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Tag: Medical

  • Weight-Loss Drug Price Wars Are Upending Big Pharma’s Business Model

    Weight-Loss Drug Price Wars Are Upending Big Pharma’s Business Model

    The multibillion-dollar market for GLP-1 weight-loss drugs, once a duopoly dominated by Novo Nordisk and Eli Lilly, is fracturing under intense pricing pressure, political intervention, and rising competition from compounded alternatives. What began as a revolutionary breakthrough in obesity treatment has evolved into a fierce price war that’s challenging the core business models of Big Pharma giants, raising questions about innovation, profitability, and access to life-changing medications.

    Novo Nordisk, the Danish pioneer behind Ozempic and Wegovy, stunned investors this week by forecasting a 5% to 13% sales decline in 2026 – its first drop since 2017 – amid “unprecedented” U.S. price cuts and patent expirations in key markets like China and Brazil. The company’s shares plunged 17% on Wednesday, erasing nearly $50 billion in market value, as CEO Mike Doustdar acknowledged short-term “pain” from slashing prices to boost volumes and compete with Lilly’s surging Zepbound and Mounjaro.

    In contrast, U.S. rival Eli Lilly delivered a bullish outlook, projecting 25% revenue growth to $80-83 billion in 2026, far exceeding Wall Street expectations. Lilly’s tirzepatide-based drugs raked in over $36 billion in 2025, outpacing Novo’s semaglutide portfolio and positioning Lilly as the clear leader in the GLP-1 race. “We’re seeing incredible demand, and our manufacturing investments are paying off,” Lilly CEO David Ricks told analysts, downplaying pricing headwinds as a temporary drag offset by volume gains.

    As illustrated in the accompanying chart from LSEG Workspace, Novo’s revenues have boomed in double digits for years, driven by weight-loss drug sales, but the firm now anticipates a sharp reversal in 2026 due to these pressures.

    The divergence highlights how pricing dynamics, fueled by U.S. President Donald Trump’s “most favored nation” (MFN) policy and direct-to-consumer platforms like TrumpRx.gov, are reshaping the industry. Launched on February 5, TrumpRx connects Americans to discounted drugs from manufacturers like Novo, Lilly, Pfizer, and AstraZeneca, offering prices as low as $149 for Wegovy’s starter dose – a fraction of the original $1,000 monthly list price. In exchange, companies received tariff relief and expedited approvals, but critics argue it sidesteps systemic issues, with limited impact for insured patients who may still pay less through coverage.

    [video src="https://newyorkbudgets.com/wp-content/uploads/2026/02/prescription-drugs-will-be-available-at-dramatic-discounts-for-all-consumers-throughout-a-new-website_-http___TrumpRx.Gov-The-New-York-Budgets-Video-Made-with-Clipchamp.mp4" /]

    “TrumpRx could have some impact, but it’s far from revolutionary,” said Craig Garthwaite, director of health care at Northwestern University’s Kellogg School of Management. Experts like economist Öner Tulum warn that MFN relies on opaque global pricing, allowing companies to game the system by raising overseas prices or delaying launches.

    Adding fuel to the fire, telehealth provider Hims & Hers Health launched a $49 compounded semaglutide pill on February 5 – just weeks after Novo’s Wegovy pill debut – prompting Novo to vow “legal and regulatory action” for alleged patent infringement and patient safety risks. Hims uses liposomal technology to aid absorption, bypassing Novo’s proprietary SNAC method acquired in a $1.8 billion deal. The FDA has warned against compounded GLP-1s, citing lack of safety evaluations, while the Department of Health and Human Services referred Hims to the Justice Department for investigation.

    This isn’t the first clash: Novo previously partnered with Hims for Wegovy injections but ended ties acrimoniously last summer. Now, compounded knockoffs – estimated to serve 1.5 million Americans – threaten the duopoly’s pricing power. “This new offering could test how far compounders can skirt Big Pharma’s patents,” said Deb Autor, Hims’ chief policy officer.

