If a picture can tell a thousand words, a share price chart of Novo Nordisk (NOVOB-B:CPH) versus Eli Lilly (LLY:NYSE) strongly suggests the US firm is well ahead in the race to dominate the market for weight loss drugs, which analysts predict could be worth $150 billion per year by 2030.

Over the last five years an investor in Lilly would have made 360% excluding dividends, while an investor in Novo would be sitting on a gain of ‘only’ around 93%.

It is notable that the share prices of both companies are way below their peaks of roughly a year ago, with Novo suffering a circa 60% drop while Lilly is down by around a fifth, reflecting the emergence of greater competition and supply bottlenecks for both companies.

The sharp underperformance of Novo’s shares led to the surprise exit of its chief executive Lars Fruergaard Jorgensen on 16 May. While a chief executive falling on their sword is a common occurrence in the UK and the US, in Scandinavia it is relatively rare.

As Barclays analyst Emily Field commented: ‘It is really not the way the company’s ever done things, so that would be a huge departure from what they’ve done, that would be a big surprise to people.

‘They need someone who understands the US system better because they have not competed to the same degree that (Eli) Lilly has.’

Guggenheim analyst Seamus Fernandez commented: ‘This announcement, following in the wake of recent senior departures, retirement of those responsible for US senior commercial leadership, and the reshuffling of reporting structure will only intensify questions around Novo’s strategic market position vs. Lilly and may even escalate concerns over new competitors poised to emerge in 2028-2030.’

Despite Novo’s nearly two-year head start, Lilly’s weight loss drug Zepbound garnered $4.9 billion in sales in its first full year of 2024, more than half of the $8.2 billion reported by Novo’s Wegovy.

Analysts predict sales of Lilly’s anti-obesity drug will overtake Novo’s by 2027, as its superior effectiveness drives higher sales penetration. Clinical trial results and, increasingly, real-world evidence suggests Zepbound induces greater weight loss.

For example, a recent (11 May) Lilly sponsored head-to-head study showed participants lost an average of 22.8 kilogrames over 72 weeks on Zepbound while those on Novo’s Wegovy lost 15 kilograms.

The Lilly group trimmed around 18 centimetres from waist circumference compared with 13 centimetres for Novo. Nearly a third of participants taking Zepbound lost at least a quarter of their bodyweight compared with around 16% for Wegovy.

Some scientists believe the reason Lilly’s drug may be more effective is because it targets two hormones while Novo’s Wegovy just targets just one.

In the first quarter of 2025 Zepbound accounted for 53.3% of all prescriptions in the US, up five percentage points on the prior year, according to Lilly, while Novo prescriptions had a 46.1% share, based on rolling four-week data.

A contributing factor has been Novo’s struggle to keep up with demand, leading to shortages which lasted until February 2025 while Lilly fixed its own supply issues much earlier in October 2024.

This left Novo vulnerable to competition from ‘copycat’ pharmacies which, under FDA rules, are allowed to fill the supply gap while the drug remains in shortage. These so-called compounders are sold at a big discount to the branded product.

These headwinds led Novo to downgrade full year sales and earnings growth on 5 February. Sales growth expectations for 2025 have dropped by three percentage points to a range of 16% to 24% and operating profit growth is now expected to be in a range of 16% to 24%, down from 19% to 27% previously.

Lars Fruergaard Jørgensen explained: ‘We have reduced our full-year outlook due to lower-than-planned branded GLP-1 penetration, which is impacted by the rapid expansion of compounding in the US.

‘We are actively focused on preventing unlawful and unsafe compounding and on efforts to expand patient access to our GLP-1 treatments.’

Pharmacies making compounders have until the end of May 2025 to stop manufacturing copycat versions of Wegovy.

FIXING THE GLOBAL OBESITY CRISIS

Obesity is a major global health crisis with the World Obesity Atlas 2025 projecting the number of adults living with the disease expected to double between 2010 and 2030 to over a billion people.

Obesity is associated with a host of chronic conditions such as type 2 diabetes, heart failure, kidney disease and cancers.

The breakthrough in the development of obesity drugs came out of a niche class of drugs developed to treat diabetes, called GLP -1 (glucagon-like peptide -1) agonists. These drugs mimic naturally-occurring hormones which regulate appetite and blood sugars.

