Why Eli Lilly Stock Topped the Market Today

Eli Lilly (LLY 0.10%) stock eked out a gain on the stock market Wednesday, but the company doesn’t necessarily have itself to thank for this. One of its rival pharmaceutical companies posted strong annual results fueled largely by a product category Lilly is entering. That pushed Eli Lilly’s share price marginally higher (by 0.1%), handily beating the 1.6% decline of the S&P 500 index.

The Novo Nordisk effect

That rival was Danish pharmaceutical company Novo Nordisk (NVO 5.25%), which published its full-year 2023 figures well after market open Tuesday. These revealed that its sales rose a lofty 31% over 2022, and its net profit increased 51%.

Novo Nordisk is the company that developed and sells diabetes treatment Ozempic and weight loss drug Wegovy. Since the U.S. has high rates of both diabetes and obesity, the two medications have been explosively popular in this country. In fact, over 90% of total Wegovy sales came from patients in this country.

These sharp increases bode well for Eli Lilly because like Novo Nordisk, it has powerful diabetes/weight loss twins as well. Last November, its Mounjaro diabetes treatment won approval from the U.S. Food and Drug Administration (FDA) under a different brand name, Zepbound. Weight loss is certain to remain a hot area in the pharmaceutical world, so the continued strength is sure to benefit the U.S. company too.

Second-mover disadvantage

That said, competing against Novo Nordisk’s lineup won’t be easy, even for a very well-capitalized company with vast resources like Eli Lilly. Wegovy as a brand name has become almost synonymous with “effective weight-loss drug,” and even the mightiest competitors struggle to beat a first mover.

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