Peptide Pricing Power: The GLP-1 Duopoly

Over the past two years, the meteoric rise of Ozempic has been hard to miss. Initially developed to treat diabetes, most people now know the drug through social media, where it exploded in popularity due to one of its primary side effects: weight loss. In fact, by March 2023, TikTok videos with the “#ozempic” tag had been viewed over 300 million times (Illinois State Medical Society, 2023). The resulting surge in demand created a booming market for weight loss drugs in the United States. At first, limited manufacturing capacity and related shortages drove prices up. Over the past year, supply has stabilized due to firms’ relentless expansion efforts. In spite of this, elevated out-of-pocket costs persist, now reflecting the pricing power of a highly concentrated market. However, before analyzing these industry dynamics in detail, it will be useful to get a sense of the science behind Ozempic.

Ozempic is part of a drug class called GLP-1 receptor agonists; it is administered as a once-weekly injection, and mimics a human gut hormone while suppressing appetite and slowing the digestion of food (UC Davis, 2023) ineffective. The active ingredient in Ozempic is a peptide called semaglutide. This compound requires cold storage as well as gentle handling to prevent it from breaking down and being rendered ineffective. This fragility, along with regulatory challenges, makes Ozempic a tricky good to produce and distribute, posing a significant barrier to entry for newcomers in the space. These are classic conditions for a duopoly, where two sellers own all or most of the market share. Some examples of duopolies in other industries are Boeing and Airbus in the aircraft manufacturing industry or Nvidia and AMD in the graphics card industry. In the weight loss drug space, the two dominant firms are Eli Lilly and Novo Nordisk. Eli Lilly is based in the US and is more broadly established throughout the medicine space. On the other hand, Novo Nordisk is based in Denmark, and is more specifically focused on diabetes and weight loss. Each company has their own respective GLP-1 drugs directed at both of these conditions.

In late 2025, Novo Nordisk’s reported market share in the US fell to 42%, while Eli Lilly’s rose to 58% (eMarketer, 2025). This two-firm structure makes pricing power a large concern among consumers and regulators. In 2024, Bernie Sanders spoke out regarding his frustration at the extortionate prices Americans were being charged for weight loss drugs, displaying rising tensions between the firms, customers, and policymakers (NBC, 2024). Ordinarily, the two-seller nature of a duopoly is what allows high pricing—without a competitive market, the firms have the power to charge what they want without losing customers. However, during the early boom in the weight loss drug market, high prices were driven by shortages instead.

Semaglutide shortages were first declared by the FDA in 2022, and lasted through early 2025 (FDA, 2025). Capacity and manufacturing constraints were the two most cited reasons for this shortage (Reuters, 2024). As it turns out, the difficulties that come with producing and distributing GLP-1 drugs don’t just deter new firms from entering the market, but also act as a bottleneck for current players in the market. Lilly and Novo couldn’t keep up with soaring demand, which prompted them to raise prices. During this time period, the cost of a one month supply of GLP-1 drugs rose to $1,300 (Health System Tracker, 2023). This gave rise to compounding pharmacies, businesses which purchased semaglutide from China and ran small-scale operations reconstituting, packaging, and distributing their bootleg product to people who couldn’t afford the real thing. Shockingly, in mid-2024, up to 30% of GLP-1 sales in the US could be traced back to these compounding pharmacies (KFF Health News, 2023). These drugs were about one-third of the cost of Lilly’s or Novo’s—so consumers either paid a hefty brand premium or risked low potency and contamination in order to save money. While solving this supply problem is really just as simple as building more factories, that process takes years, not to mention billions of dollars. In mid-2024, Novo Nordisk began construction on a North Carolina manufacturing facility with a price tag of more than $4 billion, projected to be completed sometime between 2027 and 2029. Eli Lilly similarly invested $4 billion into an Indiana manufacturing facility, set to be finished in late 2027 (Reuters, 2024).

However, during 2025, the driver of GLP-1 pricing in the US shifted. In tandem with their long term expansion efforts, both Eli Lilly and Novo Nordisk had been working on additional fixes to boost supply in the short-term until their main projects were finished. For example, Eli Lilly opened a new manufacturing site at the beginning of 2025 (Manufacturing Dive, 2024) and rolled out their new single-dose GLP-1 drugs, which eased manufacturing needs and allowed quicker distribution (Reuters, 2025). Novo Nordisk also purchased the massive manufacturing firm Catalent, boosting production capacity significantly (Reuters, 2024). By early 2025, the FDA declared the GLP-1 shortage to be over, and subsequently barred compounding pharmacies from selling weight loss products. Despite these developments, high prices persisted, and with supply stabilized, the high cost of these drugs now reflected typical duopoly pricing power as opposed to scarcity or shortage. The fact that there are no substitutes makes demand highly inelastic, so consumers are relatively unresponsive to changes in price and Lilly and Novo are free to raise prices as high as they wish.

Due to proactive efforts to boost manufacturing capacity in lieu of predicted sales growth, shortages are unlikely to occur again in the future. Despite this, there are other potential forces or market disruptors which could affect pricing dynamics. For example, policymakers are actively working to lower the cost of GLP-1 drugs for Americans, since they are much cheaper elsewhere. In fact, both Eli Lilly and Novo Nordisk recently reached a deal with Medicare to slash prices for its beneficiaries (CNBC, 2025). As part of a related agreement with the Trump administration, recently developed GLP-1 pills are projected to be significantly cheaper than injectable alternatives, should they be approved by the FDA (Reuters, 2025). Outside of governmental efforts, future technological advancements could serve to lower the barrier to entry in this industry, allowing new firms to compete and drive prices down. Currently, the closest business to achieving this is Hims & Hers, a telehealth company which experimented in the GLP-1 market as a compounding pharmacy during the semaglutide shortage. They found success, which led their stock to rally, and while they eventually were forced to exit the market when the shortage was declared over, they raised their credibility and positioned themselves well to reenter the market in the future. In addition to new competitors, new compounds could eventually have effects on price level in the weight loss drug market. Retatrutide, another peptide similar to semaglutide, has proven to have faster and greater effects than other weight loss drugs available on the market (Jastreboff et al., 2023). Eli Lilly is currently proceeding with clinical trials using retatrutide, and if it is ultimately approved by the FDA, Lilly could corner this portion of the market—deepening their overall control of the GLP-1 space.

So far, scarcity and then brand power have been the primary drivers behind the price level of GLP-1 drugs. No matter what the coming years hold, it will be exciting to see how the market dynamics adjust. Over the next decade, additional firms are likely to enter the picture as serious competitors, and new compounds will further reshape the industry. How these changes unfold could weaken Lilly’s and Novo’s grip on the market, and will determine whether weight loss drugs remain relatively exclusive or finally become accessible, an issue of special importance in a country grappling with high and rising obesity rates.

Edited by Caitlin Williams

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