Ask AI · How Chinese pharmaceutical companies should respond to the red ocean competition of generic drugs?

Text | Feng Ye

Editor | Hu Miao

In 2023, inside a New York subway station, a huge advertisement hangs on the wall: someone is injecting an injection into what appears to be a bloated abdomen.

On the other side of the billboard, large characters proclaim, “Inject once a week to lose weight.”

This drug is the weight-loss magic tool that Elon Musk, the American entrepreneur, has repeatedly mentioned — semaglutide.

Originally used to treat type 2 diabetes, it was found in studies to significantly reduce appetite and weight. Soon, “miracle weight-loss drug” became its new label.

In 2022, Musk publicly stated that after using semaglutide, he lost 30 pounds (about 27 jin) with “very minimal side effects.” The “richest man”’s endorsement quickly ignited the global market, with initial doses of semaglutide reaching up to 1,700 yuan per pen, and shortages occurred. The original developer, Novo Nordisk, alone, achieved sales of $36.1 billion by 2025 based on it, with a market value once surpassing luxury giant LVMH, topping Europe’s “stock king.”

But this myth did not last long.

The frenzy of capital and markets fueled the enthusiasm of pharmaceutical R&D. Just as semaglutide was at its peak, more potent competitors like tirzepatide and maralizumab, new-generation weight-loss drugs, roared onto the scene, dividing the huge weight-loss market. Among them, tirzepatide surpassed semaglutide in 2025, with sales of $36.51B, becoming the “world’s drug king.”

To counter the competition, Novo Nordisk repeatedly reduced the price of semaglutide defensively, with some markets nearly halving the price. When market expectations cooled, pressure quickly transmitted upstream to raw material manufacturers. Starting in 2024, the raw material price of semaglutide continued to fall, with “a 50% drop last year, and an estimated further 40-50% decrease this year.” Investor Zhao Xuan, who has invested in multiple raw material factories for semaglutide, revealed.

On March 20, 2026, the core molecule patent for semaglutide in China officially expired, opening the door to generics. This also means a wave of imitation drugs is about to flood in, sharing a market worth hundreds of billions of dollars.

But when more than ten pharmaceutical companies, including Huadong Medicine and United Laboratories, hold approvals and rush into the field, they will find: there is no tempting cake before them, only a brutal red sea where original drugs actively cut prices to clear the market and are crushed by new-generation drug technologies.

A destined fierce breakout battle has already begun the moment entrants get their entry tickets.

Miracle drug, no longer miraculous

In the entertainment industry, using semaglutide for weight loss is now an open secret.

According to the American entertainment magazine Variety, in 2022, semaglutide nearly swept Hollywood, with influencers, celebrities, producers, and others privately praising Novo Nordisk’s Ozempic (the diabetes version of semaglutide).

The principle of this drug is not complicated: it can mimic the body’s natural hormone GLP-1, controlling blood sugar while transmitting “full” signals to the brain, thereby suppressing appetite and achieving weight loss.

Because of its remarkable weight-loss effect, this phenomenon-level product has led to the appearance of “Ozempic Face,” abbreviated as “Semagface,” referring to rapid loss of fat and muscle, resulting in skin sagging and facial hollowing. Some companies have even started targeted pharmaceutical research on this.

● Image source: Cleveland Clinic, USA

But side effects cannot stop people’s desire for a better figure. After becoming a hit, this miracle drug once faced shortages. In 2023, domestic supply of semaglutide was tight, with many diabetic patients claiming they couldn’t buy the drug. Although at that time, semaglutide had not yet been approved domestically for weight loss indications, a considerable number of users placed orders through online medical platforms, attempting to use it “off-label.” In 2024, Novo Nordisk’s Wegovy (the weight-loss version of semaglutide) was officially launched in China, with an initial price of about 1,400 yuan (for 1.5ml, 0.68mg/ml starting dose pen), which was quickly driven up to 1,700 yuan by channels, and frequently out of stock.

From 2021 to 2023, the annual sales of semaglutide skyrocketed from $5.88 billion to $21.2 billion, nearly quadrupling. Novo Nordisk’s market value also soared, surpassing LVMH for the first time in September 2023, and reaching a record high of about $650 billion in June 2024.

