These corporations dominate the weight loss drug market, controlling 97% of it, and have the potential to expand significantly in the coming decade.
Is there anything hotter in healthcare right now than weight loss medications? Research by Morgan Stanley indicates that sales of these drugs could jump from approximately $15 billion last year to as much as $150 billion by 2035, marking a tenfold increase over just over ten years.
The majority of current weight loss treatments consist of GLP-1 agonists, which help suppress appetite by slowing digestion and enhancing the sensation of fullness.
Two major players in this field, Novo Nordisk (NVO 1.05%) and Eli Lilly (LLY 0.49%), currently hold an impressive 97% market share between them. The question remains: Can they maintain their leading positions in this rapidly evolving industry? Here’s what I’ve discovered as of June 2025, and why both stocks could be strong buys.
Challenges of Competing in the Weight Loss Sector
High growth in any market inevitably attracts competition. Many companies are currently working on weight loss drugs; however, it’s a significant challenge for new entrants to take market share from Novo Nordisk, which controls 62% of the GLP-1 sector, and Eli Lilly, holding 35%.
The drug development process is intricate and heavily regulated, with many candidates failing to reach the market. Recently, Pfizer halted the development of its oral weight loss drug danuglipron due to concerns over potential liver injury reported in clinical trials.
Future Innovations in Weight Loss Medications
The market for weight loss products is still in its infancy. Leading medications like Novo Nordisk’s Ozempic and Wegovy, along with Eli Lilly’s Mounjaro and Zepbound, involve injections, require refrigeration, and remain costly for consumers.
New options on the horizon include more convenient oral formulations, which may also be less expensive to manufacture, allowing for lower retail prices. Both Novo Nordisk and Eli Lilly are actively pursuing these advancements to maintain their market positions.
Novo Nordisk may soon launch an oral version of Wegovy, having submitted its approval application, with hopes for a decision by the year’s end. Additionally, its candidate CagriSema, a potential successor to Wegovy, is currently in phase 3 trials and could appear as early as next year.
Eli Lilly is also making strides in this area. Its oral weight loss candidate, orforglipron, has shown good results in phase 3 studies and could be the first small-molecule drug to reach market; these drugs are generally simpler and cheaper to produce. Furthermore, its innovative injectable therapy, retatrutide, which targets three hormones related to hunger, is also in phase 3 studies and may become available in 2027 if successful.
Investment Opportunities in the Weight Loss Drug Market
Barring any unforeseen circumstances, Novo Nordisk and Eli Lilly are well positioned to take advantage of the explosive growth expected in the weight loss drug market in the upcoming years.
Investors often wonder which company will perform better. Currently, Wall Street seems to favor Eli Lilly, as indicated by its higher stock valuation, with a price-to-earnings (P/E) ratio of 62 compared to Novo Nordisk’s 22.
While Novo Nordisk’s CagriSema is struggling in clinical trials compared to Eli Lilly’s orforglipron, treatment choices are influenced by a variety of factors, meaning Eli Lilly won’t necessarily dominate the market at Novo Nordisk’s expense.
The ideal strategy? Invest in both companies.
Evaluating potential returns can include examining their PEG ratios, which compare stock valuations to expected growth rates:
- Novo Nordisk PEG ratio: 1.5
- Eli Lilly PEG ratio: 1.9
Both companies appear reasonably priced based on anticipated long-term growth, currently projected at 14% annualized for Novo Nordisk and 32% for Eli Lilly. Although outcomes may differ, investing in both stocks seems prudent, as they are likely to share in the benefits from the expanding weight loss drug market.
