Oramed Pharmaceuticals Inc. (ORMP): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at Oramed Pharmaceuticals Inc. right now, trying to figure out if this pivot from a pure-play oral insulin developer to a platform technology story makes sense, especially after seeing that $65.0 million net income from investments in the first nine months of 2025-a stark contrast to the $4.4 million spent on R&D. Honestly, the market is brutal; you've got giants like Novo Nordisk and Eli Lilly dominating the diabetes space, and your lead product is still stuck in a small trial while proven injectables are everywhere. To truly see where Oramed Pharmaceuticals Inc. stands-balancing that strong investment income against the high threat of substitutes and intense rivalry-you need a clear map of the competitive battlefield. Below, we break down Porter's Five Forces to show you the real leverage points and the defintely tough spots ahead.

Oramed Pharmaceuticals Inc. (ORMP) - Porter's Five Forces: Bargaining power of suppliers

The bargaining power of suppliers for Oramed Pharmaceuticals Inc. (ORMP) is a nuanced calculation, heavily influenced by the proprietary nature of its core delivery system versus the commodity status of its active pharmaceutical ingredients (APIs).

Suppliers of protease-inhibiting materials hold moderate power due to the proprietary nature of the POD™ technology's key components. Oramed Pharmaceuticals Inc.'s novel Protein Oral Delivery (POD™) technology relies on a capsule featuring a highly protective coating and specialized protease inhibitors to shield the drug from the gastrointestinal tract and enhance absorption. The specialized nature of these components, which are integral to the technology's function, grants those specific material suppliers a degree of leverage over Oramed Pharmaceuticals Inc.

Reliance on specialized Contract Manufacturing Organizations (CMOs) for complex capsule production increases supplier leverage. This reliance is formalized through the joint venture structure established in February 2025 with Hefei Tianhui Biotech Co., Ltd. (HTIT) to form OraTech Pharmaceuticals Inc. As part of this arrangement, HTIT is designated to provide a supply agreement for oral insulin capsules, indicating a concentrated source for a critical manufacturing step. This structural dependence elevates the power of this key manufacturing partner.

The company's low R&D spend suggests limited internal vertical integration capacity, meaning Oramed Pharmaceuticals Inc. must rely externally for specialized manufacturing and material sourcing. For the nine months ended September 30, 2025, Oramed Pharmaceuticals Inc.'s reported Research & Development (R&D) expenses were $4.4 million, a decrease from $4.9 million in the prior comparable period. This relatively low figure, especially when compared to the $65.0 million pre-tax net income reported for the same nine-month period, underscores a strategy focused on external development and manufacturing partnerships rather than internalizing complex production processes. You see the math: spending less on internal R&D often means you have less in-house capability to switch suppliers.

To put the operational investment into context, here is a look at key financial and partnership capital figures as of late 2025:

Conversely, the bargaining power of suppliers for the active pharmaceutical ingredient (API) is significantly lower. Insulin and GLP-1 peptide raw materials, which are the core drug substances for Oramed Pharmaceuticals Inc.'s pipeline assets like ORMD-0801 (oral insulin), are largely commoditized within the broader pharmaceutical market. This commoditization means Oramed Pharmaceuticals Inc. can likely source these APIs from multiple vendors, which inherently reduces the leverage any single API supplier can exert.

Key factors influencing supplier power include:

• Proprietary component suppliers have moderate leverage.
• CMO for complex capsule production has increased leverage.
• API suppliers for insulin/GLP-1 have low leverage.
• Low R&D spend limits internal substitution options.

Finance: draft a sensitivity analysis on the impact of a 10% cost increase from the primary capsule CMO by next Tuesday.

Oramed Pharmaceuticals Inc. (ORMP) - Porter's Five Forces: Bargaining power of customers

For Oramed Pharmaceuticals Inc. (ORMP), the bargaining power of customers-which includes payers like Pharmacy Benefit Managers (PBMs) and insurers, as well as prescribers and patients-is significantly elevated. This is a direct consequence of the high-cost, high-risk nature inherent in bringing novel therapies to market in the diabetes space.

Payers exert extreme pressure on Oramed Pharmaceuticals Inc. (ORMP) and its competitors. They demand rigorous proof of clinical superiority and, critically, cost-effectiveness when weighing oral therapies against established injectable treatments. This dynamic is magnified by the sheer size of the market they control. The global diabetes drug market surpassed $80 billion in 2025, with some estimates placing the market size as high as $101.48 billion for the same year, giving customers many alternatives to choose from.

Patient switching costs present a mixed picture. Moving from a burdensome injectable regimen to a convenient oral capsule, which Oramed Pharmaceuticals Inc. (ORMP) aims to provide, represents a clear, high-value benefit for the patient, suggesting low switching costs to the oral product. However, once a patient is on an oral therapy, switching between competing oral therapies remains easy, keeping pressure on Oramed Pharmaceuticals Inc. (ORMP) to maintain competitive value.

