Everyone wants a piece of the GLP-1 pie

GLP-1s are all the rage right now: 1 in 8 US adults use them for weight loss, over a quarter of US adults with diabetes take them, and Bank of America just said it spends over $250 million per year covering the drugs for employees. Unsurprisingly, that demand is translating into blockbuster results for drugmakers, so let’s take a look at how the industry’s biggest players fared this quarter.

Eli Lilly comfortably beat Wall Street’s expectations, as massive demand for its GLP-1 portfolio continued to outweigh pricing pressure. Revenue from diabetes drug Mounjaro jumped 91% year over year while sales from its weight loss treatment Zepbound climbed 46%, and prescriptions for its newly launched obesity pill Foundayo doubled in just one month. The strong volume more than offset a 13% decline in realized prices. Shares popped 4.86% today.

Rival Novo Nordisk also beat forecasts and raised its forward guidance, but investors were less impressed. The drugmaker is still searching for the “sweet spot” between pricing and volume, while sales of its oral weight loss pill Wegovy, which competes with Lilly’s Foundayo, missed Wall Street’s forecasts. Shares fell yesterday, but rebounded 0.56% this afternoon.

CVS joins the race

CVS Health is also venturing into the obesity market. The healthcare company announced a partnership with Eli Lilly that will make Zepbound and Foundayo available to eligible patients through the CVS Health app beginning in the fourth quarter.

Beyond GLP-1s, CVS topped expectations across its insurance, pharmacy, and healthcare services businesses last quarter, led by a rebound at insurer Aetna, whose revenue rose 3.5% to $37.5 billion as medical costs eased.

Shares still fell 5.08%, however, as investors expect membership at pharmacy benefit manager Caremark to decline in the coming months.

Beyond the needle

All three companies raised their full-year guidance, an indication that the GLP-1 boom is still in its early innings.

GLP-1 drugs generated roughly $79 billion in sales last year alone, and Morgan Stanley expects that figure to reach $190 billion by 2035. Much of that growth is expected to flow to today’s market leaders: Lilly controls roughly 60% of the injectable market, while Novo holds an 85% share of the still-nascent oral GLP-1 market—a segment projected to make up a quarter of the overall market by 2030.

So far, investors have overwhelmingly favored Lilly, sending its shares up 342% over the past five years while Novo has lost 13.67% in the same period. But that optimism comes at a premium: Lilly trades at 34.8 times this year’s expected earnings, compared with 15.6 times for Novo.

Today, Lilly wears the crown, but the GLP-1 race is far from over. If the future is in pill form, Novo may still have the last laugh.—SY