How To Fight a Weight Loss War

Like Coke and Pepsi, Novo Nordisk and Eli Lilly compete for the same consumer. Trying to predict the other’s strategy, their behavior reflects the basics of game theory and the prisoners’ dilemma.

A Weight Loss War

Our story starts with the GLP 1 drugs that targeted type 2 diabetes. Initially used to improve glucose control, researchers soon realized they also had a product that suppressed appetite. Taking the next step, they re-aligned their drug and entered the weight loss market. The year was 2017 when Novo Nordisk launched Ozempic.

However, we could say that the war began in 2021 when Novo Nordisk introduced its weight loss drug called Wegovy. Soon after, Eli Lilly had Mounjaro for diabetes and then Zepbound for weight loss. With more than 40% of all adults in the US defined as obese, they both recognized that the weight loss market could exceed $100 billion annually.

As a metric for judging the war’s winners, we can first go back to 2024. At the time, with Ozempic and Wegovy, Novo Nordisk could cite approximately $30 billion in sales while Lilly’s GLP 1 portfolio was moving past $15 billion.

Now though, looking at efficacy and delivery, Lilly seems to have had some recent victories. In head-to-head trials, Eli Lilly announced 23.6% weight loss over 84 weeks compared to Novo Nordisk’s 20.2%. As for delivery, instead of weekly injections, Lilly offered a four-dose single device alternative. But, this year, when Novo Nordisk introduced a Wegovy pill as an injection alternative, it had the largest drug launch in recent history with 1.3 million prescriptions in the first quarter. Its new CEO said that, at that moment, it became the pill leader.

Moving to pricing strategy, we are told that Novo Nordisk said it will slash GLP 1 prices in 2027 up to 50% to $675 a month for Wegovy and 35% for Ozempic. But also, Lilly announced a $299 self-pay option with certain doses. Both also negotiate with Pharmacy Benefit Managers (PBMs) to expand consumers’ insurance access. As Novo Nordisk’s CEO said to The Journal, few pay list price.

Then, to all of this we can add their pipeline of new and related products. The Novo Nordisk CEO cites the related health gain that their future drugs will target.

Our Bottom Line: The Prisoners’ Dilemma

With metrics that relate to efficacy, delivery, price, and pipeline, Eli Lilly and Novo Nordisk worry about what each will do. Like two burglary suspects, they have the prisoners’ dilemma:

Assume two burglary suspects have just been arrested. Interrogated separately at the police station, each one knows that the sentence depends on who confesses.

As you can see in the following diagram, if both confess, they each get three years. And if both don’t confess then the sentence is 6 months. However, denial could bring the longest jail time if the other person tells all:

Because oligopolies like Novo Nordisk and Eli Lilly have considerable market power, each one can determine a competitive strategy. However, like our prisoners, the outcome of the decision also depends on the other party.

My sources and more: Thanks to The Journal’s podcast for inspiring today’s post. From there, for more detail, we looked at Yahoo Finance for our facts. We also looked back to our previous post on competition and the prisoners’ dilemma.

Please note that several of today’s sentences were in a past econlife post.