Once seen as a niche category, obesity treatments are now one of the most lucrative segments in healthcare, with demand steadily rising.Novo Nordisk had an early lead in this space, but Lilly’s drugs – Mounjaro and Zepbound – have soared in popularity and helped eclipse their rival in prescriptions.
In the last reported quarter, Lilly reported combined revenues of more than $10.09 billion from its obesity and diabetes portfolio, accounting for more than half of its total revenues of $17.6 billion.
“They’re doing so many things outside of obesity, but to suggest that something is driving the stock price beyond obesity at this point, I don’t know if that would be a statement of fact,” said Kevin Gade, chief operating officer at Lilly shareholder Bahl and Gaynor, ahead of the milestone. Wall Street estimates that the weight-loss drug market will be worth $150 billion by 2030, with Lilly and Novo together controlling the majority of expected global sales. Investors are now focused on Lilly’s oral products. Obesity drug, orforglipron, expected to be approved early next year.
Last week, Citi analysts said in a note that the latest generation of GLP-1 drugs is already a “sales phenomenon,” and that orforglipron is poised to benefit from the “advance of its injectable predecessors.”
Lilly’s recent deal with the White House to lower prices for its weight-loss drugs, as well as planned investments to expand drug production, bode well for the company’s growth.
Lilly is starting to look like the “Magnificent Seven” again, said James Shin, director of Biopharma Equity Research at Deutsche Bank, referring to the tech heavyweights, including Nvidia and Microsoft, that have driven much of the market’s returns this year.
At one point, investors considered it part of that elite group, but after some disappointing headlines and earnings reports, it fell out of favor.
Now, however, it appears poised to rejoin that circle, possibly even as an alternative for investors, especially given recent concerns and weakness in some AI stocks, he added.
Still, analysts and investors are watching to see whether Lilly can sustain its current growth as Mounjaro and Zepbound prices come under pressure, and whether its scale-up plans, along with its diversified pipeline and dealmaking, will offset margin pressure.
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