It's difficult to find a pair of biotech giants that have performed better than Novo Nordisk (NVO 0.84%) and Eli Lilly (LLY 1.19%) this year. Both have left broader equities well behind since 2023 started. It's not a coincidence that these two major players in the diabetes and obesity care market are crushing it. Sales of weight-loss medicines are projected to skyrocket through the end of the decade.
As the two leaders in this field, Novo Nordisk and Eli Lilly are already benefiting. Both stocks seem to have excellent prospects, but which one edges out the other? Let's find out.
The case for Novo Nordisk
Novo Nordisk's portfolio of diabetes and obesity therapies is impressive. As of August, it held a 33.3% share of the diabetes care market, up from 31.5% in the same month of 2022. Two of the company's medicines, Wegovy and Ozempic, have been attracting incredibly high demand. Novo Nordisk has even had to deal with shortages of the former. In the first nine months of the year, sales of Wegovy came in at 21.7 billion Danish kroner ($3.1 billion), a whopping 481% higher than the year-ago period.
Novo Nordisk's revenue from Ozempic was DKK 65.7 billion ($9.4 billion), 40% higher than the nine months ended Sept. 30, 2022. Novo Nordisk's total sales of DKK 166.4 billion ($23.8 billion) increased by 29% year over year. Those are solid results for a biotech company of this size.
Novo Nordisk could earn some major approvals that would move the needle in the right direction. The company's Ozempic could earn label expansions in treating chronic disease in diabetes patients. It is also targeting non-alcoholic steatohepatitis (NASH), a liver disease associated with obesity. Furthermore, Novo Nordisk is awaiting approval for icodec, a potential once-weekly insulin product.
Elsewhere, the biotech is developing medicines for Alzheimer's disease, sickle cell disease, and hemophilia, among others. Novo Nordisk's lineup should get much stronger in the coming years, and there is an excellent chance that the biotech will continue delivering solid financial results and above-average stock market performances. That's what makes the stock worth buying today.
The case for Eli Lilly
Eli Lilly's portfolio of medicines is more diversified. The company markets therapies in areas such as oncology with Verzenio and the newly approved Jaypirca, and immunology with Taltz and Omvoh, which also got the green light not too long ago. However, Eli Lilly's diabetes portfolio remains its biggest growth driver thanks to Mounjaro, a medicine that first hit the shelves just last year.
Mounjaro's revenue has been growing incredibly rapidly. Through Sept. 30, it reported nearly $3 billion in sales just about a year and a half after being approved. Mounjaro just got approved to treat obesity, where it will be marketed under the brand name Zepbound. This should allow the medicine's sales to grow even faster.
Eli Lilly's total revenue in the first nine months of the year jumped by 17% year over year to $24.8 billion. The company's pipeline also looks exciting. Eli Lilly is awaiting a potential approval for donanemab, a potential Alzheimer's disease therapy. This area has been difficult to crack for biotechs, but Eli Lilly's phase 3 results were solid, signaling that there is a good chance the U.S. Food and Drug Administration (FDA) stamps its seal of approval on the medicine.
Furthermore, the company is also working on a once-weekly insulin product that could rival Novo Nordisk's icodec. Eli Lilly's excellent results and deep pipeline paint a bright picture for the company's future, making the stock worth buying.
The verdict
Let's get one thing out of the way: Investors can't go wrong with either of these growth stocks as both have been recording solid and somewhat comparable results in recent quarters.
NVO Revenue (Quarterly) data by YCharts.
But which one has the edge? On the one hand, Eli Lilly's more diversified lineup is a significant strength. The company also has several brand-new medicines in the works that could become blockbusters in addition to label expansions to its existing medicines. However, Eli Lilly also looks like the more expensive stock.
NVO PE Ratio data by YCharts.
Perhaps that will swing the pendulum in Novo Nordisk's favor for many investors, but if I had to choose one of the two, Eli Lilly would still be my pick despite the seemingly unreasonable valuation metrics. The company's proven ability to develop breakthrough medicines well beyond diabetes and obesity care could make it the more attractive one of the two over the long run, in my view.