It’s clear that what truly boosted this pharmaceutical company’s valuation was not just the saturated diabetes market, but the unintended opening of the global weight-loss “Pandora’s box.” Semaglutide has made “weight loss” transcend traditional medical scenarios, becoming a super business targeting hundreds of millions of consumers. Market research firm Goldman Sachs predicts that by 2030, the market size for GLP-1 injectable weight-loss drugs will reach $95 billion.

This huge cake instantly ignited a global arms race among pharmaceutical companies. In 2022, Eli Lilly in the US approved tirzepatide, a diabetes and weight-loss drug that added GIP, a target that directly acts on adipose tissue, based on GLP-1. In simple terms, it has a stronger weight-loss effect. Semaglutide’s weight reduction is about 15%-18%, while tirzepatide can reach 22%. Eli Lilly is ambitious; its executives have publicly stated that their goal is “not just to offer another option,” but to “redefine the standards for obesity treatment.”

Meanwhile, Chinese pharmaceutical company Innovent Biologics teamed up with Eli Lilly to develop maralizumab. Besides weight loss and blood sugar reduction, it can also promote liver fat oxidation and metabolism, targeting the huge fatty liver population.

The successive launch of new drugs quickly shook semaglutide’s position.

A regional manager of a leading medical enterprise, Zhang Xiaodong, said: “Consumers only care about results.” He has tried both semaglutide and tirzepatide. “Tirzepatide’s appetite suppression is very obvious. Also, some men worry about side effects of semaglutide, like ED (erectile dysfunction).”

He also revealed that under the influence of new drugs, demand for semaglutide in private channels is shrinking rapidly. “A major private supplier in Southwest China, which used to sell 20,000 units a month, now sells less than 200.” Those involved in private channels are now switching to tirzepatide.

Elon Musk, who has long supported semaglutide, also revealed at the end of 2024 that he has switched to tirzepatide. By 2025, tirzepatide’s sales surpassed semaglutide, officially becoming the “world’s drug king.”

Additionally, tirzepatide was officially included in the medical insurance at the end of last year, with a reduced monthly fee from about 1,700 yuan to over 300 yuan. Although its approved indication is only for type 2 diabetes, the review is not strict, and weight-loss users can easily obtain it through online platforms, further eating into semaglutide’s market.

In February 2026, Novo Nordisk issued its 2026 performance guidance, estimating a 5%-13% decline in sales at fixed exchange rates, marking the first negative growth in nearly nine years. It specifically highlighted the pressure faced by “injectable GLP-1 (main component of semaglutide).” After the announcement, Novo Nordisk’s market value evaporated by over $100 billion in a single day. By early April, its total market cap had fallen below $1.7 trillion.

Meanwhile, another major shock is approaching. On March 20, 2026, the core molecule patent for semaglutide in China officially expired, with more than ten domestic pharmaceutical companies submitting applications for generic versions. The market pattern, once dominated by Novo Nordisk, is accelerating toward decentralization.

The unstoppable wave of generics

To counter the threat of competitors and the upcoming wave of generics, semaglutide has repeatedly cut prices in the second half of 2025.

At the end of last year, Novo Nordisk announced that in the US, the monthly fee for Ozempic and Rybelsus would be reduced to $199 for two months, then restored to $349. Compared to the previous price of up to $1,300, this is a significant drop. In China, procurement platforms in Yunnan and Sichuan showed that the price of Novo Nordisk’s generic had fallen by over 50%.

The online platform prices have also collapsed. The initial price of domestic Novo Nordisk’s injection was about 1,400 yuan, but now the online price is even lower than the original wholesale price. Zhang Xiaodong revealed: “On Meituan and JD, the procurement price is about 180 yuan, and the selling price is 230 yuan.”

Market pressure has already propagated upstream. Zhao Xuan said that since 2024, the raw material price of semaglutide has been falling steadily, with “a 50% drop last year, and an estimated further 40-50% decrease this year.”

