Is there a hotter trend in healthcare than weight loss drugs? Probably not. Research from Morgan Stanley suggests that sales of weight loss drugs will soar from an estimated $15 billion last year to as much as $150 billion by 2035. That would be a tenfold increase in just over a decade.
Most current medications for weight loss are GLP-1 agonists, which suppress patients' appetites by slowing digestion and making them feel full.
Two companies, Novo Nordisk (NVO 5.22%) and Eli Lilly (LLY 4.41%), currently dominate this area, together accounting for an estimated 97% of the market share. Can they can stay atop this fast-growing industry? Here's what I found -- and why they could both be screaming buys right now in June 2025.
Image source: Getty Images.
Competing in weight loss isn't as easy as it looks
Whenever an opportunity exhibits such rapid growth, it will inevitably attract competition. Indeed, numerous companies are currently developing weight loss drugs. However, it's quite a leap to assume that Novo Nordisk, with 62% of the GLP-1 market, and Eli Lilly with another 35%, will easily cede their market share to new products.
First and foremost, drug development is a challenging process that undergoes rigorous regulatory testing. Many of the drugs in development today will ultimately fail to reach the market. In April, industry heavyweight Pfizer abandoned development of its oral weight loss drug danuglipron, after it may have caused a liver injury in a patient during a clinical trial.
Weight loss drugs that do make it to market must then actually compete with what patients already use. That boils down to more than price: Efficacy, side effects, and prescribers' comfort levels with products all make a difference in how these treatments ultimately sell.
Next-gen products are on the way
The weight loss opportunity is currently in its early innings. The leading drugs -- Novo Nordisk's Ozempic and Wegovy and Eli Lilly's Mounjaro and Zepbound -- are injected, require refrigeration, and remain expensive for patients.
Upcoming drugs will include more convenient oral pills; some could be cheaper to produce, and thus could be sold at lower prices. Naturally, Novo Nordisk and Eli Lilly have remained active in order to stay atop the market.
Novo Nordisk could soon have an oral GLP-1 agonist for sale; it has filed an application for approval of an oral version of Wegovy. The company hopes to receive a nod by the end of this year. Additionally, its candidate CagriSema, a potential successor to Wegovy, is working through phase 3 trials. At this rate, CagriSema could arrive sometime next year.
Eli Lilly is also very active. Its experimental oral weight loss drug, orforglipron, has performed well in phase 3 studies. It could be the first small-molecule drug to hit the market; small-molecule drugs are easier and cheaper to manufacture. Its next-generation injectable therapy, retatrutide, is innovative in that it targets three separate hormones related to hunger. Retatrutide is also currently in phase 3 studies, and could arrive in 2027 if all goes well.
Boehringer Ingelheim's survodutide, an injected therapy that could arrive in 2027, is arguably the only potential near-term competition worth noting. There aren't any other immediate threats to Novo Nordisk and Eli Lilly's dominance. The next hopeful, MariTide from Amgen, only begins phase 3 studies in March; if approved, its estimated market arrival would be in 2028.
To ensure you capture weight-loss growth, buy both
Barring something unexpected, Novo Nordisk and Eli Lilly appear well positioned to capture much of that explosive growth in the weight loss market over the coming years.
The question is, which industry giant will do better? Wall Street is currently placing its money on Eli Lilly, as evidenced by the stock's significant valuation premium. Shares trade at a price-to-earnings (P/E) ratio of 62, versus just 22 for Novo Nordisk.
Novo Nordisk's CagriSema has struggled to outperform existing treatments in clinical trials, while Eli Lilly's orforglipron has performed well. However, how patients choose treatments involves several factors, so it's not a sure thing that Eli Lilly will capture all this market share from Novo Nordisk.
The best solution? Own both.
One way to value them is by their PEG ratios, which weigh the stocks' valuations against the companies' expected growth rates:
- Novo Nordisk PEG ratio: 1.5
- Eli Lilly PEG ratio: 1.9
Both companies are reasonably priced for their expected long-term earnings growth, currently 14% annualized for Novo Nordisk and 32% annualized for Eli Lilly. Of course, that could play out differently, but it's all the more reason to own both stocks. One way or another, these two companies will likely split the upside in the weight loss drug market.
