FDA approves Eli Lilly’s GLP-1 pill, opening the next phase of the weight loss drug market

The US Food and Drug Administration has approved it Eli LillyPills GLP-1 ‘s, said the company, a major milestone for the Indianapolis-based drugmaker and one that will test the market for new weight loss medications.

Lilly said the once-daily pill, Foundayo, will begin shipping from LillyDirect’s direct-to-consumer platform on Monday and will be available in pharmacies and on telehealth platforms “shortly thereafter.” People with insurance can pay $25 a month with a coupon from Lilly, while people paying out of pocket can pay between $149 and $349, depending on the dosage.

The approval comes just months after Lilly submitted the drug to the FDA as part of a program that grants expedited reviews to drugs deemed to be of national priority interest. That means Lilly will introduce Foundayo just about three months after Novo Nordisk’s Wegovy pill, setting the stage for the next battle between rival drugmakers on the front lines for GLP-1 drugs.

“This is a huge moment,” Eli Lilly CEO Dave Ricks said in an interview with CNBC. “We have obviously worked in this category of drugs while taking the first GLP-1 drug 20 years ago and improving ever since. Here is an option that is not more effective … but more accessible, it is easy to fit into your daily routine”.

Lilly licensed the molecule, orforglipron, from Japanese drugmaker Chugai in 2018, paying just $50 million upfront for global rights to the drug. But there are still questions about how big the drug is. It doesn’t produce as much weight loss as Lilly’s best-selling Zepbound shot. Millions of people have become accustomed to regularly injecting themselves once a week.

Analysts forecast Foundayo’s sales to reach $14.79 billion by 2030, according to FactSet. That compares to expectations of $24.68 billion for weight loss drug Zepbound and $44.87 billion for Mounjaro, which is marketed for diabetes in the US and obesity and diabetes worldwide.

Ricks said shots are not as big of a barrier to uptake as Lilly once thought they would be. He still sees Foundayo as an attractive option for people who like to take pills or who are looking for a lower price than injections.

He sees it playing a role in maintenance, for people who hit their goal weight with a shot and want to keep the weight off. And he sees Foundayo as a way to “reach the planet” without the manufacturing constraints or cold chain requirements that exist with Zepbound.

Foundayo is a small molecule while Zepbound and Wegovy are peptides, which require a more intensive manufacturing process, an obstacle Ricks thought would block generic versions of Wegovy that were recently launched in several other countries, including India.

“[Foundayo] it allows for scalability, and that will allow us to launch this globally at first,” Ricks said. “So now, you can get word of mouth. [Wegovy] in the US, but really can’t get it elsewhere. It will be marketed worldwide. As soon as we got regulatory approval, we essentially had the scale we needed to provide the world with an oral GLP-1 inhibitor.

Lilly expects approval for Foundayo in more than 40 countries in the next year. The company since 2020 has invested more than $55 billion in manufacturing, including opening new sites and expanding existing plants to produce pills.

In the US, Lilly will compete with the newly launched Wegovy Novo pill. Initial demand for the pill was stronger than expected, with Novo reporting more than 600,000 prescriptions in March.

Novo CEO Mike Doustdar told CNBC in February that one of the first takeaways from the launch of the pill seems to be expanding the obesity treatment market, drawing in new patients instead of changing existing ones from injections. Ricks agreed with that assessment and said Lilly doesn’t care whether people take Foundayo or Zepbound.

“We want people to be on drugs that meet their health goals,” Ricks said. “If it’s got Lilly in the box, that’s our goal.”

Novo plans to argue that Wegovy pills are more effective than Foundayo. The Wegovy pill showed an average weight loss of 16.6% in a late-stage trial, while Lilly’s oral drug resulted in an average of 12.4% in a separate study, when analyzing patients who remained on treatment. Lilly’s Zepbound has shown that it can help people lose more than 20% of their body weight.

Meanwhile, Lilly plans to tout the fact that Foundayo can be taken at any time without restrictions, while Wegovy pills need to be taken first thing in the morning on an empty stomach with only a few ounces of water.

Where two drugs are the same is the starting price. The lowest dose of both drugs will cost $149 for customers paying cash thanks to a deal the company struck with the Trump administration last fall. And price is the most important factor for patients, says Dr. Nidhi Kansal, an obesity medicine physician at Northwestern Medicine.

“Unfortunately, price is what drives the decision between doctors and patients for these drugs because they are all good drugs and we have a lot of options now, but it’s still a financial decision at the end of the day,” Kansal said.

The lower price point and precision of the pill versus the shot opens up the market for interested patients, said BMO Capital Markets analyst Evan David Seigerman. Seniors on Medicare will be able to access Foundayo and other GLP-1 obesity drugs for $50 a month starting this summer as part of Lilly and Novo’s deal with the Trump administration. Ricks expects a “pretty strong” response to the program, which Lilly built into that year’s financial guidance.

Analysts say Foundayo’s successful launch is key to Lilly’s stock recovering from recent weakness. The company’s stock has fallen about 14% this year after a meteoric rise that briefly made Lilly the first trillion-dollar market health care company. Sales are a lagging indicator, so analysts will track prescriptions to monitor pill intake, said Cantor Fitzgerald analyst Carter Gould.

“If the script is going in the right direction, and you’re seeing consistent results, my guess is that people will see what kind of chaos is around. [the first or second quarter],” Gould said.

Another factor in Lilly’s performance this year is the upcoming readout for its stronger obesity shot, retrutide. The company has shared some late-stage data on the drug, but the most important trial is one investigating a specific treatment for weight loss. If retrutide lives up to its expectations, Lilly will be on its way to creating a portfolio of obesity drugs.

“In the future there will be more options, and that’s a good thing,” Ricks said. “And we hope Lilly is the one to present that option.”