This change mainly results from supply and demand reversal. Over the past two years, as the semaglutide market rapidly expanded, upstream raw material factories increased capacity sharply. Public data shows that “capacity king” Puli Pharmaceutical’s synthetic biology-based semaglutide production line (12-ton fermentation scale) entered trial production in 2025, with plans to further expand to 50 tons/year.

Meanwhile, as the technical barriers to raw material production have been gradually overcome, more companies have entered, intensifying competition. “Some companies that weren’t in pharmaceuticals before are now participating,” Zhao Xuan said.

When terminal demand for semaglutide slows down and capacity is already heavily released, raw material prices naturally decline. “In the long run, there might even be oversupply, leading to price wars among raw material producers,” Zhao Xuan judged.

However, the falling raw material prices have not eroded much of the high profits in the production chain. Thanks to improved efficiency and optimized synthesis processes, raw material companies have significantly increased batch yields, reducing fixed costs. “For example, they used to produce only 6 kg per batch, now they can do 8 kg; or reaction tanks have been expanded from 150 liters to 250 liters, naturally lowering unit costs.”

Zhao Xuan revealed that industry gross profit margins have declined but remain high. “These raw material companies used to have gross margins around 70%, and now, they’re still very high—50-60%. That’s a conservative estimate.”

For pharmaceutical companies, profit margins are even more astonishing. Zhao Xuan said that current raw material prices are about 2,000–3,000 yuan per 1,000 mg. For example, a 1.5ml (0.68mg/ml) dose of Novo Nordisk’s product contains about 1.02 mg of active ingredient. Calculating this, the raw material cost for one dose is only about 2-3 yuan (excluding injection device, filling, packaging, etc.). Meanwhile, the monthly treatment cost of semaglutide is usually hundreds to over a thousand yuan. Zhao Xuan said the net profit margin for the injection is over 90%.

● Image source: Internet

This explains why, even after the miracle drug halo of semaglutide fades, many companies are still rushing into generic production.

On one hand, no one wants to give up high profit margins and the proven trillion-dollar market. From a cost perspective, generics can also save a lot of R&D expenses. Pharmaceutical executive Liu Siming revealed that the R&D of original drugs follows the “double ten laws”: ten years of development, and a billion dollars in costs. Since generics do not need to bear early R&D and large-scale experimental costs, they can often save hundreds of millions of dollars.

On the other hand, companies that want to produce generics have already laid out production lines three to five years before the patent expiration of semaglutide, or even earlier. After investing heavily, withdrawing would mean high sunk costs. “(Generic companies) are like sitting on a ship that can’t turn back,” Zhang Xiaodong said.

Now, Huadong Medicine, United Laboratories, Qilu Pharmaceutical, and more than ten other companies have submitted registration applications, just waiting for final approval.

It is foreseeable that after generics enter the market, price wars will be unavoidable.

From a business strategy perspective, future generics are likely to adopt a “low price for volume” approach: initially, they will use low prices to open up the market, then leverage scale effects to reduce costs and support factory operations. Zhang Xiaodong believes, “Maybe only two or three large companies have the strength to fight this consumption war.” For smaller firms, even if initial profits are modest, they have no choice but to follow—because idle production lines will incur even more fixed costs.

Moreover, market stratification may become key. Liu Siming believes that the early price reduction of the original semaglutide has indeed squeezed the space for generics—especially in first- and second-tier cities, where consumers can directly buy the original drug and are less sensitive to price. But in third- and fourth-tier cities, the low-price advantage of generics can be amplified if they penetrate the sinking market, even activating a huge new user base previously unable to afford the original.

The next round of competition for semaglutide

As semaglutide retreats step by step in fierce price and efficacy battles, the real test for Chinese generic companies with approvals and upcoming market entry is just beginning. They are no longer fighting for the throne of the “miracle drug,” but seeking their own survival niches in a shrinking, pre-empted market.

Currently, most applications for generic semaglutide in China are for the “type 2 diabetes” indication. But some companies are also advancing clinical trials and applications for weight-loss indications, such as Jiuyuan Genetics, Livzon Pharmaceutical, CSPC Pharmaceutical, and Han Yu Pharmaceutical. Among them, Jiuyuan Genetics’ application for approval of semaglutide for weight loss has been officially accepted by the drug administration and is in review.

