By Jack Hough
By now, the growth potential for obesity meds is well understood. Or is it? Two developments in 2026 could lead to much faster growth in coming years than investors are predicting.
The first is the rollout of pills. Novo Nordisk is likely to be the first to market, as it was with its auto-injector pens, Ozempic for diabetes and Wegovy for obesity. Oral semaglutide, which has the same active ingredient as those drugs, could win regulatory approval by the end of this year and go on sale early next year. Eli Lilly's competing orforglipron pill could be approved by the end of the first quarter of 2026 and launch in the second quarter.
With injectables, Lilly has had the edge on efficacy. The active ingredient in its Mounjaro for diabetes and Zepbound for obesity proved superior to Novo's drug for weight loss in head-to-head trials. That has helped Lilly take the market lead, despite its later start, and become the first drug company to reach a $1 trillion stock market value.
With pills, Lilly won't have the same advantage. In a recent trial, the highest dose of orforglipron helped patients lose about 12.4% of their body weight after 72 weeks. In a separate trial, patients on Novo's oral semaglutide lost an average of 16.6% after 64 weeks.
These numbers won't overwhelm compared with the 20%-plus of body weight that Zepbound patients lose. But pills are easy. "Certain people are going to be needle phobic and say, 'Hey, it's great that I can lose 15% to 20% of my body weight, but I don't want to inject myself every week,' " says Jason Kritzer, co-head of Morgan Stanley Investment Management's Value Team. "If you're already taking statins, and you're already taking high blood-pressure medicine...we'll throw in another pill. Not a big deal."
Pills are also cheap to make and don't require refrigeration. The drug team at Morgan Stanley predicts that Lilly's orforglipron will see a modest sales start in 2026, and then explode to overtake Zepbound in sales by 2030. The bulk of pill sales are expected to come from outside the U.S.
The second 2026 development is cheap, broad coverage for Medicare and Medicaid. Under a November deal with the Trump administration, Lilly and Novo Nordisk will cut the cost of their obesity drugs to these plans, while the plans will expand coverage to obesity, and not just diabetes or heart conditions. Patients will pay no more than $50 a month in copays, starting as early as April. The plans won't give preferential terms for either company's drugs, which could be a big advantage for Lilly. It estimates that there are 20 million to 25 million obese Medicare patients, not counting those with Type 2 diabetes. Compare that with a total population of just under 10 million people who are now taking GLP-1 drugs, as these medicines are called.
Separately, Lilly and Novo are also reducing prices for injectables in their cash-pay channels for patients who lack insurance coverage. Pills will provide an even cheaper option. That could expand usage of these drugs to lower-income patients, and help win over the estimated million patients who buy knockoff GLP-1s from drug compounders.
There are other drugs coming. Lilly is working on one called Retatrutide that uses three mechanisms of action, versus two for Zepbound, and has been shown in early trials to produce greater weight loss. Even more promising, a drug called Eloralintide works on a different hormone than current drugs and could help patients lose fat without losing lean muscle mass, but more trials are needed. Approval for either drug could be years away. Meanwhile, Pfizer, Roche, and others are preparing to enter the GLP-1 market in coming years.
Eli Lilly stock has tripled since I wrote here about its promising GLP-1 results back in summer 2022. Its earnings per share have tripled, too. The stock looks ambitiously priced at 44 times projected 2025 earnings. The next doubling of earnings could take three years, judging by Wall Street estimates.
Then again, Morgan Stanley is way ahead of the Street on Lilly's sales estimates. It uses the experience of statin drugs as a guideline for what's to come with GLP-1s, and concludes that penetration could ultimately reach 30% of the market, or about 30 million U.S. patients, triple the number today. It predicts that by 2030, Lilly will reach $100 billion in combined sales for Mounjaro, Zepbound, orforglipron, and Eloralintide. Consensus estimates for the same group of drugs total $78 billion. If the higher estimate is even close to correct, Lilly stock is probably cheaper than it appears.
The flip side of obesity drug uptake is sales pressure on grocery store indulgences and restaurant meals. Sales growth for food companies is the slowest in years. There are several factors at work, including budget stress for low-income shoppers, and competition from insurgent brands. GLP-1 drugs haven't gotten a lot of the blame so far, but there are signs that raise suspicions.
Over the past two years, sales growth around the perimeters of grocery stores, where fresh food is typically found, has been running two to three points ahead of growth in the center of stores, which are packed with shelf-stable goodies. In other words, shoppers suddenly seem to be eating a little healthier.
So far, GLP-1 usage has skewed toward higher incomes. That's poised to change. "The next wave is likely to skew toward middle- and lower-income households, where eating occasions, calorie density, and elasticity are higher," write Morgan Stanley's analysts. "While we agree that low-income consumer weakness remains the dominant drag on food and restaurants today, broader GLP-1 uptake is likely to cap the recovery even as macro conditions stabilize." Good news for waistlines, but tough times for the cookie aisle.
Write to Jack Hough at jack.hough@barrons.com. Follow him on X and subscribe to his Barron's Streetwise podcast.
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(END) Dow Jones Newswires
December 19, 2025 16:07 ET (21:07 GMT)
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