Eli Lilly (LLY -1.25%) has produced a wide variety of treatments for various illnesses throughout its 145-year history. But this big pharma company truly took center stage over the past year or so, with the launches of two drugs that have been prescribed for a billion-dollar indication: weight loss.
Lilly makes tirzepatide, which is approved for type 2 diabetes under the name Mounjaro and for weight control under the name Zepbound (though doctors have also prescribed Mounjaro for patients trying to lose weight). The pharma company won approval for the former back in 2022 and then for the latter about a year ago. Both quickly became blockbusters, bringing in more than $1 billion in annual revenue.
Today, Lilly shares the weight loss drug market with fellow big pharma company Novo Nordisk (NVO 1.72%), but other potential players are waiting in the wings -- for example, biotech giant Amgen and smaller biotech company Viking Therapeutics. Both of those companies have reported positive data from clinical trials of their weight loss candidates.
Against this backdrop, could Lilly beat rivals in the weight loss market in 2025? Evidence is piling up, and it's pointing to one answer in particular.
Image source: Getty Images.
Lilly's weight loss portfolio
Before we get to that, though, let's take a closer look at Lilly's weight loss portfolio. Tirzepatide is known as a dual GIP/GLP-1 receptor agonist. It acts on two hormonal pathways that are involved in the digestive process, and as a result, helps regulate blood sugar levels and reduce appetite.
Patients self-administer the drug using a pre-dosed injector pen, but Lilly recently introduced the product in single-dose vials for injection via syringe -- a move to increase production of these popular drugs and decrease both costs of manufacturing and costs for the patient.
Both Mounjaro and Zepbound have been so popular that demand surpassed supply -- and the same goes for Novo Nordisk's semaglutide. It's marketed as Ozempic for type 2 diabetes and Wegovy for weight loss. As a GLP-1 receptor agonist, it acts on only one hormonal pathway, but produces results that are similar to those of the Lilly drug. In fact, in many instances, doctors and patients will try whichever brand is most readily available in their area.
Lilly's increased production, and demand for Mounjaro and Zepbound, have helped these drugs deliver sales in the billions of dollars on a quarterly basis. In the most recent quarter, Mounjaro generated $3.1 billion in sales, while Zepbound brought in $1.2 billion.
The risk of compounders
Now, let's consider the clues we have about these drugs' potential performance in the coming year. The major threat for Lilly may not be from Novo Nordisk, or even up-and-coming players. Instead, it might come from compounding pharmacies. They are authorized to mix their own versions of drugs that are on the U.S. Food and Drug Administration's shortage list, and to sell them.
This fall, the FDA removed tirzepatide from this list -- but changed course after a compounder group filed a lawsuit. Compounders argue sufficient supply of the drug is still lacking, so they should be allowed to continue selling their versions.
The FDA is now reviewing the supply situation again. In the meantime, compounders may sell their versions of the popular drugs, and they typically sell at lower prices than those sold by pharma companies. This could weigh on Lilly if it goes on for many months, or if the FDA rules that tirzepatide should remain on the shortage list. And it's the biggest risk for the pharma giant heading into 2025.
A study of Zepbound vs. Wegovy
But some positive evidence is piling up too, and that's in the form of tirzepatide's efficacy compared to its alternatives or potential alternatives. Lilly reported that in a head-to-head study of Zepbound versus Wegovy, its own product resulted in greater weight loss for patients. People on Zepbound showed an average weight loss of about 20%, while those on Wegovy reported an average weight loss of around 13%.
A separate phase 2 study of Amgen's weight loss candidate, MariTide, showed that it delivered weight loss of up to 20%, though that disappointed analysts who were hoping for as much as 25% weight loss. It's also important to keep in mind that the Amgen candidate still has a way to go before it approaches commercialization -- so it won't interfere with Lilly's market share next year. The same goes for biotech Viking's promising candidate.
So, the 2025 weight loss market will be one dominated by Novo Nordisk and Eli Lilly. Right now, Novo Nordisk holds the top spot -- it was the first to market with its products -- but that may not be the case for long. Lilly's sales figures are expected to surpass those of Novo Nordisk within the coming 12 months, according to a paper by Saxo Bank strategist Oskar Barner Bernhardtsen.
Of course, competition from compounders may continue to limit the growth of both companies in the coming months, but this problem is temporary. Both have heavily invested in production capacity, and at a certain point, it's likely they will ensure that supply meets demand. And that should mark the end of sales by compounders.
Meanwhile, Zepbound's latest efficacy data compared with Wegovy's could offer Lilly the push it needs to stand out in the coming months. All of this means that even if Eli Lilly doesn't beat Novo Nordisk in the weight loss market in 2025, evidence shows it could be on the right path.
