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biotech/news//MarketScreener
"Compounding" refers to the personalized preparation of a medication for a patient by a pharmacist or a specialized pharmacy.
The FDA has issued a draft regulation to ban 503B outsourcing facilities from supplying GLP-1s.
KEY POINTS
Implementation of this 503B ban is not expected until mid-2027 if the rule is finalized.
Most compounding of GLP-1s continues under the 503A exemption, which is harder to regulate.
Compounded GLP-1s dropped from 30% to 15% market share and could halve again next year.
To begin, the term "compounding" refers to the personalized preparation of a medication for a patient by a pharmacist or a specialized pharmacy. This segment of the healthcare sector, particularly regarding GLP-1s (hormones that play a key role in regulating blood sugar and appetite), is significant for major pharmaceutical groups like Novo Nordisk as it represents direct competition.
During shortages of branded GLP-1s, compounding pharmacies managed to capture a considerable market share in this space, although this has since receded slightly. Pharma giants such as Novo Nordisk and Eli Lilly viewed this as a risk and have intensified price competition to reclaim lost market share.
A Jefferies Conference Call
For this discussion, the American investment bank invited David Tolman, a consultant and former Vice President and General Counsel at Novartis Oncology. Tolman indicated that pressure from the US Food and Drug Administration (FDA) is intensifying, though it is merely accelerating a transition that was already underway.
The FDA has issued a draft regulation that would effectively prohibit 503B outsourcing facilities (large-scale compounding sites) from supplying GLP-1s. However, implementation is not expected until mid-2027 if finalized, meaning short-term disruptions should remain limited.
The majority of compounding currently occurs under the 503A exemption (traditional pharmacy preparations), which is more difficult to restrict. Nevertheless, regulators are increasingly questioning whether high-volume telemedicine models truly meet an individualized medical need.
According to the Jefferies call, while compounded GLP-1 volumes have fallen from approximately 30% at the peak of the crisis to around 15% today, they could be halved again next year due to regulatory oversight, legal risk, and price competition from branded drugs. However, it is unlikely that this market will disappear in the short term.
Jefferies maintains its Hold rating on Novo Nordisk shares, with a target price of DKK 270.