Eli Lilly (NYSE: LLY) has been a key player in the pharmaceutical industry for 145 years, creating treatments for various illnesses. Recently, its focus has shifted to weight loss with the introduction of two groundbreaking drugs that have already exceeded $1 billion in sales each year.
Lilly’s drug tirzepatide, marketed as Mounjaro for type 2 diabetes and Zepbound for weight management, received approval in 2022 and about a year ago, respectively. The sales of both drugs skyrocketed, quickly categorizing them as blockbusters in the weight loss sector.
In this competitive landscape, Lilly faces off against Novo Nordisk (NYSE: NVO). However, it’s not just these two giants in the race; companies like Amgen and Viking Therapeutics, both with promising weight loss candidates, are also monitoring the market closely.
As we look ahead to 2025, will Lilly be able to outpace its rivals in the weight loss market? Evidence suggests that it might.
Image source: Getty Images.
Lilly’s Weight Loss Drug Overview
First, let’s examine Lilly’s weight loss offerings. Tirzepatide functions as a dual GIP/GLP-1 receptor agonist, impacting two hormonal pathways related to digestion. This aids in glucose regulation while helping to curb appetite.
Patients can administer tirzepatide via a pre-dosed injection pen, with recent additions of single-dose vials meant to broaden production and lower both production and patient costs.
Both Mounjaro and Zepbound’s popularity has led to a situation where demand exceeds supply, a challenge also faced by Novo Nordisk’s semaglutide, marketed as Ozempic for diabetes and Wegovy for weight loss. Semaglutide, similar to tirzepatide, produces effective outcomes but works through one hormonal pathway. Many doctors and patients often opt for whichever brand is currently available.
Due to heightened demand, Lilly’s production capabilities have translated into impressive sales figures: Mounjaro brought in $3.1 billion in the latest quarter, while Zepbound added $1.2 billion.
Potential Challenges Ahead
What obstacles might Lilly face in the upcoming years? Surprisingly, it may not be Novo Nordisk that’s the biggest concern. Instead, compounding pharmacies could pose a significant threat. These pharmacies are licensed to create their formulations of drugs on the FDA’s shortage list, making them more accessible and often cheaper.
Recently, tirzepatide was removed from this shortage list, but this decision is under review due to a lawsuit from compounding pharmacies citing ongoing supply issues. If compounding pharmacies continue to operate, they might sell their versions at lower prices, which could significantly impact Lilly’s sales.
Zepbound vs. Wegovy Study Insights
On a more positive note, new evidence shows the efficacy of Zepbound in comparison to Wegovy. In a head-to-head clinical trial, Zepbound users experienced an average weight loss of about 20%, while Wegovy users lost around 13% on average.
Amgen’s weight loss candidate, MariTide, showed potential with weight loss of up to 20% in a phase 2 study but did not meet analyst expectations of 25%. With commercialization still a distance away for this candidate and Viking’s drug, Lilly’s market share for 2025 appears secure.
Currently, Novo Nordisk leads the weight loss market; however, projections suggest Lilly could surpass them in sales over the next 12 months, according to Saxo Bank strategist Oskar Barner Bernhardtsen.
Though compounding pharmacies might limit growth temporarily, both Lilly and Novo Nordisk are investing heavily in production capacity. Eventually, production is likely to align with demand, diminishing the need for compounded drugs.
The promising data comparing Zepbound with Wegovy could provide Lilly with the competitive edge it needs to excel in the market. Hence, while it’s uncertain if Lilly will lead the weight loss sector in 2025, the signs indicate a favorable trajectory.
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Adria Cimino has no positions in any stocks mentioned. The Motley Fool recommends Amgen and Novo Nordisk. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