Medically, obese describes people with a BMI (Body Mass Index) of more than 30. According to the WHO (World Health Organisation), in 2019 an estimated 15 million noncommunicable disease deaths were caused by higher-than-optimal BMI.

DRAWBACKS MAY LEVEL THE PLAYING FIELD

While Lilly and Novo have stolen a march on competitors, existing treatments have several drawbacks including nasty side effects which cause some patients to stop taking them after a few weeks.

The treatments are currently administered by weekly injections, making them costly to deliver to patients and consumer-unfriendly. There are also longer-term health issues including the loss of muscle tissue and brittle bones. Patients who stop taking the medicines tend to put the lost weight back on.

What all this means is companies focused on making treatments more tolerable or less damaging to muscle and bone health have a shot at getting in on the action and taking market share.

Scientists have known for some time that reducing weight can have other knock-on health benefits and reduce risk of cardiovascular and other diseases.

However, making that claim requires further trials to show a drug’s true effectiveness and safety.

Novo has been successful at extending the use of its diabetes and weight loss drugs to treat other diseases. For example, in January the FDA approved Novo’s diabetes treatment Ozempic to reduce the risk of kidney disease worsening, as well as kidney failure and death due to cardiovascular disease.

Therefore, Ozempic has the potential to offer significant relief across a host of obesity-related diseases and cut healthcare costs, reducing the need for multiple drugs.

These are important considerations for healthcare professionals and the insurance companies paying for obesity treatments.

Novo received a boost on 7 May after US retail pharmacy chain CVS Health (CVS:NYSE) removed Lilly’s Zepbound from the list of medicines it covers for reimbursement from July 1 in favour of Wegovy after negotiating a better price.

Furthermore, Novo has struck a long-term collaboration with telehealth platform Hims & Hers (HIMS:NASDDAQ) which gives Americans access to Wegovy via a bundled care subscription starting at $599 per month.

Beyond the initial deal the two companies are developing a roadmap which combines Novo’s innovative medications with Hims & Hers ability to deliver quality care at scale. Meanwhile, Lilly also sells its obesity treatment through the same platform directly to consumers. It is worth noting Hims & Hers has been a big beneficiary of the rise of compounders.

Currently around a tenth of obesity drugs are sold directly to consumers and both Lilly and Novo are keen to grow this channel, as president Donald Trump doubles down on reducing the cost of US medicines.

It is important to point out that although Lilly appears to be nudging ahead of Novo in its home market, Novo claims to be the clear market leader globally with a 54% market share of prescriptions.

THE BATTLEGROUND MOVES TO ORAL TREATMENTS

The battleground for weight loss is shifting to oral pills. Lilly’s oral GLP-1b Orforglipron demonstrated statistically significant efficacy in late-stage trial results on 17 April.

The once-daily oral pill reduced weight by an average 7.9% of bodyweight and had a safety profile consistent with injectable GLP-1 medicines.

Lilly’s CEO David Ricks commented: ‘As a convenient once-daily pill, Orforglipron may provide a new option and, if approved, could be readily manufactured and launched at scale for use by people around the world.’

If approved, Lilly plans to launch its oral obesity pill in early 2026. Novo already has an oral diabetes drug on the market called Rybelsus which generated sales of $3.4 billion in 2024.

A late-stage trial of an oral version of Wegovy showed positive results almost two years ago, but the company has only recently made a regulatory submission.

The trial showed patients on the higher dose lost 15% of their bodyweight after 64 weeks. The relatively late filing in relation to the positive clinical results reflects Novo’s manufacturing issues in supplying enough Wegovy to meet demand (both drugs use the same active ingredient) and a focus on developing its next generation dual-hormone treatment CagriSema.

Novo had hoped the injectable drug could induce a 25% weight loss, pushing it ahead of Zepbound in terms of effectiveness. Disappointingly, late-stage clinical trial results in April showed an average 15.6% weight loss in patients after 68 weeks.

That said, 40% of participants did manage to lose 25% of their bodyweight after 68 weeks and the drug is more effective than Novo’s existing products. The company expects approval of CagriSema in early 2026.

