China-based drugmakers that once fueled a surge of copycat weight-loss treatments in the U.S. are now pivoting to generics of Novo Nordisk‘s (NYSE:NVO) Wegovy and Eli Lilly's (NYSE:LLY) Zepbound as regulators tighten rules on compounded medicines.
After unprecedented demand strained branded supplies, at least eight Chinese firms—including Jiangsu Sinopep-Allsino and Hybio Pharmaceutical—supplied raw ingredients that helped produce more than a billion makeshift doses in 2024, according to FDA shipping data cited by Reuters.
Novo Nordisk estimates that in just six months, U.S. imports of semaglutide alone could have yielded 1.5 billion starter doses of Wegovy.
Those shipments have since collapsed. By mid-2025, semaglutide imports were down 90% from a year earlier, while tirzepatide fell 34%, reflecting tighter FDA enforcement and improved branded supply.
With the U.S. crackdown squeezing margins, Chinese ingredient makers are eyeing markets like Canada and Brazil, where Novo's semaglutide patent expires next year, and developing their own generics—though scaling injectable production remains a hurdle. Deals with branded manufacturers could also delay entry.
The earlier compounding boom was fueled by fat markups: producing a month's supply of semaglutide powder cost just seven cents, yet U.S. compounders sold injectables for about $230—less than half the branded price. Now, suppliers are shifting toward liraglutide, the active ingredient in older drugs like Saxenda, which is gaining traction on telehealth platforms.
FDA Commissioner Robert Califf called the wave of compounded semaglutide and tirzepatide a "once-in-a-decade" challenge, warning that the agency will keep close watch as the market transitions to generics.
Price Action: LLY stock is down 0.03% at $734.97, and NVO stock is up 1.21% at $57.06 at the last check on Wednesday.
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