Can Mounjaro, Zepbound Help Lilly Maintain Dominance in Obesity Space?

Eli Lilly’s LLY key top-line drivers are its GLP-1 medicines, Mounjaro for type II diabetes and Zepbound for obesity. Both have witnessed rapid demand despite being on the market for less than three years. Mounjaro and Zepbound include the same compound tirzepatide, a dual GIP and GLP-1 receptor agonist. Mounjaro and Zepbound generated combined sales of $6.15 billion in the first quarter of 2025, accounting for around 48% of the company’s total revenues. Both drugs enjoy increasing market share in the United States.

Though sales of Mounjaro and Zepbound were below expectations in the second half of 2024, hurt by slower-than-expected growth and unfavorable channel dynamics, their sales picked up in the first quarter of 2025, driven by launches of the drugs in new international markets and improved supply from ramped-up production. Since 2020, Lilly has committed more than $50 billion to manufacturing capacity for its drugs, mainly Zepbound and Mounjaro, in the United States and Europe.

We believe that increased uptake in outside U.S. markets and deeper penetration into the U.S. market will continue to drive Mounjaro and Zepbound’s growth in future quarters. Our model estimates combined Mounjaro and Zepbound sales of $48.2 billion by 2027.

Approvals for new indications can also drive sales of Mounjaro and Zepbound higher. In late December, the FDA approved Zepbound for its second indication, moderate-to-severe obstructive sleep apnea in adults with obesity. In addition, LLY filed tirzepatide for heart failure, which further expands the opportunity for the candidate. It also expects to announce data from a cardiovascular outcome study on tirzepatide this year.

Competition Heating Up in the Obesity Space

The obesity market is heating up and is expected to expand to $100 billion by 2030, according to data from Goldman Sachs. