The weight-loss drug market is a duopoly, not a monopoly, because companies cannot patent the underlying biological mechanism (mimicking GLP-1). Instead, Novo Nordisk and Eli Lilly patented distinct molecules that achieve a similar outcome, allowing both to compete directly.

By negotiating prices down from over $1,000 to as low as $150 per month, the government deal fundamentally shifts Ozempic's market position. It is no longer a high-end luxury akin to plastic surgery but an accessible wellness product comparable to a fancy gym membership, dramatically expanding its addressable market.

Despite its first-mover advantage, Novo Nordisk lost its lead in the weight-loss drug market by failing to recognize its consumer-driven nature. While it planned a traditional pharma launch, competitor Eli Lilly adopted a direct-to-consumer model, treating the drug like an e-commerce product and capturing the market.

The two pharma giants are competing aggressively in the direct-to-consumer channel. They're cutting prices on their GLP-1 drugs, anticipating that lower costs will drive significantly higher volume and sales in the long run, even if it hurts short-term revenue forecasts.

Despite their obesity drugs having similar clinical efficacy—both help patients lose 15-20% of body weight—Eli Lilly's market cap has skyrocketed while Novo Nordisk's has been flat. This massive valuation gap suggests investor narrative and perceived safety profiles are dramatically outweighing the fundamental product similarities.

The emergence of low-cost, compounded versions of GLP-1 drugs from telehealth companies like Hims is creating significant pricing pressure on market leaders Novo Nordisk and Eli Lilly. This dynamic has pushed the pharma giants toward direct-to-consumer models with lower prices to compete.

In explosive markets like GLP-1 drugs, significant price drops and margin compression (e.g., from 80% to 60%) don't necessarily harm profits. The sheer volume of new customers can completely offset lower per-unit profitability, leading to far greater overall earnings.

Novo priced the maintenance dose of its oral Wegovy pill far lower than anticipated. This aggressive strategy, costing less than the average U.S. monthly grocery bill (~$400), is a direct attempt to regain momentum from rival Eli Lilly and expand the self-pay market before more oral competitors launch.

Beyond the initial wave of GLP-1s from Novo and Lilly, the next major competitive front in the obesity market will be monthly injectables. Amgen and Pfizer (via its Metsara acquisition) are poised to lead this race, shifting the focus to dosing convenience and long-term adherence.