When you think of a top weight loss drug, chances are that Ozempic is the name that first comes to mind. Although it is approved for diabetes (Wegovy is the equivalent version, which is approved for weight loss), many people have been using it for years to lose weight, and it has been highly effective in doing that. The success of Ozempic and Wegovy has helped the company behind the products, Novo Nordisk (NYSE: NVO), become one of the most valuable healthcare stocks in the world.
But in an increasingly competitive market for weight loss drugs, these are not the only options for people looking to lose weight. A recent study found that it may not be Ozempic or Wegovy that's the best weight loss drug. Instead, that could come from Novo Nordisk's longtime rival, Eli Lilly (NYSE: LLY).
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Zepbound outperforms in head-to-head study
Companies will perform clinical trials of drugs, but they aren't likely going to be directly comparable. The patient population may be slightly different and the time period may not be the same, and so it can be difficult to definitively say that one drug is more effective than another -- unless you're talking about a head-to-head study.
Eli Lilly's weight loss drug, Zepbound, was recently involved in a head-to-head trial against Wegovy, and the results indicated that the former is the clear winner in helping people lose weight.
In a 72-week trial, Zepbound helped people lose just over 20% of their body weight, on average. Patients taking Wegovy, however, lost a little under 14% of their body weight during the same time frame. And there was also a greater proportion of people who achieved significant weight loss with Eli Lilly's drug. More than 31% of people who took Zepbound lost a quarter of their body weight or more, versus 16% with Wegovy.
While this comparison involved Wegovy and not Ozempic specifically, with both products sharing the same active ingredient, semaglutide, it effectively proves that Zepbound is a much more effective weight loss option than both Wegovy and Ozempic.
What does this mean for investors?
While these trial results are great news for Eli Lilly, that doesn't mean that Novo Nordisk's stock is in trouble. After all, there are shortages of weight loss drugs, and there's room for more than just one drug. According to Goldman Sachs, the entire market for anti-obesity drugs could top $100 billion by 2030.
Another factor to consider is how well people react to these treatments. While Zepbound may be more effective in helping people lose weight, it may not be the preferred option if someone encounters more side effects with the drug, or they simply have an easier time taking Wegovy. There's no one-size-fits-all drug for people looking to lose weight.
The study could, however, help Zepbound become more prominent and well-known among patients. And with doctors having a clear head-to-head study to rely on, they may be more likely to prescribe it for patients who need an aggressive weight loss option.
Both of these stocks can still make for good buys
Eli Lilly and Novo Nordisk are two highly successful and profitable companies to invest in. But investors also shouldn't ignore valuation. Today, Eli Lilly stock trades at a price-to-earnings ratio of 84, whereas investors only have to pay a multiple of 36 times earnings for Novo Nordisk.
The better growth stock for investors may be Eli Lilly due to Zepbound's success, but if you're looking for a more reasonably priced option, then Novo Nordisk may still be worth adding to your portfolio.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
