It's rare for a prescription drug to become part of the cultural landscape. However, that's exactly what has happened with Ozempic. Hollywood celebrities and social media have put the GLP-1 agonist in the spotlight.
Novo Nordisk (NVO 0.84%) has no complaints. Thanks largely to the tremendous success of Ozempic and its sibling Wegovy, shares of the Danish biopharmaceutical company have soared.
However, another drugmaker hopes to push Ozempic and Wegovy to the side. And its share price has skyrocketed, too. Is Eli Lilly (LLY 1.19%) a better stock to buy and hold over the next 10 years than Novo Nordisk?
Ozempic/Wegovy vs. Mounjaro/Zepbound
Arguably, the most important arena that will determine whether Lilly or Novo Nordisk perform better over the next decade is the competition between Ozempic/Wegovy and Mounjaro/Zepbound. Ozempic and Wegovy are actually the same drug (semaglutide), with Ozempic approved for type 2 diabetes and Wegovy for weight loss. It's a similar story for Lilly. The company's Mounjaro and Zepbound are the same drug (tirzepatide), with Mounjaro approved for type 2 diabetes and Zepbound approved for weight loss.
Wall Street analysts think Lilly will come out on top in this head-to-head marketplace matchup. Some predict that Mounjaro and Zepbound will combine for peak annual sales of more than $50 billion.
Why do analysts favor Lilly over Novo Nordisk? Clinical studies have already demonstrated that Mounjaro is slightly more effective than Ozempic at controlling blood sugar in patients with type 2 diabetes. The bigger story, though, is with weight loss. A recent analysis of real-world data conducted by Truveta Research found that patients taking Lilly's Mounjaro were significantly more likely to lose weight after three months than patients taking Novo Nordisk's Ozempic.
Both Lilly and Novo Nordisk are also advancing other diabetes and obesity therapies in clinical testing. Lilly is evaluating a couple of drugs in late-stage clinical studies -- orforglipron and retatrutide. Novo Nordisk's pipeline features late-stage candidates CagriSema and an oral version of semaglutide.
Beyond the diabetes and obesity battles
Although Novo Nordisk focuses heavily on diabetes and obesity, it also markets several rare-disease drugs. The company is especially strong in the hemophilia and human-growth disorder markets.
Novo thinks that semaglutide could be effective in treating nonalcoholic steatohepatitis (NASH), a liver disorder that has become a major burden to healthcare systems. It's even evaluating the drug as a potential treatment for Alzheimer's disease. The company's pipeline also includes late-stage programs targeting cardiovascular disease and sickle cell disease.
Meanwhile, Lilly has several commercially successful drugs outside the diabetes and obesity space in its lineup. They include breast cancer drug Verzenio and autoimmune disease drug Taltz, both of which are blockbusters with growing sales.
Lilly awaits regulatory approval of Alzheimer's disease drug donanemab. It's evaluating another experimental Alzheimer's therapy, remternetug, in late-stage testing. The company is also conducting late-stage studies with the hopes of expanding tirzepatide into obstructive sleep apnea and heart failure.
Lilly or Novo Nordisk?
My view is that both Eli Lilly and Novo Nordisk could be successful investments over the next 10 years. However, I think that Lilly is more likely to deliver stronger growth. The efficacy advantages offered by Mounjaro and Zepbound should play a key role. So should the company's Alzheimer's disease, autoimmune disease, and cancer therapies.
It's important to note, though, that Lilly's valuation reflects expectations of higher growth. Its stock currently trades at more than 48 times expected earnings, well above Novo Nordisk's forward-earnings multiple of 31 times.
However, these ratios only look out a year into the future. I suspect that Lilly's earnings will continue to grow at a much stronger rate than Novo's. As a result, I pick Lilly as the better stock to buy and hold over the next 10 years.