Novo has also submitted a regulatory application for an oral version of Wegovy with a decision expected in late 2025.

To hedge its bets, Novo recently agreed (14 May) an exclusive $2.2 billion collaboration with San Francisco-based biotech firm Septerna (SEPN:NSDAQ) to develop oral obesity drugs, sending Septurna shares up 64%.

This follows a $1.75 billion deal (28 March) with Lexicon (LXRX:NASDAQ) to jointly develop an oral obesity pill. Novo Nordisk will hold an exclusive, worldwide license to develop, manufacture and commercialize the drug candidate, while Lexicon is eligible to receive $1 billion upfront in potential milestone payments.

THE NEXT GENERATION

There are an estimated 157 clinical assets being investigated to combat obesity, 43% of which are aimed at the oral pill market with seven in late-stage clinical trials, according to data from IQVIA.

Private healthcare company Boehringer Ingelheim’s Survodutide is the first new competitor to enter market outside the two leaders, Novo and Lilly. The glucagon/GLP-1 receptor dual agonist is a potential treatment for obesity and metabolic dysfunction-associated steatohepatitis (MASH), currently in late-stage trials.

Elcella has the potential to disrupt the GLP-1 market due to its unique all-natural weight loss pill, made from specific nutrients found in food that supresses appetite using your natural hormones.

Spun out of Queen Mary University of London-Elcella was founded by Dr Madusha Peiris and Dr Rubina Akjtar who have spent a decade researching gut health.

‘We differ from other weight-loss drugs in that Elcella releases your own naturally occurring appetite-reducing hormones rather than replacing them with synthetic hormones,’ explains Peiris.

The drug has been available in the UK since February and will be rolling out worldwide by August 2025. It costs £595 for three-months supply. Other companies are working on some of the long-term health issues and side effects of current injectable treatments. What follows are the views of Marek Poszepczynscki , co-manager of International Biotechnology Trust (IBT).

‘There is ongoing research into preserving muscle mass during weight loss, with several companies focusing on the ratio of fat loss to muscle retention.

‘Innovations in administration methods, such as Amgen’s (AMGN:NASDAQ) monthly injection versus weekly dosages, and the oral alternatives that several smaller biotech companies are developing, such as Structure Therapeutics (GPCR:NASDASQ), continue to progress through the clinical trial process.

‘The bar for new entrants is set high; to succeed, drugs must be well-tolerated, efficacious and convenient.

‘As with other chronic diseases such as cholesterol and diabetes, one could foresee a product fragmentation of the market where premium brands are prescribed to those with the highest need or willingness to pay out of pocket and more basic products are offered at a highly discounted and/or generic price to a wider patient population,’ added Poszepczynscki.

Consensus forecasts for Eli Lilly and Novo Nordisk

NOVO OR LILLY?

It is the stock market’s job to discount or ‘handicap’ the future and from today’s starting point we would observe that the valuations of both companies are less stretched than they were a year ago.

This makes intuitive sense as both companies have struggled to keep pace with demand, leaving the door open to cheaper copycat compounders to take a share of the pie.

In addition, more companies have entered the space as competition heats up. But which company do we think offers the better investment opportunity? As ever in investing, the answer depends on what you could get in future earnings compared with what price you pay today. Let’s have a look.

Lilly trades on 25 times consensus 2026 EPS compared with 40 times a year ago. For that, consensus growth is pegged at 34% in 2025 and 37% in 2026 or an average of 35.5%.

Novo trades on just 14.4 times 2026 EPS compared with 31.5 times a year ago. For that, growth is expected to be 8% in 2025 and 19.4% in 2026 or an average of 13.7%.

Another factor to consider is that consensus growth expectations for Lilly are above company guidance while for Novo, consensus is below guidance. In other words, Novo could see upward revisions if the company can deliver on its guidance while Lilly needs to ‘over deliver’ to merely maintain consensus expectations.

It is also worth noting both companies have seen consensus expectations drift lower over the last nine months. We believe both companies trade on reasonable valuations today relative to 12 months ago and compared to their current growth outlooks, although Novo just edges it because of the recovery potential.

Should the company hire a strong CEO to reinvigorate its US strategy, we think it would be well received by the market.

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