By Maggie Fick
(Reuters) -Swiss medical technology company Ypsomed announced on Wednesday a long-term supply deal with Novo Nordisk for autoinjectors, the latest sign of how the Danish drugmaker’s weight-loss drug business is a boon for pharmaceutical services companies.
Ypsomed said it would expand its manufacturing capacities over the coming years, with Novo Nordisk contributing a significant part of the investment for the additional production infrastructure.
The autoinjectors will be used by people self-administering drugs to treat various metabolic indications, Ypsomed said, adding that the pens were “for various drugs currently undergoing clinical trials”.
It said “significant capacity” for manufacturing its autoinjectors will be available for Novo in 2025.
Ypsomed shares surged 5% after the market opened.
Ypsomed will manufacture autoinjectors for Novo’s “second-generation GLP-1s”, which are currently in clinical trials, Ypsomed’s head of investor relations Thomas Kutt told Reuters by phone after the announcement.
“We will deliver autoinjectors for this upcoming device, which may be available in two or three years on the market,” he said.
Wegovy is in a class of drugs known as GLP-1s used to treat diabetes and obesity. In the United States, where it was launched in June 2021, it is the first and so far only one of a group of newer and more effective GLP-1 drugs approved specifically for weight loss.
Novo has been unable to keep pace with demand for Wegovy, which uses autoinjectors, in the five markets where it is available: the United States and four European countries.
It is spending billions to build new factories and hiring contract manufacturers for a range of supply chain and production tasks. On Monday, Reuters reported that Novo has hired U.S. private contract manufacturer PCI Pharma Services to handle assembly and packaging of Wegovy.
Novo declined to comment on the Ypsomed agreement but referred Reuters to its previously announced plan to invest about 25 billion Danish kroner ($3.6 billion) “in expanding capacity across all relevant production facilities” this year alone.
The main companies producing components for self-injection drugs include West Pharmaceuticals, Ypsomed and Gerresheimer, according to a Bernstein research report published in August.
Healthcare-focused investors and pharma industry analysts have recently told Reuters that shares of companies with “exposure” to the booming obesity market, which some analysts estimate will be worth $100 billion by 2030, are performing well on expectations of even more demand for GLP-1 injection drugs in the years ahead.
Once companies like Ypsomed win supply contracts with big pharma companies like Novo who market these drugs, their components are likely to be used for years given the complex regulatory approval process for injection-pen devices, industry experts say.
“Once this is approved, it’s like a marriage, in a very Catholic way, where divorce doesn’t exist,” Ypsomed’s Kutt told Reuters.
(Reporting by Maggie Fick in London and Louise Breusch Rasmussen in Copenhagen, Editing by Rachel More and Hugh Lawson)