Chinese Companies Pivot from Compounded Weight-Loss Drugs to Generics

Chinese companies, initially focused on producing generic versions of Novo Nordisk’s Wegovy, also supplied ingredients for a vast number of makeshift weight-loss drug doses sold online in the U.S. over the past two years. This occurred as regulators began to restrict the sale of these cheap copies of Wegovy and Eli Lilly’s Zepbound, slowing shipments from Chinese suppliers of the raw ingredients.

The shortage of the branded drugs created an opportunity for compounding pharmacies, amplified by telehealth firms, to supply cheaper alternatives. This shift towards FDA-approved generics follows a period of high demand for the branded drugs, which have demonstrated significant weight loss benefits.

At least eight Chinese companies, including Jiangsu Sinopep-Allsino Biopharmaceutical and Hybio Pharmaceutical, contributed to the influx of raw semaglutide and tirzepatide, the main ingredients in Wegovy and Zepbound, respectively. Some of these companies are now working to launch their own generic semaglutides.

U.S. law now limits compounding pharmacies to producing personalized doses or formulations not offered by the branded medicines. One Chinese manufacturer, for example, is now targeting markets where Novo’s main semaglutide patent is expiring to sell the ingredient to generic drugmakers.

The transition to generics is unlikely to replicate the explosive growth seen previously. The process of manufacturing semaglutide into its final, injectable form is complex. Additionally, companies seeking to sell generics may face delays due to deals with branded companies.

The compounding of weight-loss medicines during the shortage of branded drugs presented an unprecedented opportunity. In 2024 alone, the eight Chinese companies shipped enough raw material into the U.S. to produce over a billion starter doses of the blockbuster medicines.

However, in the second quarter of the year, shipments of semaglutide and tirzepatide significantly decreased. The economics for Chinese companies selling semaglutide to compounders were attractive, with a month's supply of powder costing little to produce but selling for a much higher price.

U.S. compounding pharmacies were selling the injectable drugs at significantly reduced prices compared to the branded versions. This has had a financial impact on Novo Nordisk, leading to missed sales targets and a change in leadership.

Some Chinese companies have started shipping more liraglutide, the main ingredient of an older Novo drug, into the U.S. Generic versions of liraglutide are now being promoted by online telehealth sites that previously focused on semaglutide.

The FDA is committed to overseeing the safety and quality of regulated products. The compounding of weight-loss drugs at such a large scale is likely a unique occurrence.