At its Capital Markets Day event this week, Novo gave investors a plan to keep growing beyond Ozempic/Wegovy. They hope to see more than 5 “multi-blockbusters” reach market by 2030, risk-adjusted sales of DKK 150bn (approx. $23bn) from their pipeline by 2035, expand production of oral GLP-1s significantly, and treat over 60m patients worldwide by 2030. These are lofty goals. Eli Lilly isn’t going to sit back and wait, though.
We are starting to see the obesity market resemble other areas of pharma, where a leading player can fall behind in no time. Novo had the first blockbuster GLP-1 drug, semaglutide. Eli Lilly followed suit with tirzepatide and has leveraged better clinical data, a stronger commercial push, and production capabilities to steal market share.
In Lilly’s Q2 results, Zepbound sales were $4.93bn, up 46% y/y. Mounjaro also saw $9.94bn of sales, up 91% y/y. These two products alone made Lilly nearly $14.9bn in sales in one quarter. Total revenue grew 48% to $23.0bn.
Novo saw adjusted sales grow by only 7% CAGR in Q2 and expects full-year 2026 sales to grow between 0% and- 6% CAGR.
It’s more than just one quarter.
Lilly has gained traction in the market. Novo has a plan.
Lilly has already won a war
Looking at the injected obesity space, you can start to see Novo’s issue.
IQVIA data recently shared by the sell side shows that Lilly’s Zepbound has taken around 60% of the US market share for obesity drugs. Wegovy and its related products account for roughly 40%. Reuters predicts Zepbound will sell $7bn more than Wegovy this year.
Considering Wegovy paved the way for branded obesity drugs, this is crazy.
Part of the reason is clinical data.
In a head-to-head obesity trial, Lilly’s current injectable outperformed Novo’s in weight loss. Novo’s next step to beat this is CagriSema, which we will get into more below, but it also hasn’t shown a decisive win over Lilly’s drug.
Novo has some good news here. This week they announced that at a lower dose of CagriSema they saw an estimated mean weight loss of 12.4% vs 9.1% with tirzepatide 5mg. This was in patients with type 2 diabetes. Although it’s worth noting this was against the 5mg dose of Lilly’s drug and not its highest dose of 15mg. In a head-to-head obesity trial, CagriSema led to about 23.0% weight loss vs 25.5% with Lilly’s drug.
So we could see CagriSema become a large drug as well. Just not one that will instantly put Novo ahead of Lilly in the clinic.
Pills are where the battle is going to be fought
Arguably this will be the most impactful change to obesity drugs.
One of the biggest limitations of GLP-1s is that you have to inject yourself to receive the most potent forms. Offering these drugs orally will open up more patients to this class of therapy.
Novo knew this when they released their Wegovy pill. They have established themselves as leaders in this area and said in August that they believe they have about 90% market share in US oral obesity drugs. However, Lilly is catching up fast. As of mid-September, Lilly said its oral drug, Foundayo, has reached 30%+ market share among new US patients on oral obesity drugs.
Weekly prescription trends also show this. IQVIA data recently cited by Citi showed Wegovy pill around 163k weekly prescriptions. Foundayo is reaching near 39k weekly prescriptions and breaking highs. Novo is currently leading in the oral space. Can they keep it? Lilly has one thing in its favor. Convenience.
Their oral drug is a small molecule that can be taken daily with no food/water restrictions. You have to follow certain protocols when taking oral semaglutide.
In a pharma setting, this may not seem like a big deal. In the real world, it will. Obesity drugs aren’t only competing on clinical data. They will also compete on ease of use, cost, access, production, provider preference, and more. An oral drug that can be easily added to a patient’s daily regimen will help it gain ground over competitors.
Production could also play a big role for Lilly
Another factor to consider for Lilly is production. Oral small molecules can potentially be produced more easily than their counterparts that require peptide manufacturing. This will be very important if we start to see hundreds of millions of people being treated for obesity.
Novo is aware of this. Their new strategy includes expanding production of oral GLP-1s to treat 10x as many people by 2030.
Production is becoming a bigger issue in obesity. More production will be a competitive advantage. Whoever can make the most product at a lower cost will be able to compete with insurers, create d2c offerings, sell internationally, and lower prices in the future.
Optionality is something Lilly also offers
As mentioned before, Novo is still heavily reliant on semaglutide. Ozempic. Wegovy injectables. Wegovy pills. All based on one compound.
This has allowed them to become one of the largest drug franchises of all time. Once patents expire in key geographies early next decade, they will need something to replace it.
Which is why they have laid out a plan to have 5 obesity/diabetes drugs in Phase 3 by 2030. They also want another 5 outside those therapeutic areas. They have also stated they are open to M&A and licensing deals to help fill their pipeline.
There are a lot of ifs here. Lilly, on the other hand, is targeting obesity with multiple compounds. Tirzepatide, oral orforglipron, and more to come in their pipeline. This lets them split up the market and find their next hit. Perhaps Lilly’s best selling point is that. Obesity probably won’t be a one-size-fits-all market.
We may see a market of multiple hits. Patients will want the most weight loss. Others will want an oral drug. Some will want to treat their diabetes. Others will have comorbidities such as heart disease, sleep apnea, osteoarthritis, or NASH. We may even see patients want to stay on a lower dose after losing significant weight.
Having multiple drugs that do what they do well may be Lilly’s key to staying on top.
Novo has time to catch up. They just have to act fast.
I don’t think we should count out Novo here. They still have a ton of positives. The Wegovy name is household. Semaglutide has been studied extensively. They stated on their call that the Wegovy pill has gained great traction, and they continue to expand their obesity franchise internationally. They also stated they now have around 50 million patient-years of oral semaglutide.
CagriSema can become another big drug for them as well. Maybe they have other pipeline assets that could succeed, or they could make an acquisition that helps.
Novo just needs to do it while competition keeps growing.
This is why we saw Novo’s stock drop after their call. Shares fell as much as 9% after analysts grilled management on pricing power, M&A, and growth expectations as semaglutide nears its patent cliff. They know the issues. Can they overcome them in time?
Obesity has entered phase 2
Phase 1 of GLP-1s was about showing us that we could lose weight from drugs. Similar to what we saw with bypass surgery. Novo took that phase.
Phase 2 is going to be all about clinical data + ease of use + access + production + cost + having a portfolio of drugs. Lilly seems built for that.
Novo will have to rely on their pipeline to grow. Which takes time. Drugs have to be developed, approved, produced, and sold to patients. Lilly will continue to rake in billions each quarter while throwing money at their next wave of drugs.
That is why we need to be cautious with Novo’s new plan. They need to find a way to recreate their engine around their blockbuster drug.
They’ve shown they can change the market with Wegovy. Can they change as fast as the market itself?