    The broader shift to cash-pay channels has made prices more sensitive, with injectables now starting at $149-$299 on company sites, down from $1,000. Analysts like Markus Manns at Union Investment fear a “no-win” price war: “There’s no assurance cuts will pay off.” Bernstein’s Courtney Breen noted Novo’s cuts are risky given its trailing position.

    Lilly holds clinical edges – Zepbound achieves higher weight loss than Wegovy’s injection, while Novo’s pill edges Lilly’s upcoming orforglipron in trials. Lilly expects orforglipron approval in Q2 2026, potentially expanding the market further. “Pills could reshape GLP-1s like consumer products,” one analyst noted.

    Yet the market is crowding: Pfizer and Amgen eye 2028 launches, while GSK focuses on obesity’s downstream effects like liver disease. Goldman Sachs raised Lilly’s target to $1,260, citing confidence in 25% growth despite pressures.

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    Critics argue Big Pharma’s model prioritizes shareholders over patients. Economist William Lazonick’s research shows U.S. pharma spent $747 billion on buybacks and dividends from 2012-2021, exceeding $660 billion on R&D. During the pandemic, 18 firms distributed $377.6 billion to shareholders – over 90% of profits – while claiming high prices fund innovation. “It’s a fallacy,” said UNAIDS’ Winnie Byanyima. “Profits go to Wall Street, not cures.”

    A Senate HELP Committee report echoed this: In 2022, Bristol Myers Squibb spent $12.7 billion on buybacks, dividends, and exec pay versus $9.5 billion on R&D. Overall, 10 firms with drugs under Medicare negotiation spent $162 billion on shareholder handouts and marketing in 2023 – far outpacing $95.9 billion on R&D.

    As shown in the second chart from LSEG, Novo’s market cap peaked in June 2024 before a sharp plunge, reflecting these pressures and Lilly’s ascent toward a trillion-dollar valuation.

    What tames Big Pharma? Tulum suggests emulating the VA system’s deep discounts via centralized negotiation. Biden’s Inflation Reduction Act (IRA) enabled Medicare negotiations for 10 drugs in 2026, including GLP-1s like Ozempic in 2027. Yet industry lobbies fiercely, with $83.2 million in trade dues funding opposition in 2023.

    Mark Cuban’s Cost Plus Drugs offers transparent markups, but scalability is limited. Ultimately, reformers like Lazonick advocate banning buybacks and stock-based pay to redirect profits toward innovation.

    As prices fall and competition rises, the GLP-1 war may force Big Pharma to adapt – or face a reckoning. For patients, lower costs could mean broader access, but sustained innovation requires reining in financialization.

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  • Boston Scientific Stock Is on Pause. Its Earnings Could Get It Moving Higher Again

    Boston Scientific Stock Is on Pause. Its Earnings Could Get It Moving Higher Again

    Boston Scientific Corp. (NYSE: BSX), a leading global medical device manufacturer, is facing an unusual period of stagnation. Known for delivering consistent performance over the years, the company’s stock has treaded water for the last six months. But with the release of its second-quarter earnings scheduled for Wednesday, investors and analysts alike are watching closely for signs of renewed momentum.

    Boston Scientific’s stock has historically been a favorite among long-term investors, with a solid track record of innovation in minimally invasive medical technologies. Over the past five years, BSX has significantly outperformed many of its peers in the medtech sector, driven by robust product pipelines and strategic acquisitions.

    However, since January 2025, the stock has shown little movement—hovering around the $66 to $70 range. This is despite broader market indices, including the S&P 500 and the Nasdaq Composite, reaching new highs fueled by strong tech and healthcare performance.

    Market analysts attribute the recent pause in momentum to a combination of valuation concerns and investor wait-and-see behavior ahead of earnings. “Boston Scientific is not underperforming—it’s consolidating,” said Linda Corrigan, Senior HealthTech Analyst at Fairview Investments. “Investors are waiting for a new catalyst.”

    That catalyst could come in the form of Boston Scientific’s Q2 earnings report, which is expected before the market opens on Wednesday.

