Eli Lilly has seen revenue and earnings soar in recent years.
One of the biggest growth markets in the pharmaceutical industry today is that of weight loss drugs. Novo-Nordisk A/S got the ball rolling when it launched Ozempic back in 2017. The drug, part of the GLP-1 class, was approved for type 2 diabetes but also proved to be useful for weight loss. Novo Nordisk followed up by winning approval for the same ingredient -- semaglutide -- under the name Wegovy for weight loss.
Eli Lilly soon joined with tirzepatide, commercialized as Mounjaro for type 2 diabetes and as Zepbound for obesity. Though Novo led the market in the early days, Lilly soon gained ground -- and slipped ahead. Today, Lilly holds a 60% share of the U.S. market for these kinds of drugs.
And now Lilly just took two major steps forward in this billion-dollar market. Here's what you need to know.
How GLP-1 drugs work
Let's start with a few quick notes on GLP-1 drugs and Lilly's path along this road so far. GLP-1 drugs soared to popularity with the release of Ozempic as doctors and patients realized their weight-loss potential. These drugs act on hormonal pathways involved in digestion, so they help in the key areas of appetite and blood sugar control.
Today's drugs come in injectable format, administered on a weekly basis. The one exception is the recently approved Wegovy pill -- and regulators are reviewing Lilly's oral weight loss candidate, orforglipron, right now, so a second pill option may be on the horizon.
Novo held the first-to-market advantage, but in recent years, Lilly's drugs have taken the lead. One reason for this may be due to efficacy. In a head-to-head trial, for example, Zepbound helped patients lose more weight than Wegovy. All of this has resulted in soaring revenue and stock performance for Lilly.
Now, let's turn to the latest pieces of news that could push this company further ahead. Novo's CagriSema, a GLP-1 and amylin analogue combo that's currently under regulatory review, didn't beat Lilly's Zepbound in a phase 3 trial. CagriSema -- in a dose of 2.4 mg of cagrilintide and 2.4 mg of semaglutide -- delivered weight loss of 23% over 84 weeks. That's compared to weight loss of more than 25% for 15 mg dosage of tirzepatide.
A positive sign for Lilly
CagriSema, which acts on additional pathways involved in weight control, has been seen as a potential product to rival the Lilly drug -- so this latest trial result isn't good news for Novo. But it is positive for Lilly, as it adds to evidence that Zepbound may be the most effective drug available.
The second piece of news isn't related to efficacy, but it is related to something else that's important to patients: convenience. Lilly just released a new Zepbound format that holds a month's worth of doses in a single pen. This could make treatment easier for patients while they're traveling, for example, as they don't have to carry around as many devices. Mounjaro already is available in this format, called the KwikPen.
This latest news, reinforcing the efficacy and convenience of Zepbound, clearly should work in Lilly's favor in the quarters to come. It's important to remember that this market is growing too, with analysts expecting it to reach nearly $100 billion over the coming four years. And Lilly's orforglipron and farther down the road, other potential drugs could add to growth as this story unfolds.
Facing competition
Of course, Lilly likely will face increasing competition in the coming years. Novo remains a significant player, and other potential market participants -- from Pfizer to Viking Therapeutics -- could take some market share. These companies and others are studying weight loss candidates in clinical trials right now.
Lilly could lose momentum if a rival enters the market with a stronger product. So far, though, Lilly's current products and its pipeline, as well as its massive investments in manufacturing, show its ambition in this market. And that means it has a solid chance of staying ahead and delivering long-term growth to investors.
