Novo Nordisk (NYSE:NVO) And Elie Lilly (NYSE:LLY) are two of the hottest pharmaceutical stocks of the last three years. Both companies have recorded returns well above the market, driven by popular demand for their recently launched drugs that treat obesity as well as type 2 diabetes. Both drugs are blockbuster drugs — defined as those generating annual sales totaling more than $1 billion. Blockbuster drugs tend to generate a lot of buzz, and companies that can market more drugs with success potential are likely to outperform those with less.
So which of these two giants has more blockbuster potential on their roster? Let’s answer this question by examining each pharmaceutical company’s portfolio to identify the most likely candidates for billion-dollar drugs.
The case of Novo Nordisk
Novo Nordisk now has a drug worth more than $1 billion, with more in the pipeline. The newest star you’ve probably already heard of is called Ozempic, which treats type 2 diabetes and is based on a molecule called semaglutide. The company’s main obesity drug, Wegovy, is based on the same compound and generates similarly large revenues. Approximately 90% ($31.2 billion) of Novo Nordisk’s capital income in 2023 came from sales of drugs for diabetes and obesity.
In the future, Novo Nordisk hopes to apply semaglutide to other indications that could also lead to the creation of blockbuster drugs if approved. It has a phase 3 program aimed at determining whether it can treat steatohepatitis associated with metabolic dysfunction (MASH, also known as NASH), a liver disease. One group estimates that the market for these drugs could reach $16.3 billion by 2030. There is also another phase 3 trial targeting its use in Alzheimer’s disease.
But semaglutide is far from the only lucrative vein in the company’s portfolio. It offers a few late-stage programs for the treatment of atherosclerotic cardiovascular disease (ASCVD) and heart failure, as well as a late-stage program for chronic kidney disease (CKD). All of these candidates could easily become blockbuster drugs, given the massive size of their target markets.
So Novo Nordisk has no shortage of potential big winners lining up for approval over the next couple of years. This means that investors will have plenty of catalysts to potentially generate outsized returns if things go as planned with the Food and Drug Administration (FDA).
The case of Eli Lilly
Much like Novo Nordisk, Eli Lilly’s pipeline is full of near-term opportunities to launch winning therapies, and it also has some high-performing players. Its rising star of the moment is Zepbound, an obesity drug that began to become a blockbuster shortly after its sister drug Mounjaro, aimed at type 2 diabetes, hit it. Mounjaro grossed $5.1 billion in 2023 and Zepbound sold $175.8 million in its first months on the market.
Both Mounjaro and Zepbound are based on the tirzepatide molecule. In addition to testing it in phase 2 trials for MASH, Eli Lilly is testing tirzepatide in phase 3 trials for the treatment of cardiovascular disease. So it could soon receive at least two more blockbuster-ready indications, which is a bullish sign for the stock to say the least.
It is also trying to enter the Alzheimer’s market, and regulators are currently considering whether to grant approval to one of its candidates. As if that weren’t enough, its pipeline offers mid-to-late stage programs for pain, arthritis, Crohn’s disease, psoriasis and cardiovascular disease – all of which are large and growing markets with annual spend of several tens of billions of dollars. dollars per year. It is not necessary for it to succeed in all its attempts to have several valuable new drugs available in the short term.
The verdict is not the most significant
Comparing their pipelines, Eli Lilly has a few more opportunities to hit home runs than Novo Nordisk, but the competition is far from a blowout. Both companies are very likely to produce several highly profitable drugs in the short, medium and long term. Either company could be a good investment, and it might even make sense to buy both to benefit from their efforts to enter the type 2 diabetes and obesity markets.
In this regard, the two countries are not really fighting tooth and nail for market share in these markets. In fact, Novo Nordisk management predicts that there will still be such demand for Ozempic and Wegovy that it will not need to engage in a direct competitive struggle for some time. If that’s not good news for both players, it’s not a big deal.
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Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
Best Blockbuster Drug Stock: Novo Nordisk vs. Eli Lilly was originally published by The Motley Fool