    Wall Street consensus estimates forecast revenue of $3.77 billion for the quarter, up 9.3% year-over-year, and earnings per share (EPS) of $0.61, compared to $0.53 in Q2 2024. The company has beaten EPS estimates in 8 of the last 10 quarters, and analysts are optimistic it will continue that trend.

    “The real story will be in the company’s guidance and commentary on growth drivers like the Watchman FLX Pro, Farapulse, and recent expansion in Asia-Pacific markets,” said John Nathan, Equity Research Director at Harding Wealth. “If they deliver a solid beat and raise, BSX could break out of its holding pattern.”

    Boston Scientific continues to benefit from its diversified product offerings across cardiology, urology, neuromodulation, and endoscopy. The Watchman heart device and Farapulse pulsed field ablation system remain two of its most closely watched products, with the latter recently gaining traction in Europe and awaiting wider U.S. adoption.

    Moreover, the company’s $3.7 billion acquisition of Axonics earlier this year has expanded its footprint in sacral neuromodulation and is expected to be accretive to earnings by late 2025.

    In its last earnings call, CEO Mike Mahoney emphasized “strong momentum across our growth platforms” and hinted at further investment in AI-driven diagnostics and robotic-assisted technologies—an area Boston Scientific is expected to ramp up through 2026.

    Despite the flat trading pattern, institutional interest in BSX remains strong. According to Bloomberg data, over 68% of the float is held by institutions, including major players like Vanguard, BlackRock, and T. Rowe Price.

    The stock currently trades at a forward price-to-earnings (P/E) ratio of 24.5, roughly in line with the sector average. Some analysts believe this leaves room for upside if the company can deliver a strong beat and raise guidance.

    Technical analysts note a key resistance level at $71.50. A strong earnings report could push the stock through this ceiling, with bullish targets around $75 to $78 in the near term.

    Boston Scientific is at a critical juncture. While its fundamentals remain strong and its long-term outlook is bright, the next few days could determine whether BSX resumes its upward climb or continues to linger in limbo. Wednesday’s earnings report will be a major inflection point for the stock—and possibly for investors seeking medtech exposure in a high-growth, post-pandemic landscape.

  • Trump’s 200% Tariff Threat Leaves Pharma Firms Scrambling for Contingency Plans

    Trump’s 200% Tariff Threat Leaves Pharma Firms Scrambling for Contingency Plans

    Novartis AG NOVN –.–%
    Sanofi SA SAN –.–%
    Roche Holding AG ROG –.–%
    Eli Lilly and Co LLY –.–%
    Johnson & Johnson JNJ –.–%

    U.S. pharmaceutical companies are racing to assess the fallout from President Donald Trump’s proposal of a 200% tariff on imported pharmaceutical products, a policy that has sent shockwaves through the global drug industry and sparked intense scenario planning among manufacturers and investors.

    Speaking on Tuesday, Trump reiterated that long-delayed, industry-wide tariffs are imminent, following the launch of a Section 232 national security investigation into pharmaceutical supply chains in April. While he hinted that the tariffs wouldn’t take effect immediately — instead offering a grace period of 12 to 18 months — industry analysts and executives warn the impact could be both disruptive and long-lasting.

    “This kind of tariff would inflate production costs, compress profit margins, and risk severe supply chain disruptions, leading to drug shortages and higher prices for U.S. consumers,” analysts at Barclays warned in a research note Wednesday.

    Even with a grace period, the pressure is building. UBS called the delay “insufficient time” for pharmaceutical manufacturers to shift operations back to the U.S., noting that relocating commercial-scale production typically takes four to five years.

    According to Pharmaceutical Research and Manufacturers of America (PhRMA), a mere 25% tariff would already drive up U.S. drug prices by $51 billion annually, translating to as much as a 12.9% increase in consumer prices. The group blasted the proposed 200% levy as “counterproductive” to public health, especially given rising inflation and mounting healthcare costs.

    “A 100% or 200% tariff would be potentially disastrous for every person because we need those pharmaceuticals, and it takes those companies a long time to produce them here in the U.S.,” said Afsaneh Beschloss, founder and CEO of RockCreek Group, speaking on CNBC’s Closing Bell.

