Patient groups cheer as the WHO adds diabetes and cystic fibrosis drugs to its essential medicines list

The World Health Organization has for the first time added high-cost diabetes and cystic fibrosis treatments, including Eli Lilly's Mounjaro and Novo Nordisk's Ozempic (GLP-1s) for type 2 diabetes with comorbidities, to its essential medicines list. This move is expected to significantly improve drug accessibility and cost control in low- and middle-income countries, potentially expanding market reach for these pharmaceutical companies while also signaling future pricing pressures as governments leverage the list to guide procurement and supply chain strategies.

Analysis

The World Health Organization's inclusion of Eli Lilly's Mounjaro and Novo Nordisk's Ozempic on its essential medicines list is a pivotal development, signaling a significant expansion of the addressable market for GLP-1 therapies into low- and middle-income countries. This endorsement, which has historically accelerated access for treatments like those for HIV, validates the drugs' clinical importance and is poised to drive long-term volume growth for both companies in over 150 countries. However, the explicit purpose of the list is to guide governments on cost control and supply chain management. This implies that the expansion into emerging markets will likely be accompanied by substantial pricing pressure, as governments leverage the WHO's guidance to negotiate lower costs. Therefore, while this move solidifies the global dominance of LLY and NVO in the diabetes and obesity markets, it presents a strategic trade-off between higher sales volumes and potentially lower per-unit margins in these new territories.

Key Decisions for Investors

• Investors should view this as a long-term positive catalyst for Eli Lilly and Novo Nordisk, as the WHO endorsement de-risks market access and underpins significant volume growth potential in emerging economies.
• It is crucial to monitor future earnings calls for management commentary on pricing strategies and expected margins in low- and middle-income countries, as government-led procurement will likely lead to prices substantially below those in developed markets.
• Consider this development as a widening of the competitive moat for LLY and NVO, as it establishes their products as the standard-of-care in new territories, creating higher barriers to entry for competitors in the GLP-1 space.