FDA Proposes to Exclude Novo Nordisk's Semaglutide and Liraglutide, and Eli Lilly's Tirzepatide from 503B Bulk List
Background of the Proposed Exclusion of 503B Bulk Ingredients
The U.S. Food and Drug Administration (FDA) has proposed to exclude Novo Nordisk's (NVO) semaglutide and liraglutide, and Eli Lilly's (LLY) tirzepatide from the 503B Bulk List. This action is based on the determination that there is no clinical need for outsourcing facilities to compound large quantities of these GLP-1 receptor agonists and GIP/GLP-1 dual agonists. If the 503B exclusion is finalized, it will completely block the pathway through which small outsourcing manufacturers have been producing compounded drugs by circumventing regulations in a situation where supply shortages have been resolved. This is analyzed as an intention to drastically reduce the alternative compounding market that has been allowed for temporary prescription maintenance and to reorganize the market order around approved original products.
Significance of Enhancing Patient Safety and Strengthening Regulations
The FDA's proposed regulatory strengthening is a measure to protect patients from the risk of adverse effects of unapproved compounded drugs that have not undergone formal clinical trials. 503B compounded drugs have been continuously raising concerns about adverse effects due to difficulties in verifying the accurate content of active ingredients and sterility. In the future, patients will be able to receive prescriptions for officially approved drugs such as Novo Nordisk's Ozempic and Wegovy, or Eli Lilly's Mounjaro and Zepbound, and will be able to enjoy more uniform and safe drug effects. In the short term, some patients who prefer compounded drugs due to cost may be dissatisfied, but from the perspective of regulatory authorities, this appears to be an inevitable decision for long-term improvement of public health.
Solidification of a Monopoly Structure in the Global Obesity and Diabetes Market
From a market perspective, the leading companies, Novo Nordisk (NVO) and Eli Lilly (LLY), are expected to further solidify their duopoly. The global GLP-1 therapeutic market is a key bio-field that is expected to grow rapidly from $50 billion to $70 billion in 2025 to $150 billion to $200 billion (USD) or more by 2030. Due to this regulation, the growth of digital healthcare platforms and small and medium-sized manufacturers that have been compounding and selling low-cost bulk drugs will be suppressed, and the market share of original manufacturers will be guaranteed. As a result, the sales momentum of Ozempic (FDA approved in December 2017) and Wegovy (FDA approved in June 2021), and Mounjaro (FDA approved in May 2022) and Zepbound (FDA approved in November 2023) will remain strong for the time being under the protection of monopoly barriers.
Relationship with Competitor Pipelines and Future Prospects
This decision will also result in relatively higher barriers to entry for pipelines under development by latecomers such as Amgen's (AMGN) MariTide and Viking Therapeutics' (VKTX) VK2735. This is because the market penetration of existing dominant drugs with regulatory benefits is accelerating, making the conditions for commercial success for new drug developers much more difficult. In addition, in the future, major global regulatory authorities such as the EMA (European Medicines Agency) and PMDA (Pharmaceuticals and Medical Devices Agency) are likely to review stricter restrictions on the non-approved manufacturing of GLP-1-based drugs in line with the U.S. FDA's stance. Industry professionals and prospective employees should pay attention to the trend of a slowdown in the small and medium-sized compounding market and an increase in the demand for regulatory science professionals in large pharmaceutical companies.
The FDA's proposed exclusion from the 503B bulk list will be a decisive factor in legalizing the revenue monopoly of Novo Nordisk (NVO) and Eli Lilly (LLY) in the global GLP-1 market, which is expected to reach $150 billion to $200 billion by 2030. In the short term, as it coincides with the resolution of supply shortages, it will have the effect of rapidly shrinking the illegal and circumventing compounding market for marketed drugs such as Wegovy and Zepbound. In the medium to long term, it will be a commercial risk for competing pipelines in Phase 2/3 clinical trials, such as Amgen's (AMGN) MariTide and Viking Therapeutics' (VKTX) VK2735, which will have to overcome the solid original market share barriers of incumbent companies when entering the market. The regulatory crackdown due to the failure to demonstrate clinical need will raise the global standard for drug safety to the next level, and for industry professionals, it is a signal to greatly strengthen the role and importance of compliance and regulatory affairs departments in large biotech companies.