Political and regulatory actions are actively capping potential pricing power. You are seeing this play out in real time with the major GLP-1 players. For instance, recent political agreements aim to cap future oral GLP-1 prices for government programs. The established injectable GLP-1s currently command list prices between $1,000 and $1,350 per month before insurance, with patient out-of-pocket costs sometimes reaching $500 to over $1,000 monthly without coverage. In contrast, new government deals have slashed prices for existing drugs to as low as $150/month or set Medicare prices at $245/month, with patient copays as low as $50 per month for approved uses. This sets a very aggressive benchmark for any new entrant like Oramed Pharmaceuticals Inc. (ORMP).

The consolidation among PBMs is a major factor driving customer power. These entities aggregate the purchasing power of millions, forcing manufacturers to compete aggressively on net price. Consider the market structure:

The power of these large payers means Oramed Pharmaceuticals Inc. (ORMP) must demonstrate clear value beyond just the oral route. They need to show superior efficacy or a significantly lower net cost to secure favorable formulary placement against entrenched competitors. The PBM landscape is dominated by a few major players-CVS Caremark, Express Scripts, and OptumRx-who collectively manage nearly 80% of prescription drug claims in the United States. This concentration means Oramed Pharmaceuticals Inc. (ORMP) is negotiating with very few, very powerful entities.

The key demands from these powerful customers can be summarized as follows:

• Demonstrate clinical superiority over existing injectables.
• Prove significant cost-effectiveness to payers.
• Accept pricing that aligns with government-negotiated caps.
• Offer deep rebates to secure preferred formulary tiers.
• Ensure low patient copays, often below $50 per month.

To counter this, Oramed Pharmaceuticals Inc. (ORMP) must leverage its platform technology. The company reported a strong balance sheet as of September 30, 2025, with total assets reaching $220.5 million and a net income of $65.0 million for the preceding nine months, providing capital to support aggressive contracting strategies. You need to ensure that the value proposition of an oral drug delivery platform translates into a net price that payers cannot ignore, even with the competitive pressure from generics and biosimilars entering the market soon after 2026.

Oramed Pharmaceuticals Inc. (ORMP) - Porter's Five Forces: Competitive rivalry

You're looking at the competitive landscape for Oramed Pharmaceuticals Inc. (ORMP), and honestly, the rivalry force is maxed out. This isn't a niche fight; it's a heavyweight bout dominated by pharmaceutical giants. We're talking about Novo Nordisk and Eli Lilly, companies with market capitalizations that dwarf Oramed Pharmaceuticals Inc.'s total assets of $220.5 million as of September 30, 2025.

The core issue is that the established players already own the oral space Oramed Pharmaceuticals Inc. is targeting. Novo Nordisk has Rybelsus, their oral semaglutide, which generated DKK 11.3 billion (or about USD $1.7 billion) in sales in the first half of 2025. That's a massive, established revenue stream they are defending.

To be fair, the competition isn't just resting on current sales; they are aggressively advancing next-generation oral therapies. Eli Lilly plans to submit its oral GLP-1 candidate, orforglipron, for regulatory approval by the end of 2025, targeting a potential 2026 market launch. This candidate showed an average weight loss of 11.9% in a 72-week study. This pipeline threat is immediate, not theoretical.

Here's a quick comparison of how the established oral GLP-1 players are performing in the first half of 2025, which shows the scale of the challenge:

Meanwhile, Oramed Pharmaceuticals Inc.'s lead candidate, ORMD-0801, is still navigating the late-stage clinical path, though the company announced it submitted FDA protocols for two pivotal Phase III studies in October 2025. This is a significant step, but it contrasts sharply with the commercial reality of competitors. The prompt suggests a small 60-patient US trial for a high-responder subgroup, which, if true, represents a much smaller, more focused development effort compared to the multi-thousand-patient pivotal trials run by the giants.

The market itself is a battleground across several drug classes, not just oral GLP-1s. You have to factor in the established injectable GLP-1s, the SGLT2 inhibitors, and the newer dual-agonists like Eli Lilly's Mounjaro and Zepbound, which are showing superior efficacy data.

• Injectable GLP-1s still command the largest segment share.
• Dual-agonists are rapidly gaining traction due to better efficacy.
• SGLT2 inhibitors offer alternative mechanisms for glycemic control.
• The overall GLP-1 analogues market is projected to reach USD 66.48 billion in 2025.

The intensity is reflected in the stock market, too; Novo Nordisk shares plunged nearly 10% in premarket trading on November 24, 2025, extending a year-to-date decline of over 50% amid this competitive pressure. Oramed Pharmaceuticals Inc. is trying to break into a market where incumbents are fighting fiercely and where even the leaders are seeing stock volatility due to competitive dynamics.

Oramed Pharmaceuticals Inc. (ORMP) - Porter's Five Forces: Threat of substitutes

The threat of substitutes for Oramed Pharmaceuticals Inc. is high and immediate. You are competing against treatments that are not just alternatives; they are the established, dominant market standards for diabetes management right now. The core challenge is that patients and prescribers are deeply familiar with these existing options, which have proven efficacy and established reimbursement pathways.

