May the thinnest (prices) win?

Our goal with The Daily Brief is to simplify the biggest stories in the Indian markets and help you understand what they mean. We won’t just tell you what happened, we’ll tell you why and how too. We do this show in both formats: video and audio. This piece curates the stories that we talk about. You can listen to the podcast on Spotify, Apple Podcasts, or wherever you get your podcasts and watch the videos on YouTube. You can also watch The Daily Brief in Hindi. In today’s edition of The Daily Brief: May the thinnest (margins) win? How do stronger patents impact Indian exporters? At Markets, we’ve spoken about the ticking time bomb of the semaglutide patent expiring plenty of times in the past year. Now that the bomb has gone off, so has the potentiality of a war. A price war. A few weeks ago, Novo Nordisk cut the price of its blockbuster drugs in India by up to 48%. Ozempic, which had been selling for between ₹8,800 and ₹11,175 a month, suddenly costs a fraction of that. Some versions of the same molecule are now available in India for ₹1,290 a month — a 90 percent price collapse, in a matter of weeks. Novo Nordisk didn’t decide to be generous, though. They were forced to. Its key Indian patent on semaglutide — the molecule behind Ozempic and Wegovy — expired on March 20th. And Indian pharma firms, who had been counting down to this date for years, flooded the market days. Dr. Reddy’s launched on Day 1, followed by Mankind, Zydus, Natco, and Glenmark. India has followed this playbook for varieties of medicines, from cancer drugs to antibiotics — wait for a patent to expire, make the molecule cheaper, sell it to the world. It’s how we became the pharmacy of the world. Today, India supplies ~40% of US generic drug volume. So does this mean India has disrupted the GLP-1 market? Have we successfully made the world’s hottest drug — which singlehandedly minted billions for its makers — a cheap generic? Well, that story is a little more complicated than just saying “yes, we did.” Let’s start with why semaglutide has always been hard to copy. The GLP-1 hormone that semaglutide mimics is something your body already makes naturally. Every time you finish a meal, your gut releases a burst of GLP-1 — a tiny molecular signal that tells your brain you’re full and your pancreas to release insulin. Scientists identified it in the 1980s and immediately saw the therapeutic potential. The problem was brutal and simple: natural GLP-1 breaks down in your bloodstream in about two minutes. A drug that vanishes in two minutes is not a drug. Novo Nordisk’s chemists solved this with two modifications to the natural molecule. First, they swapped one amino acid in the chain for a synthetic variant that the body’s enzymes struggle to break apart, reinforcing the molecule’s most vulnerable point. Secondly, they attached a long fatty acid tail to a specific location. It causes the molecule to latch onto a protein called albumin that floats abundantly in human blood. Albumin is large, stable, and the body’s filtering systems leave it alone. Semaglutide, hitching a ride on albumin, survives for roughly a week. Those two modifications turned a hormone that lasts two minutes into a drug worth $40 billion a year. They also turned what might have been a straightforward generic target into something with nearly 600 atoms that all have to be in exactly the right place. After all, if you change one amino acid, the molecule might not bind to its receptor at all. If you alter the fatty acid tail, the albumin camouflage breaks and the drug disappears in hours. Even the slightest of errors in three-dimensional geometry — something that might look fine in a basic chemical analysis — and you end up with something that looks like semaglutide on paper but behaves completely differently in a human body. In contrast, aspirin just has 21 atoms, which makes it far easier to copy. Making a generic version of semaglutide is something else entirely. Even if you theoretically copied the design, how would you ensure that every unit of that design is manufactured perfectly? The process for making semaglutide is called solid-phase peptide synthesis. You build the molecule’s amino acid chain one unit at a time, coupling each new unit to the growing chain through a sequence of chemical reactions. Each reaction requires specific toxic solvents at every step — these solvents have no easy substitutes. The waste generated in making one kilogram of semaglutide API weighs up to 14,000 kg. A standard small-molecule generic, in contrast, generates about 300 kilograms per kilogram of drug. Each coupling step has a small failure rate. Even at 99 percent efficiency per step across 31 steps (and that’s a tall ask), only about 73 percent of the chains you’re building come out correctly in theory. That’s an incredulously high accuracy benchmark to meet. Additionally, in practice, state-of-the-art synthesis achieves around 57% purity. That implies that nearly half of what you make is impure in some way, and has to be separated out through rounds of expensive purification. Plus, the infrastructure for all of this — the synthesis reactors, the high-pressure purification systems, the sterile fill-finish lines — is not what India’s generics industry was built on. Despite all that complexity, Indian companies did build the capability. Dr. Reddy’s spent years developing peptide synthesis capacity from scratch — API manufacturing, sterile formulation, and a proprietary injectable pen device, all in-house at its Vizag facility. It launched its own offering, Obeda, on Day 1. Zydus became a manufacturing partner for Lupin and Torrent. Mankind launched with its reach into smaller cities and towns. No one wanted to miss the first day of the impending gold rush. But then came Canada. Canada is one of the first major Western markets where semaglutide patents had already lapsed/ When Dr. Reddy’s filed to sell its generic there, Health Canada asked both Dr. Reddy’s and Sandoz to provide additional data before their applications could proceed. They couldn’t, and now their launch is pushed down the line. Now, this isn’t business as usual. It doesn’t happen with standard generics. For a small-molecule drug, proving bioequivalence — that your version delivers the same drug at the same rate into the bloodstream — is a well-worn regulatory path. But peptide drugs like semaglutide are different. Health Canada describes these as “complex synthetic products” with “possible differences that could impact safety and efficacy” — meaning regulators need to scrutinise not just whether the molecule is present, but whether subtle differences in how it was made, its impurity profile, or its three-dimensional structure could make it behave differently in patients. Indian and Canadian approvals clearly have different regulatory bars. India, Canada, Brazil, China, Turkey — these are the markets where semaglutide is going generic in 2026. Together, they represent a huge share of the world’s population, and an enormous burden of diabetes and obesity. And these markets are indeed already subject to deflation in the price of the drug. real. In February, Novo Nordisk warned analysts its revenues could fall by 5-13% this year because of these expirations. But here is what Novo Nordisk’s revenue actually looks like. India’s GLP-1 market was worth ~$110 million in 2024. Novo Nordisk’s global GLP-1 revenues last year were over $40 billion — almost entirely from the US and Europe, where patients or their insurers pay $700 to $1,000 a month and have no cheaper option. The Indian market is roughly 0.3 percent of global GLP-1 revenues. The US patent doesn’t expire until 2032, lending Novo Nordisk 6 more years of exclusivity in the market that drives the vast majority of their semaglutide revenues. What’s more, while Indian companies were spending years building the capability to manufacture semaglutide, something was already happening in the market they were building to…