    Many of the world’s leading drugmakers — including Roche, Novartis, Sanofi, Bayer, and AstraZeneca — manufacture much of their product outside the U.S., particularly in Europe, India, and Asia, where costs are lower and supply chains more mature.

    In anticipation of potential fallout, global firms are exploring relocation strategies and cost restructuring. Roche, for instance, stated it is “monitoring the situation closely” and advocating for policies that reduce barriers to patient access while continuing to expand its U.S. manufacturing footprint.

    Bayer said it is focused on “securing supply chains and minimizing any potential impact,” while Novartis confirmed no changes to its current U.S. investment strategy but emphasized ongoing collaboration with the U.S. administration and trade associations.

    Other firms — such as Sanofi, AstraZeneca, and Novo Nordisk — have remained largely silent, either declining comment or citing pre-earnings quiet periods.

    Trump’s administration argues that reshoring pharmaceutical production is a national security imperative, especially after the COVID-19 pandemic exposed vulnerabilities in the global medical supply chain. Historically, pharmaceuticals have been exempt from trade tariffs due to their essential nature. But Trump has long criticized the industry for “offshoring profits” while “overcharging American patients.”

    The president’s remarks on Tuesday reinforced this stance, describing the move as a necessary step toward bringing “American-made medicine” back to domestic shelves. Critics, however, argue that such sweeping tariffs could drive up drug costs while placing undue stress on an industry already grappling with R&D inflation, regulatory pressures, and price transparency reforms.

    The pharmaceutical industry had hoped for a carve-out from broad tariffs — a strategy that appears increasingly unlikely. Some optimism has shifted toward future trade negotiations that might soften the blow.

    The recently signed U.S.-U.K. trade agreement, while thin on specifics, includes a provision to negotiate preferential treatment for British pharmaceutical products and ingredients, contingent on the outcome of the Section 232 probe.

    Swiss and EU pharmaceutical exporters may be pursuing similar carve-outs, but progress has been slow. With the final Section 232 report due by the end of July, drugmakers are bracing for a pivotal policy moment — one that could redefine their long-term U.S. market strategy.

  • Rite Aid’s second bankruptcy filing comes surprisingly soon, less than a year after the company’s previous emergence from Chapter 11

    Rite Aid’s second bankruptcy filing comes surprisingly soon, less than a year after the company’s previous emergence from Chapter 11

    Rite Aid filed for bankruptcy protection Monday for the second time, less than a year after the embattled drugstore chain emerged from Chapter 11 as a private company.

    Rite Aid said in a news release that it’s looking for a buyer and is in “active discussions” with multiple prospects. The Chapter 11 filing in U.S. Bankruptcy Court in New Jersey gives Rite Aid access to $1.94 billion in new financing to fund the sale process, during which it plans to keep stores open.

    The company did not respond to The Washington Post’s request for comment.

    Rite Aid first filed for bankruptcy in October 2023 and received $3.45 billion in new financing to support its reorganization. The company emerged from Chapter 11 in September after slashing almost $2 billion in debt and closing hundreds of stores.

    Despite this downsizing, Rite Aid has “continued to face financial challenges” that have intensified as the retail and health-care sectors evolve, chief executive Matt Schroeder said in a statement, adding that the retailer will focus on keeping pharmacy service uninterrupted.

    Rite Aid’s October 2023 bankruptcy filing also allowed the company to resolve hundreds of lawsuits alleging that it unlawfully filled opioid prescriptions, a practice that fueled the nation’s opioid crisis, according to allegations by several cities, counties and states.

    The flood of litigation, which also targeted CVS and Walgreens, has resulted in more than $50 billion in settlements with state and local governments — upending the country’s three major pharmacy retailers.

    Those settlements come as traditional pharmacy companies also face rising competition from e-commerce giants such as Walmart and Amazon, which offer same-day prescription delivery. Walgreens announced last year that it would close a “significant portion” of its almost 9,000 U.S. locations and agreed last March to take itself private as part of an acquisition by private-equity firm Sycamore Partners.

