It is no secret that GLP-1 capacity is scarce.

 In the past few years, news of GLP-1 out of stock has been circulating in countries around the world. For example, as early as April 2022, the Australian Drug Administration began to receive continuous Ozempic shortage information from patient and physician groups.

 In addition to hypoglycemic indications, the rise of GLP-1 in the field of weight loss has led to a sharp rise in demand, while the limitation of industrialization makes it difficult to keep up significantly in the short term. The shortage is hard to avoid.

 In the future, as the indications for GLP-1 continue to expand, the demand is likely to continue to rise.

 Just last Friday, Novo Nordisk announced that semaglutide significantly reduced the risk of death in type 2 diabetes patients with chronic kidney disease (CKD), according to the phase III FLOW trial. Novo Nordisk expects to submit an application this year to expand the simeaglutide tag to CKD.

 Therefore, the competition in GLP-1, in addition to the clinic itself, is already a clear match point for all entrants. However, there may be no ceiling for production capacity input.

 Also on Friday, Eli Lilly announced that it would invest an additional $5.3 billion to expand GLP-1 capacity at its production base in Indiana. That means its total investment in Indiana will reach $9 billion.

 Eli Lilly said this was the largest manufacturing investment in the company's history and the largest investment in synthetic drug API manufacturing in U. S. history.

 In fact, Lilly has announced more than $18 billion since entering the GLP-1 capacity arms race; Novo Nordisk, not to be outdone, has announced no less total investment than Lilly.

The GLP-1 capacity battle has undoubtedly pushed the fierce competition in the pharmaceutical industry to a new height.

01. can not avoid the problem

 Before the small molecule drugs hit the stage of history, the production capacity of GLP-1 drugs in the polypeptide situation is an unavoidable topic. This is related to the process of polypeptide drugs.

 There are many technical routes for the production of traditional peptides, and the mainstream is through solid phase peptide synthesis (SPPS).

 The advantages of SPPS process are easy operation, automation, high product yield and purity; but the disadvantages are that the intermediates are not purified, feeding is relatively large, and the cycle is relatively long.

 Production under this process first needs to couple amino acids to the resin, then cut the polypeptide from the resin, and remove the amino acid side chain protection group, and finally get the polypeptide crude.

 Next, it needs to be purified and converted through methods such as reverse phase chromatography, and lyophilized or spray dried to obtain the final pure API product.

 For GMP production in the production workshop, the normal condensation rate is 2 amino acids per day (8 hours). For a long peptide with 31 residues like semaglutide, solid-phase synthesis alone may take more than 15 days.

 Moreover, cleavage of peptides is usually performed through small batch volumes. Therefore, it is likely to take nearly a month to complete the synthesis, purification, analysis, and release of a batch.

 Due to the usually high activity and small demand of peptide drugs, most CDMO solid-phase peptide synthesis kettle are relatively small, usually below 1000 liters.

 As a result, in a sudden explosion of demand, capacity is the biggest constraint. Since there is little room for process improvement, the capacity problem of GLP-1 can only be solved by expanding the plant in different locations.

A production capacity war is fighting in many parts of the world.

02. Burning to a new height

 Capacity expansion is expected by all drug companies, but the surprise is that it may burn more money than all drug companies think.

 Lilly's production base in Indiana, originally proposed in April 2023. At the time, Lilly's total investment was $3.7 billion.

 The investment is already the largest manufacturing investment in a single site in Lilly's history. But the record didn't last for long. In May, the investment grew to $9 billion.

 Similarly, Novo Nordisk's investment has also "exceeded expectations". In response to capacity problems, in June 2023 Novo Nordisk announced that it planned to start a $2.3 billion production to expand the Danish plant.

 However, by November 2023, Novo Nordisk will significantly upgrade its local plant size upgrade plan, with a total investment of more than $6 billion.

 In 2023, Novo Nordisk announced a total of $9 billion in investment plans and acquired three Conent production facilities for $11 billion in early 2024.

 Of course, the expansion of drug companies is based on a strong demand. In the first quarter of 2024, semaglutide's three products generated a combined DK 42.2 billion, or $6.132 billion. The market expects semaglutide to have more than $28 billion in sales this year, becoming the new pharmaceutical king. And Lilly's GLP-1 drug series is also growing rapidly.

 The current strong demand is mainly based on the diet drug market. In April, Novo Nordisk said that about 25,000 new patients a week use the weight-loss version of semaglutide, four times the number of patients used in the United States in December 2023, but still growing rapidly.

 But as mentioned above, the need for GLP-1 is not just for diet drugs. At present, GLP-1 has shown a strong competitiveness in many fields, such as cardiovascular and cerebrovascular diseases, Alzheimer's disease, MASH and so on.

This means that GLP-1 has the potential to become a superphenomenal drug in the field of chronic diseases in the future. As a result, in such expectations, the giants are continuing to increase their own capacity input budget.

03. the threshold of being raised

As the giants continue to invest heavily in the industrialization of GLP-1 drugs, the entry threshold is being pushed up. The expansion of production capacity is not only an increase in quantity, but also an improvement in technology and production efficiency.

 Novo Nordisk, for example, identifies two goals in its Danish capacity expansion plan:

 First, the new plant will use state-of-the-art technology with enough flexibility to adapt to future manufacturing processes; Second, it will improve its global value chain, focusing on not only API production but also drug packaging.

 The cost advantage brought by such economies of scale undoubtedly creates obstacles for the latecomers in the price competition.

 Lilly's capacity expansion in Indiana also emphasizes using the latest technology and automation to optimize production efficiency, safety, and quality control.

 For newcomers, to gain a place in the competitive circuit, they need not only to match or better in the industrial side, but also to be more competitive in their capital and first-mover advantage.

Research and development end this is a big adventure, industrialization end is a big challenge. This means that the latecomers need to show enough strategic vision and execution in multiple dimensions such as research and development, industrialization and capital operation. This is not only a contest between technology and capital, but also an all-round competition for innovation and efficiency.