HSBC assesses the price reduction plan for American weight loss drugs: pricing pressure is just a short-term pain, a new cycle of "trading price for volume" will begin.

In response to the recent pricing agreement reached for weight loss drugs in the United States, HSBC Bank stated that the agreement is milder than market expectations, especially the pricing strategy in the field of oral medications is better than expected. Although it will bring pricing pressure in the short term, in the medium term, the growth potential of the industry will be significantly enhanced by increasing sales volume driven by the popularization of drugs among patients. It is understood that the US government reached a pricing agreement for prescription obesity drugs with Eli Lilly (LLY.US) and Novo Nordisk A/S Sponsored ADR Class B (NVO.US) on November 6, 2025. According to the agreement, the monthly cost for Wegovy and Ozempic will be reduced to $350; the monthly cost for Zepbound and the pending approval of Orforgilpron will be $346; the starting dose for the potential oral drug Wegovy that may be launched in the future will be $150 per month. Of particular interest are the three key breakthroughs in the agreement: first, opening up a path for reimbursement for obesity drugs by Medicare for the first time, as these drugs were not covered by medical insurance before; second, setting drug pricing at $245 for Medicare, with patients only paying $50 out of pocket; third, Medicaid programs in various states can negotiate with pharmaceutical companies to obtain the same low prices. HSBC analysis indicates that this policy will significantly reduce the cost of medication for patients and is expected to cover about 80% of Medicare beneficiaries, including type 2 diabetes patients, patients with obesity-related complications, and individuals with a body mass index (BMI) of 35 or higher. The bank added that while the initial price drop will impact drug company revenue - Novo Nordisk A/S Sponsored ADR Class B expects a 2%-4% impact on its 2025 revenue due to the equivalent net price drop of 10%-15% - as the threshold for medication is lowered, patient compliance is expected to improve. Currently, about 70% of patients interrupt treatment within 12 months, and low out-of-pocket schemes are expected to change this situation, especially for patients currently relying on legal or illegal compound medications. Additionally, HSBC mentioned that Eli Lilly plans to provide a low out-of-pocket plan for the oral formulation Orforglipron starting in April 2026, and the drug has applied for FDA's fast-track review pathway, with a potential market launch in the first quarter of 2026. The bank stated that this alleviates concerns about underpricing in the oral medication market and further clarifies its commercialization path. However, HSBC still maintains a "hold" rating for Eli Lilly with a target price of $850, as the bank recognizes the strength of its product pipeline and long-term growth potential, but the current stock price reflects optimistic expectations, with short-term valuation pressure evident. As for Novo Nordisk A/S Sponsored ADR Class B, the bank stated that despite the risk of a sharp decline in stock price due to pricing, with the help of improvements in medical insurance access and the advancement of key clinical trials like EVOKE, the company is expected to regain its leading market position and create conditions for a strong rebound in stock price. Therefore, the bank reiterates a "buy" rating for Novo Nordisk A/S Sponsored ADR Class B with a target price of 445 Danish Kroner.