Why Novo Nordisk (NVO) Outshines Eli Lilly (LLY) in the Weight Loss Drug Race

The battle for dominance in the weight loss drug market has intensified, but Novo Nordisk (NVO) remains the clear leader. While Eli Lilly (LLY) has made strides with its fast-growing products like Zepbound and Mounjaro, NVO's entrenched market position, undervalued stock, and strategic pipeline advantages position it as the superior investment opportunity. Here's why.

Market Positioning: NVO's Unshakable Lead

With a 62% market share as of Q2 2025, NVO's Ozempic and Wegovy dominate the GLP-1 drug category. Ozempic alone generated $4.2 billion in quarterly sales, though its growth has slowed to 3.8% year-over-year, signaling maturity. Wegovy and Rybelsus, meanwhile, delivered 53% and 49% sales growth, respectively, underscoring NVO's diversified revenue streams.

Lilly's 35% share is impressive, but it's built on volatile momentum. Zepbound's 347% year-over-year sales surge and its superior weight-loss results (20.2% median vs. Wegovy's 13.7%) have drawn attention. However, NVO's scale and brand loyalty—rooted in Ozempic's decade-long track record—act as a moat. Patients and prescribers are unlikely to switch en masse to newer therapies, especially given the logistical challenges of Lilly's injectable drugs in a market where convenience is king.

Valuation Discrepancies: NVO's Hidden Value

NVO's stock trades at a P/E ratio of 19.79, significantly lower than Lilly's 62.33, despite NVO's larger market share and more established cash flows. Investors have priced in Lilly's growth potential, but this optimism may be overdone. NVO's valuation reflects its $4.2 billion quarterly Ozempic revenue and its ability to navigate generic competition, whereas Lilly's premium hinges on unproven pipeline milestones.

The gap between the two valuations suggests NVO is undervalued. Even with Ozempic's slowing growth, its sheer scale and profitability provide a foundation for steady returns. In contrast, Lilly's reliance on experimental therapies like Retatrutide (which showed a 24% median weight loss in trials) carries execution risks.

Strategic Implications of Oral Drug Development

Both companies are racing to commercialize oral GLP-1 drugs, but NVO's approach is more balanced. While Lilly's orforglipron (Phase 3) threatens injectable dominance, NVO's CagriSema—a GLP-1/GIP combo—lagged with a 15.7% weight loss in trials, trailing Retatrutide. However, NVO's manufacturing prowess and supply chain resilience give it an edge.

Lilly's oral drugs may disrupt injectables, but NVO's ability to scale production and counter generic threats (e.g., compounded generics) ensures its dominance in the near term. Furthermore, NVO's $3.8 billion in R&D spending in 2024 signals a commitment to pipeline innovation, even if early results are mixed.

Investment Outlook: NVO's Superior Risk-Reward

NVO's stock dropped 8% post-BMO reports due to growth concerns, but this presents a buying opportunity. Its 62% market share, diversified pipeline, and undervalued stock offer a safer bet than Lilly's overhyped prospects. While Lilly's innovations are promising, its high valuation leaves little room for error.

Investors should focus on NVO's operational resilience and its ability to defend its crown. Even if Lilly closes the gap, NVO's scale and brand power will sustain its leadership for years. For now, NVO is the safer, more rewarding play.

Investment Takeaway: Buy NVO on dips. Its valuation discount and entrenched market position provide a compelling risk-reward profile. Lilly's potential is exciting, but it's already priced in—and overpriced at that.

This analysis is based on Q2 2025 data and assumes no material changes in regulatory or competitive dynamics.