Intensifying competition in the fast-growing weight-loss market and the threat of tariffs on the pharmaceutical industry have taken a toll on Eli Lilly (LLY:NYSE) whose shares are down 27% over the past six months.

Lilly appeared to be pulling ahead of arch rival Novo Nordisk (NOVO-B:CPH) due to the better efficacy of its weekly injectable obesity drug Zepbound.

It offers patients the chance to shred around 23% of their bodyweight versus the 15% weight loss using Novo’s rival treatment Wegovy.

With the battleground moving to daily oral pills, Lilly was expected to maintain its advantage for many years to come. It was a shock, therefore, when Lilly released underwhelming late-stage trial results for its oral pill candidate orforglipron on 6 August.

Patients lost an average 12.4% of their bodyweight, falling short of the 15% expected while the side effects were higher than anticipated. The news sent Lilly’s shares down around 14%, while Novo’s shares got a welcome boost.

Lilly’s CEO David Ricks remained upbeat saying: ‘The goal was to create an oral pill that was convenient and can be made at a huge scale, really, for the mass market, and had weight loss that was competitive with other single-acting GLP-1s, and that’s what we’ve achieved.’

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