Novo Nordisk Stock- Zepbound vs. Wegovy: Eli Lilly’s Obesity Drug Takes the Lead
Novo Nordisk Stock– Eli Lilly (LLY) is gaining significant attention in the market following the strong performance of its obesity drug Zepbound (tirzepatide), which recently outperformed Novo Nordisk’s (NVO) Wegovy in a pivotal weight-loss study. In addition to Zepbound, the company’s diabetes drug, Mounjaro, continues to be a major contributor to its revenue growth. Despite some supply challenges in Q3, analysts are bullish on the company’s long-term prospects due to strong drug pipeline and expansion plans.
Zepbound Outperforms Wegovy in Obesity Study
Eli Lilly’s Zepbound has recently been the subject of significant attention, following impressive results from a Phase IIIb study that compared it directly with Novo Nordisk’s Wegovy for weight loss. According to the study, Zepbound led to an average weight loss of 20.2% of body weight in obese and overweight adults, significantly outperforming Wegovy’s 13.7% weight loss.
The study not only confirmed Zepbound’s superior results across all primary and secondary endpoints but also demonstrated a safety profile in line with previous studies. The data positions Zepbound to become a new standard in obesity treatment, potentially expanding Eli Lilly’s market share and solidifying its place in the growing obesity drug market.
Mounjaro & Zepbound: Key Drivers for Eli Lilly’s Revenue
Eli Lilly’s dual-receptor drug, tirzepatide, is a critical part of its strategy moving forward. Mounjaro, marketed for type 2 diabetes, and Zepbound, for obesity, generated $11.0 billion in sales in the first three quarters of 2024, accounting for 45% of the company’s total revenue.
However, despite the strong performance in the first half of 2024, Eli Lilly faced some supply issues in the third quarter that impacted sales. As channel inventory decreased, the demand-supply dynamics became challenging to predict. The company is working to balance supply and demand, with expectations that international expansion and increased production capacity will drive future sales growth.
Eli Lilly’s International Expansion Plans
Lilly has made significant investments in expanding its manufacturing capabilities. The company recently announced a $3 billion expansion plan for its Wisconsin manufacturing facility to meet the growing global demand for Mounjaro and Zepbound. The company is also focused on expanding Mounjaro into new international markets, which should boost sales in the coming quarters.
Medicare and Medicaid Coverage Proposal: Potential Game-Changer for Obesity Drugs
In a move that could significantly impact the obesity drug market, President Biden proposed that Medicare and Medicaid cover the cost of obesity treatments. If passed, this proposal would provide wider access to drugs like Zepbound and Wegovy. Currently, Medicare can only cover weight-loss drugs when prescribed for conditions like diabetes or cardiovascular risks. If the new proposal is finalized, it could broaden the availability of these drugs, benefiting Eli Lilly’s sales growth.
Competition in the Obesity Treatment Market
The obesity drug market is growing rapidly and is expected to reach $100 billion by 2030. Eli Lilly and Novo Nordisk dominate the market at present, but competition is intensifying. Companies like Amgen (AMGN) and Viking Therapeutics (VKTX) are advancing their own GLP-1-based obesity treatments, which could challenge Mounjaro and Zepbound’s market dominance in the future.
Amgen recently reported promising results from a Phase II study of MariTide, its GLP-1 therapy for obesity, showing 20% weight loss over 52 weeks. However, investor sentiment was mixed, as the results fell below expectations.
Beyond Mounjaro and Zepbound, Eli Lilly has been expanding its pipeline with several new drugs. These include Omvohfor ulcerative colitis, Jaypirca for mantle cell lymphoma and chronic lymphocytic leukemia, and Kisunla (donanemab)for early symptomatic Alzheimer’s disease. These products, along with ongoing research into other potential treatments, should continue to drive top-line growth in future quarters.
LLY’s Stock Performance & Valuation
Eli Lilly’s stock has risen by 41.5% year-to-date, significantly outperforming both the industry (+8.9%) and the S&P 500. While the stock is trading at a premium to the industry, analysts continue to view the company as a strong growth story. Despite a slight decrease in earnings estimates for 2024 and 2025, investors remain optimistic about Eli Lilly’s future.
Should Investors Hold Eli Lilly Stock?
Eli Lilly’s stock has delivered impressive returns, rising by 590% over the past five years, largely driven by the success of Mounjaro and Zepbound. The company’s strong pipeline and ongoing international expansion should continue to support its growth trajectory in the coming years. While recent supply chain issues have impacted short-term sales, the long-term outlook remains solid.
Despite the stock’s premium valuation, analysts recommend holding onto the stock for investors with a long-term horizon, as Eli Lilly’s robust pipeline and market position suggest significant upside potential.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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