The U.S. Food and Drug Administration (FDA) has announced that the supply shortages of Eli Lilly's (LLY, Financial) popular weight-loss and diabetes medications, Zepbound and Mounjaro, have been resolved. This resolution may impact the market presence of generic versions that had become popular due to previous shortages. The initial shortage led the FDA to permit pharmacies to sell less-tested generic versions. Eli Lilly has been increasing investments to boost medication supply, including constructing a new manufacturing plant in Indiana.
Due to the resolved shortage, the prevalence of unauthorized generics might face challenges. The FDA had first implemented the shortage classification at the end of 2022, allowing pharmacies to sell these generics without undergoing the usual rigorous testing process. These generics were widely used in medical spas and telehealth companies, often offered at lower prices.
Eli Lilly has been actively investing in manufacturing capabilities to increase the supply of its best-selling medications. The company is investing $4.5 billion in a new manufacturing plant in Indiana to produce drugs for future clinical trials, as part of its broader initiative to strengthen its supply chain. The first plant of this kind will be located in Lebanon, about 27 miles from Eli Lilly's Indianapolis headquarters. Additionally, Eli Lilly is constructing two more plants in the area, with a total investment reaching $13.5 billion.
Despite Eli Lilly's statement that all doses of Zepbound and Mounjaro are now available for purchase, the complexity of the supply chain means that patient access to specific doses might still vary across pharmacies. Patrik Jonsson, Eli Lilly's executive vice president and president of Lilly USA, stated that the company is heavily investing to expand production capacity and bring new options to the market.
Experts estimate that hundreds of thousands of Americans have used Eli Lilly's generics or similar drugs from Novo Nordisk. According to investment bankers collaborating with the industry, manufacturers of these compound drugs generate annual revenues of up to $1 billion.
The resolution of the compound drug shortage has also drawn attention from telehealth companies that connect patients with healthcare providers who can prescribe medications. As shortages end, future production of compound drugs might be limited, though some production may continue under other U.S. policies. However, the FDA notes that in the supply chain process from manufacturer to local pharmacy, patients and prescribers may still encounter intermittent local supply disruptions.
