These two drugmakers have a lot more in common than their market-beating potential.
The pharmaceutical industry isn’t the first place investors turn to when looking for high-growth stocks. However, some companies in the field look so promising that they could deliver well-above-average returns through the end of the decade.
There are several candidates here, but two of the most attractive today are Eli Lilly (LLY 0.65%) and Novo Nordisk (NVO 1.87%). Read on to find out why these two giants could be the best performers in the industry through 2030.
The best of enemies
Eli Lilly and Novo Nordisk are rivals in the drug market for diabetes treatment, a competition that spans many decades. Over the years, the two players have continued to innovate, and the pharmaceutical giants are still at it. One of Eli Lilly’s newer diabetes medicines is Mounjaro, first approved in the U.S. in May 2022. Mounjaro is a therapy with a novel mechanism of action that generated an $5 billion in sales last year, its first full year on the market.
Novo Nordisk isn’t too far behind, though. Its diabetes medicine, Ozempic, has been around for a little longer, but its sales are growing fast. In the first quarter, Ozempic generated revenue of 27.8 billion Danish kroner, or DKK ($4 billion), an increase of 42% year over year. Eli Lilly’s Zepbound and Novo Nordisk’s Ozempic will be among these companies’ biggest growth drivers through 2030.
Eli Lilly and Novo Nordisk are also the leaders in the obesity market. Eli Lilly’s Zepbound (which has the same active ingredient as Mounjaro) and Novo Nordisk’s Wegovy (with the same active ingredient as Ozempic) have become household names. Investors should be excited about both medicines: The weight loss drug market will grow rapidly in the coming years. According to some projections, it will be worth $44 billion by 2030 — up from $2.5 billion in 2022.
Though many companies are looking to challenge Eli Lilly and Novo Nordisk in this field, don’t underestimate the innovative potential of drugmakers with experience in successfully developing breakthroughs in a particular therapeutic area. Even if other competitors enter the market (and some will), Eli Lilly and Novo Nordisk should remain among the leaders and generate substantial sales through 2030.
No need to choose just one
Top-line growth for Eli Lilly and Novo Nordisk should be strong through 2030, largely thanks to their work in diabetes and obesity care. In the first quarter, Eli Lilly’s total revenue increased by 26% year over year to $8.8 billion, while Novo Nordisk’s landed at 65.3 billion DKK ($9.5 billion), 22% higher than the year-ago period.
Revenue growth of this magnitude is well above the average for a pharmaceutical company of their size — Eli Lilly’s market cap is $767 billion, while Novo Nordisk’s is $447 billion.
Does one of these pharmaceutical giants have the edge over the other? In my view, that would be Eli Lilly because its portfolio and pipeline are far more diversified beyond diabetes and obesity treatment. Eli Lilly could soon earn approval for an Alzheimer’s disease (AD) therapy that could be a blockbuster; it launched a couple of important medicines last year — cancer drug Jaypirca and ulcerative colitis medicine Omvoh — that will meaningfully contribute; and older products like Verzenio, a cancer medicine, and Taltz, an immunosuppressant, are still doing great.
Meanwhile, Eli Lilly’s diabetes portfolio is nearly as strong as Novo Nordisk’s. That said, the latter is also seeking to diversify its pipeline. It is working on medicines for AD, several rare conditions with a high unmet need such as sickle cell disease, and others. Further, Novo Nordisk continues to innovate in the weight loss area. Earlier this year, it reported highly encouraging phase 1 results for an oral anti-diabetes candidate. Novo Nordisk’s higher reliance on its core therapeutic areas shouldn’t be much of a problem for the company.
The bottom line is that these drug-making giants have been delivering solid financial results and stock market performances for years, are highly innovative, and could be the best-performing pharmaceutical giants through 2030. Don’t be surprised if at least one — or even both — become trillion-dollar stocks by then.
