Eli Lilly LLY stays a dominant participant within the international weight problems market, with a lot of its latest development pushed by itsblockbuster tirzepatide (GLP-1) injections, Mounjaro for kind II diabetes (T2D) and Zepbound for weight problems. Despite being in the marketplace for simply over three years, each merchandise have delivered distinctive gross sales development as demand for GLP-1 therapies has surged worldwide. Together, these medicines now account for greater than half of Lilly’s complete revenues, underscoring how central the franchise has grow to be to the corporate’s development story.
However, Lilly’s shares fell about 5.9% on Tuesday after HSBC reportedly downgraded the score on the inventory and lowered its worth goal. The funding financial institution flagged potential pricing strain, rising competitors within the weight problems drug market and the likelihood that long-term income expectations for GLP-1 medication could also be overly optimistic. Another overhang is the continued availability of compounded variations of tirzepatide in sure channels regardless of the FDA’s crackdown, which may mood demand for Lilly’s branded therapies.
Eli Lilly’s main rival within the weight-loss market is Novo Nordisk NVO, which markets its semaglutide (GLP-1) injections as Ozempic for T2D and Wegovy for weight problems, competing immediately with Mounjaro and Zepbound. Both corporations have already launched a number of worth cuts in response to strain from the U.S. authorities throughout 2025 and 2026 to enhance affected person entry to GLP-1 medicines. As affordability turns into more and more central to affected person uptake, pricing dynamics — relatively than product differentiation alone — might play a bigger position in figuring out market share. This shift provides uncertainty to Lilly’s aggressive long-term income expectations for its weight problems portfolio, which depends on increased volumes to offset worth cuts.
Novo Nordisk has additionally strengthened its aggressive place. In late December, the FDA authorised an oral model of Wegovy, and the drug was commercially launched in early January. The approval made Wegovy the primary GLP-1 remedy out there as a tablet for weight administration, providing a needle-free different that would broaden affected person adoption.
Lilly, nonetheless, is shut behind. The firm has already filed regulatory purposes within the United States, Europe and different markets in search of approval for its oral GLP-1 candidate, orforglipron, for weight problems. With a possible FDA resolution anticipated in April, investor warning seems to replicate uncertainty across the regulatory consequence. Earlier in 2026, the FDA delayed its resolution as soon as, which has possible contributed to the latest share worth volatility. Even if orforglipron is authorised, Lilly should face execution challenges if affected person adherence to an oral remedy falls in need of expectations or if pricing pressures restrict the product’s business potential.
Separately, final week, Lilly raised security issues about sure compounded variations of tirzepatide. The firm warned that some compounded formulations are being blended with vitamin B12, which might create an unidentified impurity via a chemical response between the 2 substances. According to Lilly, the security profile of this impurity is unknown, and its potential results on toxicity, immune reactions, drug exercise and metabolism haven’t been studied.
The concern highlights the rising presence of compounded alternate options to Lilly’s authorised medication, Mounjaro and Zepbound. While Lilly argues these unapproved variations pose security dangers, their continued availability via telehealth platforms and compounding pharmacies may divert some demand away from branded merchandise within the close to time period, significantly given their decrease price. That stated, tighter regulatory enforcement or heightened security issues may in the end push sufferers again towards Lilly’s FDA-approved therapies over time.
The weight problems area has garnered a lot of the highlight over the previous 12 months because of the sizeable and nonetheless underpenetrated market alternative. Smaller biotechs like Structure Therapeutics GPCR and Viking Therapeutics VKTX are additionally growing GLP-1-based therapies to problem the incumbents.
Viking Therapeutics’ twin GIPR/GLP-1 receptor agonist, VK2735, is being developed each as oral and subcutaneous formulations for the therapy of weight problems. Viking Therapeutics plans to advance oral VK2735 into section III growth for weight problems within the third quarter of 2026.
Structure Therapeutics’ section II ACCESS examine on its orally GLP-1 RA, aleniglipron, for weight problems, met its main and all key secondary endpoints. Structure Therapeutics expects to provoke the late-stage program of aleniglipron in weight problems round mid-2026.
Others like Roche, Merck and AbbVie are additionally trying to enter the weight problems area by in-licensing weight problems candidates from smaller biotechs, which may threaten Novo Nordisk and Eli Lilly’s dominance out there. Last 12 months, Pfizer acquired weight problems drugmaker Metsera to realize a foothold within the area.
Shares of Eli Lilly have gained 23.7% up to now six months in contrast with the business’s 17.4% development. The firm has additionally outperformed the sector and the S&P 500 throughout the identical time-frame, as seen within the chart under.
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From a valuation standpoint, LLY inventory is pricey. Going by the value/earnings ratio, the corporate’s shares at present commerce at 25.99 ahead earnings, increased than 17.65 for the business. However, the inventory is buying and selling under its five-year imply of 34.56.
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Estimates for Eli Lilly’s 2026 earnings have improved from $33.11 to $34.16 per share up to now 60 days, and estimates for 2027 earnings have improved from $41.48 to $41.90 per share over the identical time-frame.
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Eli Lilly at present carries a Zacks Rank #3 (Hold). You can see the entire record of at this time’s Zacks #1 Rank (Strong Buy) shares right here.
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