Eli Lilly’s (LLY) stock is down 2% on media reports that rival pharmaceutical company Novo Nordisk (NVO) has struck a deal that will help it develop new obesity treatments.
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Specifically, Novo Nordisk has entered a licensing deal with U.S. biotech firm Septerna (SEPN). The arrangement, which could be worth up to $2.2 billion for Septerna, would see the two companies create medicines for obesity, Type 2 diabetes, and other metabolic illnesses.
Novo Nordisk already makes the popular Wegovy weight-loss medication that had global sales of more than $8 billion in 2024. However, Novo Nordisk is looking to forge partnerships as it seeks a greater slice of the obesity market that analysts say could be worth $150 billion in coming years.
Market Dominance
Novo Nordisk is also looking to create next-generation drugs as investors grow concerned that the company’s weight loss medication is losing ground to Eli Lilly’s Zepbound drug. Both Eli Lilly and Novo Nordisk are racing to bring a weight loss pill to market that will be easier for consumers to take than injections and is expected to further boost sales.
The partnership with Septerna includes more than $200 million in upfront and near-term payments. California-based Septerna is working on some protein-based weight loss and weight management medications. Earlier in May, U.S. regulators accepted Novo Nordisk’s submission for a pill version of Wegovy, which, if approved, would become the first oral treatment for obesity.
This latest development shows that the rivalry between Eli Lilly and Novo Nordisk for supremacy in the weight loss drug market is far from over. LLY stock has declined 5% this year.
Is LLY Stock a Buy?
The stock of Eli Lilly has a consensus Strong Buy recommendation among 20 Wall Street analysts. That rating is based on 18 Buy, one Hold, and one Sell recommendations issued in the last 12 months. The average LLY price target of $983.13 implies 34.51% upside from current levels.
