Can LLY's Next-Gen Obesity Pipeline Sustain Growth Amid Competition?

Eli Lilly and Company LLY is one of the two clear leaders in the rapidly expanding diabetes and obesity treatment market, supported by the strong success of its GLP-1–based therapies — Mounjaro for type II diabetes (T2D) and Zepbound for chronic weight management. Both medicines contain tirzepatide, a dual GIP and GLP-1 receptor agonist that has delivered impressive efficacy in clinical and real-world use.

However, Lilly faces intense competition from Novo Nordisk NVO, which markets semaglutide-based blockbusters — Ozempic for diabetes and Wegovy for obesity.

The global obesity drug market is projected to grow dramatically, reaching nearly $95 billion by 2030 and potentially $125 billion by 2035, according to Goldman Sachs estimates. While Lilly and Novo Nordisk currently dominate this space, both companies are racing to develop next-generation, more powerful and more convenient GLP-1–based treatments, including oral options and multi-acting candidates, to stay ahead of emerging rivals. Additionally, potential approvals in new indications could further accelerate sales growth for Mounjaro and Zepbound over the long term.

Lilly is investing broadly in obesity and has several new molecules currently in clinical development, with a range of oral and injectable medications with different mechanisms of action.

Orforglipron is a Key Candidate in LLY’s Obesity Pipeline

A key drug in its obesity pipeline is a once-daily oral GLP-1 small molecule called orforglipron. Oral pills will be a more convenient alternative to the currently available once-weekly injectable obesity treatments like Zepbound and Wegovy. Oral pills may significantly lower the treatment burden and potentially broaden patient adoption versus injections. Oral pills can also be manufactured at scale to meet global demand, which, in turn, can drive billions in additional sales.

Lilly has announced positive data across six studies on orforglipron in obesity and type II diabetes. Lilly has already filed regulatory applications in the United States, the EU and several other countries seeking approval for orforglipron in obesity. Lilly expects to launch orforglipron for obesity in the United States in the second quarter of 2026 and in most international markets during 2027. For the type II diabetes indication, Lilly has filed a regulatory application in the EU and plans to file regulatory applications in the United States and other countries later in 2026.

Lilly is also evaluating orforglipron in late-stage studies in other disease areas like obstructive sleep apnea, osteoarthritis pain of the knee, stress urinary incontinence and hypertension. These multiple late-stage studies on orforglipron can expand the candidate’s revenue potential beyond obesity/T2D.

Retatrutide – Another Key Obesity Candidate

The company is also evaluating another key candidate, triple-acting incretin, retatrutide (which combines GLP-1, GIP and glucagon), in type II diabetes and obesity, along with other indications like obstructive sleep apnea, knee osteoarthritis and chronic low back pain, in late-stage studies.

Data from a phase III study on retatrutide in obesity and knee osteoarthritis pain showed that the drug delivered significant weight loss with substantial relief from osteoarthritis pain. Lilly plans to seek approval for retatrutide for obesity and knee osteoarthritis pain in 2026. It believes retatrutide has the potential to become an important new treatment option for patients who want significant weight loss and face certain complications.

Other than tirzepatide, retatrutide and orforglipron, Lilly also has some other candidates in its obesity pipeline, including its selective amylin agonist, eloralintide and next-generation GIP/GLP-1 dual agonist brenipatide, both in late-stage studies.

Race to Make Oral Obesity Pill Intensifies

Competition in the obesity market is heating up. Novo Nordisk gained approval for an oral version of Wegovy in December 2025 and launched the pill in January 2026. The Wegovy pill gives NVO the first-to-market advantage and will initially bring in additional revenues, which may hurt Lilly’s market share. However, we believe Lilly may be able to close the gap fast, once its own oral obesity pill, orforglipron is approved by the FDA this year.

Smaller biotechs like Structure Therapeutics GPCR and Viking Therapeutics VKTX are also developing oral GLP-1 drugs for treating obesity.

Viking Therapeutics’ dual GIPR/GLP-1 receptor agonist, VK2735, is being developed both as oral and subcutaneous formulations for the treatment of obesity.  Viking plans to advance oral VK2735 into phase III development for obesity in the third quarter of 2026.

Structure Therapeutics’ ACCESS study on its orally GLP-1 RA, aleniglipron, for obesity, met its primary and all key secondary endpoints. Structure Therapeutics expects to initiate the late-stage program of aleniglipron in obesity around mid-2026.

LLY’s Stock Price, Valuation and Estimates

Lilly’s stock has risen 19.5% in the past year, compared with the industry’s 18.2% increase.

From a valuation standpoint, Lilly’s stock is expensive. Going by the price/earnings ratio, LLY’s shares currently trade at 29.70 forward earnings, much higher than 18.82 for the industry. However, LLY’s stock is trading below its 5-year mean of 34.57.

The Zacks Consensus Estimate for 2026 has risen from $33.15 per share to $33.80 per share over the past 30 days, while that for 2027 has risen from $41.48 to $41.84 per share over the same timeframe.

LLY’s Zacks Rank

Lilly has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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