    Meanwhile, CVS, the country’s largest national chain, announced in 2021 that it would shutter 900 stores over three years and outlined plans last October to lay off almost 3,000 employees to cut costs.

    Rite Aid, the third-largest national stand-alone pharmacy chain, has about 1,200 stores, according to its website. The Philadelphia-based retailer has closed more than 1,000 stores since its 2023 bankruptcy filing. Most recently, it said it would shutter all of its stores in Michigan and all but four stores in Ohio by the end of September.

    Rite Aid is the latest in a string of retail bankruptcies in the past year, with Forever 21, Joann, Party City and Big Lots all recently filing for Chapter 11 protection. Coresight Research in December projected that more than 7,300 store locations would shutter by the end of 2024, compared with about 5,500 in 2023. Bankruptcies in the sector this past year almost doubled.

  • Johnson & Johnson Adjusts Its AI Strategy

    Johnson & Johnson Adjusts Its AI Strategy

    Johnson & Johnson has shifted its generative AI strategy away from broad experimentation across the healthcare conglomerate to a more focused approach.

    Chief Information Officer Jim Swanson said the move ensures that the company allocates resources only to the highest-value generative AI use cases, while it cuts projects that are redundant or simply not working, or where a technology other than GenAI works better.

    “That was a pivot we made after about a year of learning,” Swanson said. “Now we’ve moved from the thousand flowers to a really prioritized focus on GenAI.”The “thousand flowers” approach involved a number of use case ideas germinating from across the company, which made their way through a centralized governance board. At one point, employees were pursuing nearly 900 individual use cases, many that were redundant or simply didn’t work, he said. And as the company tracked the broad value of AI, including generative AI, data science and intelligent automation, it found that only 10% to 15% of use cases were driving about 80% of the value, he added.

    Now J&J is drilling down into high-value generative AI use cases around drug discovery and supply chains, as well as an internal chatbot to answer questions on company policy.

    “We’re prioritizing, we’re scaling, we’re looking at the things that make the most sense,” he said. “That was part of the maturation process we went through.”

    Since ChatGPT’s 2022 debut, companies have been grappling with where and how to start applying generative AI. Many, including J&J, encouraged experimentation, a strategy that set employees up to learn and test the technology and build applications that could see wider adoption across the enterprise.

    Yet in some cases, they are finding that too much experimentation can be at odds with actually finding business value and as a result are looking to forge a new strategy

    J&J began its pivot last year, removing a centralized governance board responsible for vetting employee GenAI ideas. It then distributed governance responsibilities to various corporate functions, including commercial, supply chain and research, that had a better handle on whether the use cases were actually driving value in their area. Those groups were able to shut down or consolidate redundant use cases and focus resources into the ones that were working.

    One example that is working is a “Rep Copilot,” which helps coach sales representatives on how to engage with healthcare professionals about new treatments. The company is piloting this in its Innovative Medicine business segment, which develops new treatments for oncology and other areas, and is now working to expand that pilot to its MedTech segment, which sells robotics and hardware like hip replacements and lenses.

    GenAI also is being used for an internal chatbot that ingests information about company policies and benefits to help reduce the some 10 million interactions employees have every year with the services team.

    In drug discovery, the company is looking at whether GenAI can help researchers find the optimal moment to add a solvent to turn a liquid molecule into a solid. Swanson said J&J also is testing how AI can help identify and mitigate supply-chain risks, including the impact of a shortage of a given raw material.

    The company is tracking progress in three buckets: first, the ability to successfully deploy and implement use cases; second, how widely they are adopted; and third, the extent to which they deliver on business outcomes.

    Swanson said the broad experimentation phase was necessary to learn about the technology and what it was good at. “You had to take an iterative approach to say, ‘Where are these technologies useful and where are they not?’ And I’m still a believer that there’s a lot more hype than there is substance,” he said.

    “We had the right plan three years ago, but we matured our plan based on three years of understanding,” he said. “This is the better way to run now.”