SHANGHAI, China: China will begin reimbursing Eli Lilly's blockbuster drug Mounjaro for type 2 diabetes from January 1, widening access to the therapy in one of the world's largest healthcare markets and intensifying competition in a fast-growing drug class, the National Healthcare Security Administration said on December 7.

Placement on China's state-run health insurance list typically boosts use of a medicine across the country's 1.4 billion population, though increased volumes often come with significant price cuts negotiated with the government.

Mounjaro, a once-weekly injectable therapy, entered China in January following the launch of Danish drugmaker Novo Nordisk's Ozempic in 2021. Ozempic was added to China's reimbursement list in 2022, and its sales in the greater China region rose to 5.76 billion Danish crowns (US$898.5 million) in 2024, according to Novo's annual report.

Lilly did not immediately respond to questions about the price negotiated for Mounjaro under the reimbursement scheme.

Analysts at Macquarie Capital said the addition of Mounjaro could pull market share from Novo and from Innovent Biologics, another drugmaker selling diabetes and obesity treatments in China.

"Even if approved and reimbursed only for diabetes, Chinese patients are too smart. Tirzepatide will be used off-label for obesity," Tony Ren, Macquarie's head of Asia healthcare research, told Reuters.

In China, Mounjaro is also approved to treat obesity and obstructive sleep apnea. Its expected price drop may ripple through the entire GLP-1 class, Jefferies analyst Cui said, potentially affecting Innovent's pricing strategy for its drug Mazdutide.

Shares of Innovent Biologics, which sells Mazdutide in China, fell eight percent on December 8.

Eli Lilly executives have previously flagged strong early demand for Mounjaro in markets outside the United States. In an October earnings call, Patrik Jonsson, Lilly's international president, said the company saw "initial stocking" in countries where it launched the drug, with China, Brazil, Mexico, and India standing out.

"Since then, we have seen a lift in the performance, also in those markets in Q3 and a continued powerful performance globally," he said.