This week, Q2 earnings from Novo Nordisk and Eli Lilly revealed that the competition between the pharma giants’ weight-loss drugs Wegovy and Zepbound is getting closer.
The FDA’s approval of Eli Lilly’s obesity drug Zepbound in November 2023 officially marked the start of a two-horse race with Novo Nordisk’s blockbuster weight-loss medication Wegovy. While Novo got an early lead, securing the regulator’s approval of Wegovy in June 2021, Lilly has quickly made up ground as evidenced by the company’s extraordinary second-quarter results announced on Thursday.
In Q2, Lilly handily beat Wall Street estimates with Zepbound sales of $1.24 billion, well above the $922.2 million that analysts had expected—and more than double the $517 million the company reported in Q1. Bear in mind that this is only the second full quarter of sales since the FDA’s approval. At the same time, Lilly’s type 2 diabetes medication Mounjaro, which shares the same tirzepatide active ingredient as Zepbound, raked in $3.09 billion in Q2—well above analysts’ expectations of $2.39 billion.
On the basis of these numbers, Lilly on Thursday raised its full-year revenue forecast by $3 billion. And the company “appears poised to generate an additional $7 billion in revenue in 2025 above previous consensus estimates,” Axios reported, citing Evercore ISI analyst Umer Raffat.
By comparison, Novo’s semaglutide products Ozempic and Wegovy both fell short of analyst expectations in Q2 due to supply headwinds. Novo reported Wednesday that Wegovy’s sales in the quarter jumped 53% to $1.7 billion, significantly below analyst forecasts of nearly $2 billion. In contrast to Lilly, the company cut its full-year profit outlook this week.
“Given competitor’s recent results (missed on Wegovy) and [Eli Lilly’s] results from today, recent announcement regarding cessation on FDA shortage list, we see potential for [Lilly] to be the leader in this space,” Truist Securities analysts wrote in a Thursday note to investors.
BMO Capital Markets analyst Evan Seigerman told CNBC that “if we see more supply kind of easing with Lilly, we could see a market share shift.”
Currently, Lilly has captured around 40% of the U.S. weight-loss drug market with Zepbound, according to Reuters, which reported this week that five analysts see a roughly 50-50 split between the two in the weight-loss market by the end of 2024. “These analysts said the even split would continue until supply stopped being an issue, at which point greater demand for Zepbound could give Eli Lilly an edge,” Reuters reported.
Supply, Efficacy Advantages
Lilly seems to have gotten a better handle on its supply challenges. Last week, the FDA’s drug shortage database indicated that all doses of Mounjaro and Zepbound are now available in the U.S. Meanwhile, Novo is also making strides in boosting the supply of semaglutide with only Wegovy’s lowest dose of 0.25 mg tagged as having “limited availability” by the FDA.
Still, the outlook from Jefferies analysts “assumes continued periodic GLP-1 supply constraints” for Novo with U.S. supply remaining “dynamically managed” in 2024. Conversely, Truist Securities analysts contend that Lilly’s additional $5.3 billion manufacturing investment in its Indiana site to increase production of active pharmaceutical ingredients for tirzepatide could further improve overall supply.
But it’s not just on the supply side that Lilly appears to be pulling ahead of Novo. In early March, new U.S. prescriptions for Zepbound surpassed those for Wegovy for the first time.
There’s another important difference between the competing drugs: Zepbound appears to result in greater weight loss compared to Wegovy. Last month, an observational study published in JAMA Internal Medicine found that taking Lilly’s tirzepatide led to more weight loss in obese or overweight adults than those treated with Novo’s semaglutide.
Separate clinical trials have shown that Zepbound is more effective than Wegovy, with patients experiencing a 21% reduction in body weight over 72 weeks compared to a 15% reduction over 68 weeks for those on Wegovy, according to GlobalData. “These findings make Zepbound a more attractive option for healthcare providers and patients seeking effective weight-loss solutions,” GlobalData analyst Sara Reci said in a statement.
Clearly, Lilly’s momentum is continuing to grow in the space. Ultimately, it’s a matter of time before Lilly replaces Novo as the leader in the weight-loss drug market, according to GlobalData. The data analytics firm forecasts Zepbound sales of $27.2 billion by 2030, while Wegovy is predicted to generate $18.7 billion in sales by the same year.
What remains to be seen is whether Zepbound can become the biggest-selling drug of all time—a title that Guggenheim analyst Seamus Fernandez believes the drug has a “strong shot” at achieving. The potential is certainly there, as time appears to be on Lilly’s side.
