Novo Nordisk's Ozempic Shortage: Smarter Forecasting Needed

Novo Nordisk, the pharmaceutical giant supplying Ozempic, has alerted the Therapeutic Goods Administration (TGA) and the Ozempic Medicine Shortage Action Group (MSAG) that supply constraints will persist throughout 2024.

This shortage highlights a critical need for enhanced demand forecasting within the pharmaceutical industry. The surge in demand, partly due to heightened media attention, reflects a missed opportunity for employing advanced analytics and artificial intelligence to predict trends and adjust supply accordingly.

The shortage is driven by a sharp increase in demand for the low-dose (0.25/0.5 mg) Ozempic, largely due to its off-label use for weight loss—an indication not approved by the TGA.

Now, the National Pharmacy Association (NPA) is warning that this shortage could potentially lead to a rise in the unlicensed sale of medication online, which poses significant risks. 

A casualty of the celebrity endorsement

The global shortage of semaglutide, marketed under the brand names Ozempic and Wegovy, is primarily driven by an unprecedented surge in demand.

Semaglutide was originally introduced as a treatment for type 2 diabetes, helping patients manage their blood sugar levels. However, a 2021 clinical trial revealed its potential for weight loss by suppressing appetite hormones.

This discovery significantly increased public and clinical interest in the drug for weight management, leading to a surge in demand that the current supply chain cannot accommodate.

The heightened media attention and endorsements from celebrities have further amplified this demand. As a result, Novo Nordisk, the sole manufacturer of semaglutide, is struggling to keep up with the needs of both diabetes and weight loss patients.

The company has faced significant challenges in scaling up production to meet the global demand for both Ozempic and Wegovy.

Ozempic is not officially licensed for weight loss though many patients and healthcare providers have turned to it due to its effectiveness in reducing appetite. This off-label use has placed additional strain on an already limited supply.

The Therapeutic Goods Administration (TGA) and other regulatory bodies have been grappling with how to manage this off-label demand while ensuring that the drug remains available for its approved uses.

Novo Nordisk also faces significant manufacturing challenges.

Despite a planned US$2.3bn investment in manufacturing upgrades, the constraints are proving too much for the complexities of drug production and the need for advanced manufacturing processes to ensure product quality and safety.

In addition to manufacturing difficulties, regulatory measures have also impacted availability.

Novo Nordisk has requested health authorities to intervene and limit off-label prescribing of Ozempic to conserve supplies for those with the most critical needs. The Medicines Healthcare Products Regulatory Authority (MHRA) in the UK has been urged to promote responsible prescribing practices and ensure that Ozempic is used primarily for its approved indications.

Addressing the shortage

To address the supply issues, Novo Nordisk has made a significant strategic move by agreeing to acquire three manufacturing sites from Catalent for US$11bn.

This acquisition is part of a larger transaction in which Novo Holdings, the controlling shareholder of Novo Nordisk, will purchase US drug manufacturer Catalent for US$16.5bn. As part of this deal, Novo Holdings will sell three of Catalent’s manufacturing sites to Novo Nordisk.

These sites, located in Indiana, Brussels and Anagni, Italy, specialise in "fill-finish" operations, the final stage of drug manufacturing and are already contracted to fill Novo Nordisk's injection pens.

The acquisition of these sites is expected to provide Novo Nordisk with the additional manufacturing capacity needed to meet the growing demand for its products.

While the new sites will not immediately resolve the supply chain constraints, they are anticipated to “gradually increase its filling capacity from 2026 and onwards,” according to Novo Nordisk.

This move is a strategic effort to enhance production capabilities and ensure that the company can better serve the needs of patients with diabetes and obesity.

Lars Fruergaard Jørgensen, President and CEO of Novo Nordisk, expressed optimism about the acquisition, stating: “We are very pleased with the agreement to acquire the three Catalent manufacturing sites, which will enable us to serve significantly more people living with diabetes and obesity in the future.”

This acquisition represents a crucial step in Novo Nordisk's efforts to address the ongoing supply issues and meet the global demand for its high-demand medications.

What can supply chain leaders learn from this? 

Demand forecasting is crucial in supply chain operations, as it enables businesses to anticipate customer needs, optimise inventory levels and enhance overall efficiency.

Accurate demand forecasting helps companies reduce costs associated with overstocking or stockouts, ensuring that products like Ozempic are available when and where they are needed, thereby improving customer satisfaction.

One solution on the rise in the industry is AI-powered forecasting- a smarter way to analyse and predict trends such as the celebrity weight-loss coverage.

For example, Blue Yonder, a leader in supply chain solutions, provides a comprehensive, end-to-end view, allowing businesses to plan proactively, execute flawlessly and deliver world-class experiences to their customers.

Blue Yonder's excellence in supply chain planning has been recognised globally, as evidenced by its recent accolade as a Leader in the 2024 Gartner Magic Quadrant for supply chain planning solutions.

In today's unpredictable business environment, companies must future-proof their operations to stay competitive. This is where the Blue Yonder Platform comes into play.

Known for its real-time visibility, demand management and lifecycle pricing capabilities, the Blue Yonder Platform is a cutting-edge supply chain management solution. It utilises machine learning to predict and resolve supply chain disruptions, offering intelligence-enriched, integrated technology across supply chain, retail planning, logistics and delivery.

With the ongoing era of uncertainty, businesses must be agile and responsive to changes in demand. The Blue Yonder Platform's advanced capabilities in demand forecasting enables companies to adapt quickly, making informed decisions based on real-time data and predictive analytics.

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