Novo Nordisk (NVO +0.56%) pioneered weight loss medicines with Wegovy, an anti-obesity therapy that quickly became a hit. However, it lost its lead to Eli Lilly's (LLY +1.53%) Zepbound, which was approved more than two years after Wegovy. Novo Nordisk is still trying to regain its crown, and the Denmark-based pharmaceutical giant seems to be outpacing Eli Lilly in the oral anti-obesity niche. Could this become a problem for Eli Lilly?
More than a first-mover advantage
Novo Nordisk launched oral Wegovy in January, while Eli Lilly's competitor, Foundayo, hit the shelves in April. So, it's not that surprising that the former has more prescriptions so far. Both are attracting a significant number of patients who are brand-new to the GLP-1 class. Eli Lilly's management reports that so far, those represent 80% of patients, whereas that number stood at 36% for oral Wegovy.
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However, according to some data, Foundayo is trailing oral Wegovy in terms of prescription volumes at similar points after their respective launches. This may be because oral Wegovy was first-in-class, but there are likely other reasons as well. For instance, Novo Nordisk's pill seems more effective than its competitor's. It's always hard to compare across clinical trials, but oral Wegovy's 13.6% mean weight loss (at the highest dose) in 64-weeks in a phase 3 study looks a lot better than Foundayo's 11.1% mean weight loss in 72 weeks.
True, the latter does have some advantage. It can be administered without restrictions on food or water intake, unlike its competitor. Foundayo should also receive label expansions, notably in diabetes. These factors could eventually allow it to catch up to oral Wegovy. But for now, Novo Nordisk seems to have finally found a way to one-up Eli Lilly. Novo Nordisk also recently received approval for oral Wegovy in the European Union, which will significantly expand its addressable market.
NYSE: NVO
Key Data Points
Should you sell Eli Lilly stock?
Even as it is trailing Novo Nordisk in the oral anti-obesity market, Eli Lilly remains the top player in chronic weight management. The company's Zepbound is helping drive incredible sales growth. In the first quarter, Eli Lilly's revenue jumped by 56% year over year to $19.8 billion. The company's adjusted earnings per share soared 156% year over year to $8.55. Zepbound's sales landed at $4.2 billion, 80% higher than the year-ago period. Mounjaro -- a medicine approved for diabetes that shares Zepbound's active ingredient -- is performing even better, posting sales of $8.7 billion during the period, 125% higher than the prior-year quarter.
Zepbound and Mounjaro should maintain solid momentum and help power Eli Lilly's financial performance, even with what is happening in the oral weight-loss niche. It's also worth noting that Novo Nordisk is more dependent on its core diabetes and weight management business than Eli Lilly is, as the latter has a far more diversified lineup of approved drugs.
NYSE: LLY
Key Data Points
During the first quarter, Eli Lilly posted strong sales growth from several other medicines outside of its core area of expertise, some of which are fairly new and could eventually generate well over $1 billion in annual sales. For instance, the pharmaceutical leader's Alzheimer's disease medicine, Kisunla, posted revenue of $124 million, up from $22 million in the year-ago period.
Eli Lilly's pipeline is also deep and diversified. In weight loss, the company is developing some of the most promising candidates, such as retatrutide, which recently delivered phase 3 results that seem to exceed even Zepbound's efficacy. Outside of this area, Eli Lilly has promising pipeline programs in oncology, neuroscience, immunology, pain management, and more. Between the company's outstanding financial results and a strong pipeline that should help it expand its lineup, Eli Lilly should perform well over the medium term. Trailing Novo Nordisk in the oral weight loss pill market is no reason to give up on Eli Lilly.
