How to understand the significant price drop of GLP-1 weight loss drugs? Goldman Sachs: Strategic "price for volume," Eli Lilly is at an advantage, Novo Nordisk is under pressure

Recently, Eli Lilly and Novo Nordisk reached an agreement with the U.S. government to significantly reduce the prices of GLP-1 weight loss drugs. Goldman Sachs believes this is essentially a strategic "price-for-volume" deal. Although the price cuts exceeded expectations, the enormous sales growth potential brought by the first-time opening of the Medicare channel will significantly offset pricing pressure.

According to an article from Wall Street Insight, Trump announced last Thursday that agreements had been reached with Eli Lilly and Novo Nordisk to drastically cut the prices of certain weight loss drugs (including upcoming oral medications). According to the agreement announced last Thursday, starting in 2026, Medicare and Medicaid patients will be able to obtain GLP-1 drugs such as Eli Lilly's Zepbound and Novo Nordisk's Wegovy at a price of $245 per month, with Medicare patients' out-of-pocket costs being only $50.

Regarding this agreement, on November 10, according to news from the Chasing Wind Trading Desk, Goldman Sachs emphasized in its latest research report that this is not merely a price reduction, but a carefully planned strategic "price-for-volume" deal. The agreement successfully unlocked the previously uncertain market of tens of millions of Medicare and Medicaid patients by significantly lowering the monthly drug costs, indicating a huge growth potential in sales.

Goldman Sachs believes that although the price reduction will exert pressure on revenue in the short term, the surge in long-term sales will be an important hedge, thus maintaining its forecast of approximately $95 billion for the total addressable market (TAM) for obesity by 2030.

However, in this deal, the winners and losers are already clear. Goldman Sachs pointed out that Eli Lilly is in a significantly advantageous position due to its stronger market share, faster expected launch of oral medications, and more proactive management stance. In contrast, Novo Nordisk faces more direct growth pressures and multiple headwinds.

Major Agreement Reached: Significant Price Cuts, But Not the Worst Scenario

Goldman Sachs stated that the core content of the agreement is a substantial adjustment in the pricing of GLP-1 drugs, but it does not touch on the bottom line that the market is most concerned about. Specific price points include:

• Medicare/Medicaid Channel: Obesity treatment is included in Medicare for the first time, with a price locked at $245 per month, and the patient's out-of-pocket portion capped at no more than $50. This applies to major drugs such as Ozempic, Wegovy, Mounjaro, and Zepbound.

• TrumpRx.com Channel: The price for Ozempic and Wegovy is set at $350 per month, while Zepbound and orforglipron (Eli Lilly's oral drug) are priced at $346 per month. This price is expected to gradually decrease to $245 in the future.

• Starting Dose for Oral Medications: The starting dose price for Eli Lilly's orforglipron and Novo Nordisk's Wegovy oral medication (if approved) will be $149 per month, with the high-dose price rising to $399 Goldman Sachs pointed out that although these prices are lower than its previous model predictions, they are much better than the market's concerns about the "abyss price" of $150-200 that could result from Medicare price negotiations (IRA). This injects certainty into the market and sets a new benchmark for the pricing strategies of the two giants in the future.

"Exchanging Price for Volume": Unlocking Tens of Millions of Government Channel Patients, Market Size Expectations Unchanged

The real purpose of the price reduction is to open new market doors. Previously, Goldman Sachs' model assumed only a 50% success probability for Medicare channel coverage. Now, this channel has been fully unlocked. According to the report data:

Novo Nordisk estimates that the Medicare channel alone covers about 30 million obesity patients. Eli Lilly mentioned that the total potential patient size for Medicare and Medicaid channels could reach 40 million.

Goldman Sachs believes that the significant increase in sales will substantially offset the impact of price declines. Therefore, its forecast for the total addressable market (TAM) of the global anti-obesity drug market at about $95 billion by 2030 remains unchanged.

In addition, price reductions may bring two additional benefits: 1) Increased patient compliance, as price is one of the key factors leading to medication discontinuation; 2) Enhanced price stability, avoiding more severe price wars in the future.

Changes in the Duopoly Landscape: Eli Lilly's Advantages Highlighted, Novo Nordisk Under Pressure

Although the agreement solidifies the duopoly position of Eli Lilly and Novo Nordisk, making it harder for new entrants to challenge them, the gains and losses for both in this transaction are not equal. Goldman Sachs is clearly optimistic about Eli Lilly for the following reasons:

Market Share Advantage: Eli Lilly's Zepbound dominates both the reimbursement channel (60% vs. Wegovy 40%) and the cash payment channel (85% vs. Wegovy 15%), thus benefiting more from sales growth.

More importantly, Eli Lilly has obtained a "priority review voucher," and its oral drug orforglipron is expected to be launched in the first quarter of 2026, ahead of the previously expected second or third quarter. Goldman Sachs estimates this could bring Eli Lilly at least $1 billion in incremental revenue in 2026.

In terms of oral drug pricing, orforglipron's starting dose is priced at $149 per month, with a maintenance dose averaging about $346, lower than Goldman Sachs' previous prediction of $400. However, analysts expect the market share in the U.S. will still maintain a favorable 60:40 ratio for Eli Lilly.

In contrast, Novo Nordisk faces more severe challenges. Goldman Sachs stated that the company expects the new pricing to have a "low single-digit" impact on revenue in 2026, which is additional pressure on top of other adverse factors already announced.

Goldman Sachs pointed out that Novo Nordisk is facing multiple headwinds: A 2 percentage point drag from GTN impact in 2025, low single-digit impacts from the semaglutide generics in international markets, and potential adverse factors from states possibly stopping Medicaid coverage.

The firm's analysts currently predict a 4.4% revenue growth for Novo Nordisk in 2026 (at constant exchange rates), but have not yet incorporated the impact of this price reform. More concerning is that the 2027 Inflation Reduction Act (IRA) pricing negotiations could bring additional pressure. **

Goldman Sachs assumes that IRA negotiations may discount semaglutide prices to $200, which represents a discount rate of about 43% compared to the Medicare price of $350. Considering that Eli Lilly maintains a fixed price of $245 throughout the agreement period, this means that semaglutide will face a price disadvantage of about 18% relative to tirzepatide.