It is expected that this year, more domestic companies will submit applications for weight-loss indications.

Liu Siming believes that because the weight-loss market is huge and consumers are willing to pay, even if the generic drug is approved only for diabetes, it is very likely to be used “off-label” in circulation.

Getting semaglutide domestically is not difficult. Some online medical platforms only require users to fill in previous diagnosis information, then quickly issue electronic prescriptions and sell the drug. These platforms often do not require offline diagnosis proof. Therefore, for generic companies, expanding online and private channels under compliance will be a key battlefield alongside hospitals.

Zhao Xuan speculates that oral formulations might be the next battleground for generics.

Although Novo Nordisk’s original oral semaglutide (Noveoglit) was launched in China last year, domestic generics are still limited to injections. Compared to cold chain transportation and invasive injections, oral forms are easier to store and carry, making it easier for users to develop habits. If a company can break through first, it could gain a head start.

However, because oral formulations need to release the drug in the stomach, the technical requirements are higher, and approval cycles can take 3-5 years. Zhang Xiaodong sees betting on oral generics as a gamble against time: “I don’t think the lifecycle of semaglutide will be that long.”

It’s worth noting that the intensifying competition around semaglutide is bringing side effects to the market.

● On a certain B2B platform, searching “GLP-1” already shows vendors offering one-stop pharmaceutical services. Image source: Internet

Zhao Xuan observed that, due to the continuous release and price decline of upstream raw materials, some raw materials are spilling over through unofficial channels, and there are cases of illegal procurement and patent infringement. In 2023, authorities seized a cosmetics manufacturer that contacted raw material suppliers and packaged products containing semaglutide as cosmetics for sale. This was the first case in China of illegal production and sale of semaglutide injections.

“It’s definitely illegal, but it’s impossible to catch them all—there are too many,” Zhao Xuan said. Driven by profit, this gray chain is hard to eliminate completely.

Although the market prospects for semaglutide are narrowing, the “obesity economy” it has triggered remains an expanding business.

Over the past two decades, the overweight and obesity rate among Chinese adults has continued to rise. A study published in The Lancet sub-journal shows that from 2004 to 2023, the rate increased from 30.1% to 56.9%, nearly doubling. Coupled with body image anxiety and health management needs, weight-loss drugs carry both serious medical value and consumer healthcare attributes, forming a broader market space.

Currently, the weight-loss drug market is still in a rapid growth phase, transitioning from centered on a single miracle drug to a landscape of innovative drugs blooming. It is reported that Novo Nordisk is continuously advancing new drug development. On March 25, they announced that the new generation of weight-loss drug “UBT251” showed positive progress in phase II trials for glucose reduction, with results indicating better weight control than semaglutide.

Eli Lilly is also pushing forward clinical research on oral weight-loss drug orforglipron. A doctor from a top-tier hospital who has long used semaglutide told Jingxiang Studio that he participated in phase III clinical trials of orforglipron, “It’s quite rewarding; not only is the weight loss effect definite, but there are also obvious improvements in uric acid, blood lipids, and overall metabolic profiles.”

These cases reveal an industry rule: semaglutide may become a thing of the past, but innovators with strong iterative capabilities will not.

The reason why generics are expected to fall into a red ocean is that their competition logic is locked into “follow and copy,” which is usually three to five years behind the market. When new drugs become the market’s new favorites, generic companies are still waiting for the previous patent wall to fall, “taking over” a saturated market with sluggish growth and thin profits.

Ultimately, in this long-term battle over human weight and health, the only moat is the continuous ability to innovate. For Chinese pharmaceutical companies, the biggest lesson from semaglutide is that they must move from the “follower’s” comfort zone into the “innovator’s” deep water. Only by betting on the next generation can they transcend cycles and avoid a pointless consumption war in the afterglow of the previous miracle drug.

(Interviewees are all pseudonyms)

Cover source: Remote Medical Enterprise RO

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