As the U.S. obesity drug market heats up, this year's outlooks for Eli Lilly and Novo Nordisk have split in opposite directions. Both face the shared pressure of price cuts in the United States, but Lilly projected strong growth while Novo publicly raised the possibility of a revenue decline.
◇ Diverging fortunes in revenue and profit... will Lilly cement its solo run?
Lilly on Feb. 4 (local time) guided this year's revenue at $80 billion to $83 billion (about 116 trillion won to 121 trillion won), far above Wall Street's estimate of $77.6 billion. By contrast, Novo said revenue and profit could fall 5% to 13% this year due to price declines in the United States and patent expirations in major markets including China, Brazil and Canada.
The market consensus is that Lilly's edge in the obesity and diabetes drug market has become clearer.
David Risinger, an analyst at Leerink Partners, told CNBC, "Throughout last year the sales momentum and market share gap widened, and the contrast became decisively pronounced as Novo offered a below-expectations outlook while Lilly presented above-expectations figures." He added, "Among investors, the view has solidified that Lilly will become the dominant player in the obesity drug market going forward."
The gap between the two already showed in last year's annual results. Lilly's revenue last year jumped 45% year over year to $65.179 billion (about 95 trillion won). Net income also rose 95% to $20.64 billion (about 30 trillion won), boosting both scale and profitability.
Novo's revenue rose just 6% to 309 billion kroner (about 71 trillion won). Operating profit fell 1% to 127.6 billion kroner (about 29 trillion won), and net income edged up 1% to 102.4 billion kroner (about 24 trillion won), effectively flat.
Fortunes split at their flagship products. Lilly's "zepbound," in its second year on the market, posted $13.542 billion (about 20 trillion won) in revenue last year, surging 175% from a year earlier. "Mounjaro" also grew 99% to $22.965 billion (about 33 trillion won). The two products together generated about $36.5 billion, accounting for 56% of Lilly's total revenue.
Novo's "Wegovy" also logged 79.1 billion kroner (about 18 trillion won) in revenue, up 36%, but it could not match zepbound's expansion pace. "Ozempic," which has the largest share of the company's total revenue, saw its growth rate stay at 6%.
◇ Why Lilly is smiling amid drug price pressure
The two companies in November last year reached an agreement with U.S. President Donald Trump to dramatically lower prices for obesity and diabetes treatments. As a result, forecasts call for global drug prices to fall by the low-to-mid double digits this year.
Lilly also acknowledged that price cuts will weigh on results. But the company expects that expanding global demand for zepbound and Mounjaro, the oral GLP-1 "orforglipron" targeted for a second-quarter launch, and broader Medicare coverage for obesity drugs could offset the impact.
Lilly CEO David Ricks said in a CNBC interview, "The number of patients currently taking the two companies' products is around 20 million to 25 million," adding, "The potential demand for obesity drugs is much larger." He noted that once Medicare coverage begins, the company could reach up to 40 million people, pointing to potential prescription growth.
The market also cites drug competitiveness and patent defense as factors widening the gap between the two.
Tirzepatide, the active ingredient used in Lilly's zepbound and Mounjaro, was assessed in a 2024 head-to-head clinical trial to outperform Novo's semaglutide in efficacy and tolerability. Prescription trends likewise suggest the center of gravity is shifting toward Lilly.
Novo is also approaching patent expirations in some overseas markets. Ricks said he expects tirzepatide to be protected by patents in key markets into the late 2030s.
◇ The next battleground is "pills"
Novo recently launched a GLP-1 pill version of Wegovy in the United States, surpassing 50,000 weekly prescriptions in less than three weeks. Lilly plans to bring orforglipron to market within the year.
Novo CEO Mike Doustdar said in a CNBC interview, "We have the most powerful weight-loss pill." Clinical data show Novo's pill produced about 15% weight loss, similar to injectables.
However, Lilly's drug is cited for convenience because it is a small-molecule therapy with no water-intake restrictions and no need to coordinate with meals. By contrast, Novo's pill must be taken with no more than four ounces of water and requires avoiding food and beverages for 30 minutes.
Novo does not believe these conditions will impede broader adoption. Still, some in the market say the factors could favor Lilly more in the long run.