Investment in expanding production is beginning to show results! Eli Lilly's supply tightness in Japan is easing, and shipment control is finally lifted
Eli Lilly has made a huge investment to expand production capacity, which is starting to show results. Due to supply shortages, the company implemented shipping controls in Japan last year, but these have now been lifted. The weight-loss drugs from Eli Lilly and its competitor Novo Nordisk are widely popular globally, with demand continuously increasing. It is expected that by the end of this decade, a market worth $80 billion will be created. Eli Lilly is investing in expanding the capacity of its Kobe plant and increasing its investment in the production base in Lebanon, Indiana. At the same time, the company is restricting the listing of these drugs outside the United States
According to the Zhitong Finance and Economics APP, Eli Lilly (LLY.US) has made a huge investment to expand the production capacity of its popular weight loss and diabetes drugs. The investment has already shown initial results, allowing the company to lift the shipping controls implemented in Japan last year.
Despite being approved for diabetes, Eli Lilly had to limit the shipments of Mounjaro in Japan last year due to supply constraints. The drug was also approved for weight loss in the US last year under the brand name Zepbound. Simone Thomsen, the President of Eli Lilly Japan, stated in an interview on Thursday that the company has invested a total of $18 billion since 2020 to continuously increase production capacity, and the current supply constraints have been somewhat alleviated.
Thomsen said, "When we started production in Japan last year, we had to control part of the shipments. I am pleased to inform everyone that the supply in Japan is now basically stable, and the controls have been lifted."
Weight loss drugs developed by Eli Lilly and its competitor Novo Nordisk (NVO.US) are popular worldwide, and the growing demand is putting increasing pressure on manufacturers. Bloomberg estimates that by the end of this decade, this demand will create an $80 billion market. Last week, Goldman Sachs raised its expectations for the size of this market, stating that the global weight loss drug market could reach $130 billion by 2030.
In Japan, Eli Lilly is investing 7 billion yen ($45 million) to expand the production capacity of its Kobe plant. Thomsen said, "By the end of this year, we will complete the expansion, and the new production line will start operation next year."
To address the ongoing shortage issue, Eli Lilly also announced last month an additional investment in its manufacturing base in Lebanon, Indiana to produce the active ingredient for Mounjaro, called terlipressin. The new investment amounts to $5.3 billion, increasing the total investment to $9 billion.
While focusing on increasing production capacity, the company is restricting the launch of these drugs outside the US. Eli Lilly has not yet launched Mounjaro for weight loss in Europe, despite the drug being approved there for several months. CEO Dave Ricks stated that the drug was approved earlier in China for diabetes treatment but Eli Lilly "will not launch" it.
Eli Lilly is currently seeking approval from Japanese authorities for the drug. Meanwhile, Novo Nordisk's weight loss drug Wegovy has already been approved in Japan
