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Investing.com -- Novo Nordisk (NYSE:NVO) and Eli Lilly (NYSE:LLY) shares fell more than 4% each in premarket trading on Friday following comments from President Trump a day earlier regarding potential price reductions for popular weight loss medications.
During a press conference, Trump specifically mentioned Ozempic, referring to it as "the fat loss drug" when asked about a $1,300 medication he had referenced earlier. When questioned if these drugs would cost $150 out of pocket, Trump responded, "They’ll be much lower. They’ll be much lower."
Dr. Mehmet Oz, who serves as the Administrator of the Centers for Medicare & Medicaid Services, clarified that negotiations for GLP-1 drugs, the category that includes Ozempic, have not yet begun.
"We’re going to be rolling these out over time. The GLP-1 category of drugs, which includes Ozempic, have not been negotiated yet," Oz stated.
While no specific timeline was provided for these negotiations, Trump indicated that prices would "come down pretty fast" and mentioned that alternatives exist. Oz added that negotiations would continue until the president is satisfied with the outcome.
The comments appear to have triggered investor concerns about potential revenue impacts for the two pharmaceutical giants that dominate the rapidly growing weight loss and diabetes drug market.
Both companies have seen substantial growth driven by their GLP-1 medications, which include Novo Nordisk’s Ozempic and Wegovy, and Eli Lilly’s Mounjaro and Zepbound.
Commenting on the news, JPMorgan analysts said they "see President Trump’s comments as in line with our expectations for the price negotiation related to Novo’s GLP-1 portfolio and see no downside to our numbers from the price points he mentioned, though to some in the market the price levels are lower than anticipated."
"The outcome of the price negotiations and the lower prices could also lead to a possible unlock of higher volumes given the potential for price elasticity of demand which is not in our forecasts," they added.
Separately, BMO Capital Markets analysts said the negative share price reactions in Eli Lilly and Novo Nordisk shares to Trump’s comments are "overdone."
"With insured individuals in the US already paying as low as $25/month for GLP-1 medications, we continue to view any ultimate negotiated MFN price as more of a headline risk versus a true fundamental change to Lilly and Novo’s businesses," they noted.
(Louis Juricic contributed to this report.)