Bloomberg Intelligence Podcast

Episode: Novo Undercuts Lilly’s Obesity Drug Price for Cash-Pay in US

Date: November 17, 2025
Hosts: Scarlet Fu and Paul Sweeney
Guests: Michael Shy (Bloomberg Intelligence Sr. Pharma/Biotech Analyst), Leanna Baker (Managing Editor, Deals Team), Mary Ross Gilbert (Sr. Retail Analyst), Michael Halen (Sr. Restaurant Analyst)

Episode Overview

This episode focuses on pivotal changes in the U.S. obesity drug market, specifically Novo Nordisk’s move to undercut Eli Lilly’s GLP-1 obesity drug pricing for cash-pay patients. The hosts analyze industry competition, market penetration, and the broader impacts of White House policies on pricing. Additional segments cover M&A news in the packaging sector, trends among apparel retailers during the holiday season, and the current state of the restaurant industry.

1. Novo Nordisk vs. Eli Lilly: Obesity Drug Price Battle

(01:33–07:39)

Main Points & Insights

• Novo Nordisk Reduces Obesity Drug Prices:

  • Novo is reducing starter doses of its GLP-1 obesity drug to $200/month, with subsequent doses at $350/month, making them about $100 cheaper per dose than Lilly's comparable products.
  • Move is strategic, targeting cash-pay patients to compete for new patient starts.

    “They're undercutting [Lilly] by about, you know, $100 at each dose. And this is basically a ploy to compete for new patient starts.”
    — Michael Shy, 02:42

• White House Deal Context:

  • Both companies have worked with the White House on overall price reduction; Novo’s move is “ahead of the White House deal.”
  • The reduced prices align with government-stated aims but are an immediate market maneuver.

• Competitive Landscape:

  • Despite Novo’s move, Lilly’s product is still considered more effective in weight loss and is executing better on launches.
  • Contrasting Q3 results show Lilly ahead.

• Market Penetration and Sensitivity:

  • The obesity drug market is “highly price sensitive.”
  • Only low single digits of the addressable market are currently using anti-obesity drugs in the US, with lower rates abroad.
  • Government policy (e.g., Medicare PIL program in 2026 and Medicaid state-based changes) could enable millions more patients to access GLP-1 drugs.

    “The deal...can unlock, you know, 7 to 8 million patients. According to a White House statement...10% of Medicare beneficiaries would become eligible.”
    — Michael Shy, 03:45

• Compounded Drug Makers:

  • Lower branded drug prices are negative for companies like Hims & Hers making compounded copycats, as it narrows the cost gap.

    “Lowering down the price...would lessen the delta between copycats and branded treatments. So I guess it's a negative for...these compounded GLP1 drug makers.”
    — Michael Shy, 05:15

• Investment Perspective:

  • Pharma companies with obesity drug exposure are strongly outperforming those without, reflecting significant investor interest.
  • Obesity is seen as a key area for growth and pipeline replenishment due to patent cliffs approaching for other major drugs.

    “Obesity is obviously appealing given the size of the target population, how underpenetrated it currently is… There's high demand for these treatments.”
    — Michael Shy, 06:04

2. Pharma Sector M&A: Structural Trends

(06:52–07:39)

• Ongoing M&A Trend:
  • Consolidation and acquisitions remain central to big pharma strategy, with several big deals (e.g., Roche, Pfizer in the space).
  • Companies use M&A to diversify beyond core areas and replenish pipelines.
  • Model: Blend of in-house and external (biotech) innovation.

3. Packaging M&A: Sealed Air’s Takeout by CDR

(09:31–14:18)

Deal Overview

• CDR (Clayton, Dubilier & Rice) agrees to buy Sealed Air for $6.2B, marking one of the largest packaging deals recently.
• No premium: Acquisition is a “take under,” with shares trading below the offer price.

Key Discussion Points

• Private equity take-privates are increasing as IPO and public market exits remain difficult.
• Despite expectations, packaging M&A volume has been down compared to other industrial sectors.
• Fundraising is more challenging now due to higher interest rates and increased competition for investment dollars.
• If rates decline in 2026, leveraged buyout activity may pick up due to cheaper debt; this might revive sponsor returns and fundraising.
• Notable that seller, Sealed Air, used boutique bank Evercore as its sole advisor, reflecting their growing prominence.

