NVO vs LLY: Which Pharma Stock is Likely to Do Better in 2025?

Airdrop Is Live CaryptosHeadlines Media Has Launched Its Native Token CHT. Airdrop Is Live For Everyone, Claim Instant 5000 CHT Tokens Worth Of $50 USDT. Join the Airdrop at the official website, CryptosHeadlinesToken.com Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.Year-to-date, both Novo Nordisk (NYSE: NVO) and Eli Lilly (NYSE: LLY) delivered negative stock performance, at -26.5% and -6.7%, respectively. In recent years, these pharma giants have become even more known for tapping into the ever-growing obesity market by tackling weight loss and diabetes. The global obesity rate seems to only climb. According to the Global Burden of Disease Study BMI Collaborators analysis published in The Lancet this March, 60% of adults will be obese by 2050, alongside 31% of children and adolescents. If governance systems fail to such an extent, pharma stocks will continue to soar. Over the last five years, LLY shares went up 361% while NVO shares climbed 104%. Given the latest earnings for Q1 2025, is this trend likely to favor Eli Lilly or Novo Nordisk?Market Positioning and Earnings: Novo Nordisk vs Eli LillyFor the first three months in 2025, Danish Novo Nordisk reported an 18% increase in international sales, owing to two main revenue generators – obesity care and GLP-1 (Glucagon-like peptide-1) treatment of diabetes.The company leveraged the GLP-1 approach to treat diabetes under brands Ozempic and Rybelsus while Wegovy is used for tackling obesity by reducing cravings. Over the last three years, Novo Nordisk increased its GLP-1 penetration by 3x, with a reported market share of 62% while Eli Lilly’s hold in the GLP-1 arena is 35%.For the 2025 outlook, Novo Nordisk now expects 13-21% revenue increase at constant exchange rates (CER). Operating profit is expected at 16-24% growth. However, this forecast, 3% lower for revenue and 5% lower for operating profit than expected, reflects lower GLP-1 penetration in the US market.For the same Q1 period, Eli Lilly reported 45% revenue growth, also driven by diabetes and obesity drugs, primarily Mounjaro and Zepbound (tirzepatide), as the equivalent gut-influencing drug to Novo Nordisk’s Wegovy.For blood sugar management, Eli Lilly’s Mounjaro sales increased 113% year-over-year to $3.84 billion. Zepbound’s sales increased by 347% to $2.3 billion, indicating that the company is well on its way to increase its market share against Novo Nordisk.For the 2025 outlook, Eli Lilly expects decreased earnings per share guidance to $20.17 – $21.67 range, and revenue between $58 billion and $61 billion. This is largely a result of increased In-Process Research and Development (IPR&D) charges.When juxtaposing these two results together, investors should hold on buying more NVO stock, as it appears that Eli Lilly’s research expenses are to pay off even more in the obesity market.Join our Telegram group and never miss a breaking digital asset story.Which Company Offers Superior Weight Loss Efficiency?In its Q1 earnings report, Eli Lilly noted that Zepbound intakers achieved 20.2% average weight loss compared to 13.7% with Novo Nordisk’s Wegovy. Moreover, Wegovy yielded only 13cm average waist circumference reduction against Zepbound’s 18.4cm slimming.Although both companies leverage gut hormones, Eli Lilly opted for a dual-agonist approach that mimics two hormones – glucose-dependent insulinotropic polypeptide (GIP) and glucagon-like peptide-1 (GLP-1).This way, Eli Lilly tackled both blood glucose regulation and appetite in a single drug. In contrast, Novo Nordisk only mimics one hormone, GLP-1. This would explain the purported efficacy difference as well as the expectation for lower GLP-1 penetration in the US market.However, it is yet unclear which drug has more side effects, as Zepbound t is only approved for adults. At the same time, Wegovy is FDA-approved from 12+ and the first drug to be approved for cardiovascular risk reduction.Although some studies suggest that Zepbound may reduce such risk by 38%, the drug is yet to reach this particular approval threshold. In Wegovy’s SELECT trial published in The New England Journal of Medicine, the drug showed 28% reduction in heart attacks, alongside 7% decrease in non-fatal strokes and 15% reduction in CV-related deaths.Altogether, it is likely that Zepbound will follow with Novo Nordisk’s Wegovy with even greater reduction of CV-related events. But for now, Wegovy holds the first mover advantage.Companies’ Next Drug MovesMoving forward, Novo Nordisk is proceeding with the CagriSema drug. A step above semaglutide in Wegovy, the company combines it with cagrilintide to tackle both type 2 diabetes and weight loss.According to the latest REDEFINE 2 trial across 1,200 participants, CagriSema achieved 15.7% average weight loss against the placebo effect of 3.1%. Novo Nordisk plans to file for the drug’s regulatory approval in Q1 2026.If Eli Lilly’s Zepbound weight loss efficiency results hold, this would still make it a better option, especially if the FDA includes the approval for cardiovascular risk reduction. On top of that, the company is exploring retatrutide which includes the regulation of three hunger-related hormones: GLP-1, GIP and glucagon.Retatrutide efficacy data is expected to be released in late 2025.If successful, this would push the company even more as the primary weight-loss supplier over Novo Nordisk. Additionally, Eli Lilly has another advantage by being US-based, with plans to more than double US manufacturing investment since 2020, at above $50 billion.The Bottom LineEli Lilly appears to have a more advanced weight loss drug pipeline that is likely to substantially increase market share in the obesity market. This not only covers drug efficacy but also supply reliability and manufacturing scalability.Although having a first mover advantage, Novo Nordisk had major supply issues in the rollouts of Ozempic and Wegovy, which was addressed late in October 2024. Eli Lilly is rolling out a more efficient Zepbound from a better position, with the tirzepatide shortage resolved in December 2024.Most recently, on Monday, President Trump announced that cut prescription drug prices by 30% – 80%. The initiative includes the order to the Secretary of Health and Human Services to make drug purchases available directly from manufacturers, bypassing costly middlemen. Compounded with streamlined FDA inspections and regulatory hurdles, this would again benefit Eli Lilly.Altogether, Eli Lilly’s broader drug pipeline, alignment with Trump’s reshoring strategy, and pricing reforms make LLY stock preferable at this point in time.According to WSJ’s forecasting data, the average LLY price target is $991.50 against the current price of $752.72 per share, giving shareholders a potential upside of 31.7%.The average NVO price target is $102.20 against the current price of $66.82 per share, giving shareholders a potential upside of 53%. Given that Eli Lilly has 2.3x greater market cap weight, the profit potential is expectedly on the side of Novo Nordisk.However, all signals point to Eli Lilly winning the obesity market in the long run. This is reflected by Eli Lilly’s significantly higher price-to-earnings (P/E) ratio of 62.33 compared to Novo Nordisk’s P/E of 19.79.Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.!function(f,b,e,v,n,t,s){if(f.fbq)return;n=f.fbq=function(){n.callMethod?n.callMethod.apply(n,arguments):n.queue.push(arguments)};if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version='2.0';n.queue=[];t=b.createElement(e);t.async=!0;t.src=v;s=b.getElementsByTagName(e)[0];s.parentNode.insertBefore(t,s)}(window,document,'script','https://connect.facebook.net/en_US/fbevents.js' );fbq( 'init', '1108039529928202' );Source link