Everyone has been talking about Ozempic in recent years. You may have seen the name in the news or even know someone who is taking this blockbuster drug. Though Ozempic, made by Novo Nordisk, is approved for type 2 diabetes, the drug has also been prescribed for weight loss. It's part of the popular GLP-1 class of drugs.
Novo was first to market with a GLP-1 drug in 2017 and maintained leadership for a while. But that has changed over the past year, as another player roared into the top spot. So, as an investor, if you're looking for a GLP-1 winner, you may want to forget Ozempic. The following obesity-drug giant is grabbing the biggest slice of this gold rush.
Image source: Getty Images.
How do GLP-1 drugs work?
First, a quick note on GLP-1 drugs. These products work by interacting with hormonal pathways involved in digestion, and by doing this, they help regulate a person's blood sugar levels -- and control appetite. As a result, they've helped those suffering from diabetes and aiming to lose weight. Regulators have approved Novo's semaglutide for type 2 diabetes as Ozempic and for obesity as Wegovy.
Now, let's consider the weight loss powerhouse that's surged ahead of Novo. The company I'm talking about is Eli Lilly (LLY +0.94%). Lilly makes tirzepatide, marketed as Mounjaro for type 2 diabetes and as Zepbound for weight loss. These drugs entered the market later than Novo's, but they've taken the lead.
In the U.S., Lilly took leadership a year ago and has progressively increased its market share. Lilly now holds 60% of the market, while Novo's share has fallen to 39%.
Lilly reported triple-digit revenue growth for Mounjaro and for Zepbound in the recent quarter, and together these drugs brought in more than $11 billion in revenue.
NYSE: LLY
Key Data Points
Why is this company a leader?
Why has Lilly jumped ahead? The company has done a great job of ramping up its manufacturing, making doses of its product readily available for patients. This is key because both semaglutide and tirzepatide were in shortage a couple of years ago.
Most importantly, Lilly ran a head-to-head study of Zepbound versus Wegovy, and it showed that the Lilly drug helped people lose more weight. This may have prompted more patients and doctors to opt for the Lilly product.
Though Novo recently launched a Wegovy pill -- the other commercialized GLP-1s are injectables -- Lilly could be set for a win in this space too. The company's oral weight loss candidate is under regulatory review right now, and unlike the Wegovy pill, it doesn't involve dietary restrictions. So it's more of a hassle-free option for patients.
All of this suggests that Lilly could continue grabbing share of this gold rush, making it a great buy for long-term investors.