4. Retail Trends—Holiday Shopping, Apparel Winners and Losers

(16:10–21:16)

Apparel Sector Highlights

• Winners:

  • Gap/Old Navy: Viral marketing and strong style drive momentum; expected to continue into 2026.
  • Aritzia: Rapid U.S. expansion, strong comp sales gains despite having under 70 stores stateside.
  • Off-price: TJX, Ross, Burlington see strength due to delivering branded products at value.
  • Dillard's: Strong Q3 comps (+3%) and margin performance linked to full-price selling strategy.

• Department Stores:

  • Macy’s shows improvement, particularly in e-commerce. Kohl’s continues to lag in assortments and overall sales.

• Abercrombie & Fitch:

  • The stock has fallen significantly; strength lies in the Hollister brand (Gen Z focus), not the Abercrombie namesake.

    “We're just not seeing the strength in the namesake brand. But in their Hollister brand, we are seeing strength...”
    — Mary Ross Gilbert, 19:31

• Sourcing and Margins:

  • Sourcing is shifting away from higher cost countries; margins expected to improve in H2 2026. Tariff impacts handled differently—Ralph Lauren stands out for maintaining strong margins at premium price points.

5. Restaurant Industry Update—Fine Dining Rebounds

(23:08–28:43)

State of the Sector

• Segment Performance:

  • Fine dining: Seeing a rebound, driven by high-income consumers’ confidence.
  • Quick Service (e.g., McDonald's): Struggled in H1 due to overshooting on price hikes, especially affecting low-income customers. Improved in H2 by revamping value offerings (e.g., McDonald’s $3 Snap Wraps).

    “Quick Service had a really difficult first half...they kind of lost their way when it came to value. They implemented too big of price increases...”
    — Michael Halen, 24:46

• Inflation & Input Costs:

  • Beef inflation running “mid teens” for Q4, disproportionately impacting burger chains and steakhouses with owner-operators (e.g., Shake Shack, Texas Roadhouse).
  • Franchised models like McDonald's buffer company financials from these cost pressures, as franchisees bear the brunt.

• Business Models—Franchise vs. Ownership:

  • Franchising leads to steadier, more predictable earnings (favored by analysts), but full ownership gives operational control—advantageous for experience-focused brands (e.g., Darden).

    “Franchising eliminates a lot of the operating leverage and thus the risk to your margins… If you are running a full service chain...you want to own and operate.”
    — Michael Halen, 27:41

6. Notable Quotes & Memorable Moments

• “This is basically a ploy to compete for new patient starts.”
  — Michael Shy, on Novo’s logic behind cutting prices (02:42)

• “Obesity is obviously appealing given the size of the target population, how underpenetrated it currently is.”
  — Michael Shy, on pharma M&A (06:04)

• “Fine dining had a really nice rebound...because they’re catering to higher income consumers who own assets and are feeling pretty good.”
  — Michael Halen, 23:33

• “Quick Service had a really difficult first half...they kind of lost their way when it came to value. They implemented too big of price increases...”
  — Michael Halen, 24:46

• “We're just not seeing the strength in the namesake brand. But in their Hollister brand, we are seeing strength.”
  — Mary Ross Gilbert, on Abercrombie & Fitch (19:31)

7. Timestamps & Key Segments

• Novo vs. Lilly Drug Pricing & Market Context: 01:33–07:39
• Pharma M&A Model: 06:52–07:39
• Sealed Air/Packaging M&A: 09:31–14:18
• Retail/Apparel State of Play: 16:10–21:16
• Restaurant Industry Trends: 23:08–28:43

Summary

• Novo’s price undercutting signals intensifying competition that could meaningfully expand the obesity drug market, but also pressure copycat and compounded drug makers.
• M&A activity in both pharma and packaging reflects defensive and opportunistic maneuvering to ensure pipeline growth and respond to macroeconomic uncertainty.
• The holiday retail landscape shows clear winners in value and full-price strategies, with apparel brands’ fates closely tied to marketing, assortment, and sourcing shifts.
• Restaurants show bifurcated fortunes: Fine dining and strategic quick-service pricing are bright spots, while input cost pressure remains a big concern.

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