Injectable insulin and the newer class of GLP-1 agonists represent the most formidable substitutes. The sheer scale of their market penetration underscores this threat. The global insulin market, for instance, was valued at approximately USD 33.81 billion in 2025. Within this, the segment for insulin analogs-the lab-made versions-already generated over 82% of the revenue share in 2024.

The GLP-1 agonist space is experiencing explosive growth, directly challenging any new peptide therapy Oramed Pharmaceuticals Inc. might introduce. Eli Lilly's tirzepatide franchise (Mounjaro/Zepbound) hit $24.8 billion in revenue in the first nine months of 2025. Novo Nordisk's GLP-1 drugs, including Ozempic, saw sales growth slow to 8% in the first half of 2025, down from 21% the prior year, largely due to competition from Mounjaro and compounded versions. Novo Nordisk's total sales for its diabetes care segment (including Ozempic and Rybelsus) were DKK 149,125 million in 2024.

You also face competition from existing oral medications, which, while perhaps less potent than the newest injectables, offer the convenience of a pill at a potentially lower cost. The SGLT2 inhibitors market alone was valued at an estimated USD 17.94 billion in 2025. These drugs, like empagliflozin (Jardiance), which generated USD 9.1 billion in 2024, are oral and offer dual benefits for glycemic control and cardiovascular risk reduction. Furthermore, the foundational drug, metformin, remains a cheap, non-injectable first-line therapy for millions of patients with Type 2 diabetes.

Novo Nordisk's commercially available Rybelsus (oral semaglutide) is a direct, established oral peptide substitute for Oramed Pharmaceuticals Inc.'s ORMD-0901. Rybelsus captured a segment revenue of USD 3,281.9 million in 2024 and saw its sales increase by 26% at constant exchange rates in 2024 to DKK 23,301 million. This product proves that an oral peptide delivery system is commercially viable, but it also means Oramed Pharmaceuticals Inc. is entering a space already occupied by a major player with a proven, albeit injectable-derived, oral product. The market for all oral insulin therapies is projected to be around $1,200 million in 2025, showing the size of the prize, but also the established competition.

Here is a snapshot of the competitive landscape from the perspective of substitutes:

The immediate actions required relate to demonstrating clear, superior efficacy and safety over these entrenched options. You need to show a compelling reason for a prescriber to switch from a known quantity like Ozempic or Jardiance to an unproven one.

• Injectable insulin is the baseline standard of care.
• GLP-1s dominate new prescription growth.
• SGLT2 inhibitors offer oral, multi-benefit therapy.
• Rybelsus validates the oral peptide delivery concept.

Finance: draft 13-week cash view by Friday.

Oramed Pharmaceuticals Inc. (ORMP) - Porter's Five Forces: Threat of new entrants

You're looking at the barriers to entry in the oral biologics space, and honestly, the picture for Oramed Pharmaceuticals Inc. is one of significant insulation. The threat of new entrants here is definitely low because the hurdles are astronomical, especially when you consider the capital and time required to even get to the starting line.

The core defense for Oramed Pharmaceuticals Inc. is its intellectual property surrounding the Protein Oral Delivery (POD™) technology. This isn't just a few provisional filings; this is a deep moat built over time.

That patent portfolio is key. It covers the core methods and compositions necessary to protect therapeutic proteins, like insulin, from degradation in the digestive system. A new player can't just copy the final product; they have to replicate the foundational science, which is a massive undertaking.

Regulatory risk alone acts as a huge deterrent. Getting a novel biologic delivery system through the U.S. Food and Drug Administration (FDA) requires years and staggering investment. Think about the cost structure for a competitor trying to catch up to Oramed Pharmaceuticals Inc.'s progress:

• Phase 3 Trial Cost Range: $20 million to $100 million or more.
• Phase 3 CRO Management Cost: Often $20 million to $50 million plus.
• Years of dedicated clinical journey required for pivotal data.

This high capital requirement for both R&D and manufacturing scale-up screens out most potential competitors before they even start. While Oramed Pharmaceuticals Inc. reported R&D expenses of only $4.4 million for the first nine months of 2025, that reflects the cost of advancing an existing platform, not the initial, multi-year, multi-hundred-million-dollar investment needed to create the platform and run the first pivotal trials.

Furthermore, the platform technology itself is not a recent discovery. The foundation of the POD™ technology is based on over 30 years of research conducted by top scientists at Jerusalem's Hadassah Medical Center. Replicating that foundational scientific knowledge base is nearly impossible for a startup to match quickly.

The combination of entrenched IP and the sheer financial scale of clinical development means that for a new entrant to challenge Oramed Pharmaceuticals Inc. in the oral biologics space, they would need access to capital measured in the hundreds of millions and a timeline measured in years, making the threat relatively low.