Novo Nordisk vs. Eli Lilly: Is the GLP-1 Correction Over, and Who's Better Positioned for Long-Term Leadership?

The GLP-1 drug race has reshaped the healthcare landscape, but the market's enthusiasm for Novo Nordisk (NVO) and Eli Lilly (LLY) has diverged sharply in 2025. While Eli Lilly's shares have held up relatively well amid a broader market correction, Novo Nordisk's stock has plummeted by 26.5% year-to-date, raising questions about whether the selloff reflects overcorrection or a genuine shift in competitive dynamics. For investors, the key question is whether Novo Nordisk's near-term struggles mask its long-term potential—or if Eli Lilly's momentum has cemented its dominance in the obesity and diabetes treatment space.

The Short-Term Pain of Novo Nordisk

Novo Nordisk's 2025 performance has been a stark contrast to its five-year 104% total return, which once made it a darling of the GLP-1 boom. The company's recent 26.5% decline has been driven by a combination of regulatory headwinds, pricing pressures under U.S. policy shifts, and investor skepticism about its ability to maintain its 62% GLP-1 market share. Meanwhile, Eli Lilly's -6.7% decline, though significant, has left it with a P/E ratio of 62.33—far higher than Novo Nordisk's 19.79—suggesting the market still values its growth prospects more highly.

Yet this valuation gap may present a contrarian opportunity. Novo Nordisk's price target of $102.20 implies a 53% upside from its current price, dwarfing Eli Lilly's 31.7% potential. The discount reflects short-term concerns but overlooks the company's structural advantages: a dominant global footprint, a 15.7% weight loss trial result for its experimental CagriSema (a semaglutide-cagrilintide combo), and a first-mover advantage in cardiovascular risk reduction approvals for Wegovy. These factors suggest Novo Nordisk's fundamentals remain robust, even as its stock price has been punished by macroeconomic and policy-driven volatility.

Eli Lilly's Momentum and Policy Tailwinds

Eli Lilly's 2025 story is one of relentless innovation and strategic alignment with U.S. policy. Its Zepbound and Mounjaro have outperformed Novo Nordisk's offerings in key metrics: Zepbound achieved a 20.2% average weight loss and 18.4cm waist reduction, compared to Wegovy's 13.7% and 13cm. This efficacy edge, combined with a $58–$61 billion revenue guidance and a $20.17–$21.67 EPS forecast, has solidified its position as the market's growth engine.

Moreover, Eli Lilly's alignment with U.S. policy initiatives—such as Trump's drug price-cutting measures—has insulated it from some of the pricing pressures that have hit Novo Nordisk. The company's $50+ billion U.S. manufacturing investment plan also signals a long-term commitment to domestic production, a move that resonates with investors and regulators alike. Meanwhile, its pipeline of retatrutide—a triple-hormone-regulating drug—positions it to maintain its lead in the next phase of GLP-1 innovation.

Pipeline Differentiation and Long-Term Leadership

The true test of leadership in the GLP-1 space lies in pipeline differentiation. While Eli Lilly's retatrutide trials in late 2025 could cement its dominance, Novo Nordisk's CagriSema offers a compelling counterpoint. The drug's 15.7% weight loss result, if replicated in larger trials, could redefine the obesity treatment landscape. However, regulatory approval timelines and market adoption rates will determine whether Novo Nordisk can close the gap.

For investors, the choice between the two hinges on risk tolerance and time horizon. Eli Lilly's current momentum and policy tailwinds make it the safer long-term bet, particularly for those prioritizing growth over valuation. Novo Nordisk, however, offers contrarian value: its discounted valuation, global market share, and pipeline potential suggest it could outperform if the market reprices its fundamentals.

Investment Implications

The GLP-1 correction has created a rare asymmetry in the sector. Eli Lilly's shares, though expensive, are justified by their growth trajectory and policy alignment. Novo Nordisk's discount, meanwhile, reflects short-term pain but hints at long-term potential. For investors with a multi-year horizon, Novo Nordisk's 53% price target upside and structural advantages in global markets warrant a closer look. However, those seeking immediate growth and regulatory certainty may prefer Eli Lilly's current trajectory.

In the end, the GLP-1 race is far from over. The company that adapts best to pricing pressures, regulatory shifts, and pipeline innovation will emerge as the true leader. For now, Novo Nordisk's underperformance may be its greatest opportunity—and Eli Lilly's dominance, its greatest risk.