Eli Lilly or Novo Nordisk: Which Weight Loss Drug Stock Offers a Superior Investment Opportunity?

Which Obesity Drug Leader Is the Better Investment?

In the past year, the two dominant players in the obesity medication sector—Eli Lilly (LLY) and Novo Nordisk (NVO)—have both underperformed the broader stock market, with Novo Nordisk experiencing a steeper decline. Despite this, industry experts anticipate robust growth in this therapeutic field over the coming decade. Given their strong development pipelines, both companies are well-positioned to retain their leadership roles. But which stock offers the most compelling opportunity?

Head-to-Head: Weight Loss Drug Portfolios

Eli Lilly’s Zepbound and Novo Nordisk’s Wegovy recently faced off in a clinical trial, where Zepbound delivered an average weight loss of 20.2% over 72 weeks, surpassing Wegovy’s 13.7%. This superior performance has propelled Zepbound to the forefront of the market, even though Wegovy received regulatory approval more than two years earlier.

Image source: Getty Images.

In response, Novo Nordisk has been working to regain momentum. The company recently launched the first oral GLP-1 medication for weight loss and secured approval for a higher-dose version of Wegovy. Additionally, Novo Nordisk’s pipeline features promising candidates like CagriSema, a next-generation anti-obesity therapy that has outperformed Wegovy in trials.

Novo Nordisk is also developing UBT251, a drug created in partnership with a Chinese pharmaceutical company, which mimics three gut hormones. While no similar medication has been approved in the U.S., UBT251 showed impressive results in a phase 2 trial in China. However, Eli Lilly is expected to introduce its own oral GLP-1, orforglipron, in the near future, which could limit Novo Nordisk’s ability to reclaim the top spot.

Novo Nordisk (NYSE: NVO) Snapshot

• Market Cap: $121B
• Day's Range: $35.89 - $36.49
• 52-Week Range: $35.85 - $81.44
• Volume: 15M
• Average Volume: 24M
• Gross Margin: 80.90%
• Dividend Yield: 4.79%
• Current Price: $36.04
• Today's Change: -0.99% ($-0.36)

While the oral version of Wegovy is only approved for weight management, Eli Lilly’s orforglipron is being developed for both weight loss and diabetes. In direct comparison, orforglipron outperformed Novo Nordisk’s oral GLP-1, Rybelsus, in diabetes trials. Although CagriSema is promising, Eli Lilly’s Zepbound was found to be more effective in Novo Nordisk’s own studies.

Additionally, Eli Lilly’s retatrutide, a triple agonist, achieved a remarkable 28.7% average weight loss at its highest dose in a phase 3 trial—an unmatched result in the field. Overall, Eli Lilly’s weight loss drug lineup appears stronger, suggesting it will likely maintain its leadership as the market expands.

Looking Beyond Obesity Treatments

Outside of anti-obesity therapies, Novo Nordisk has expanded Wegovy’s uses to include treating metabolic dysfunction-associated steatohepatitis (MASH), a liver disease linked to obesity, and reducing cardiovascular risk in overweight or obese patients with heart disease. However, the company’s offerings remain concentrated around its GLP-1 products.

Eli Lilly (NYSE: LLY) Snapshot

• Market Cap: $830B
• Day's Range: $877.11 - $900.83
• 52-Week Range: $623.78 - $1,133.95
• Volume: 2.7M
• Average Volume: 3.1M
• Gross Margin: 83.04%
• Dividend Yield: 0.71%
• Current Price: $878.24
• Today's Change: -2.09% ($-18.76)

In contrast, Eli Lilly boasts a diverse portfolio that extends well beyond weight loss. The company markets blockbuster drugs such as Verzenio for breast cancer and Taltz for autoimmune diseases. Newer products like Ebglyss (eczema), Kisunla (Alzheimer’s disease), and Jaypirca (cancer) have the potential to generate over $1 billion in annual sales. Eli Lilly’s pipeline is also broader and more varied than Novo Nordisk’s, reinforcing its position as the stronger contender in areas outside of obesity treatment.

Valuation: Is the Premium Justified?

Eli Lilly stands out with its superior weight-loss portfolio, diversified pipeline, and stronger revenue and earnings growth.

However, valuation is a key consideration. Eli Lilly trades at 26.6 times forward earnings, compared to Novo Nordisk’s 10.9, and the healthcare sector’s average of 16.9. This suggests that Eli Lilly’s shares may be priced at a premium, while Novo Nordisk could be undervalued at current levels.

Despite the higher valuation, Eli Lilly remains the more compelling investment, thanks to its breakthroughs in weight management, robust prospects across multiple therapeutic areas, and impressive financial performance. While Novo Nordisk may offer value and could rebound as it advances its pipeline, Eli Lilly continues to be the stronger buy.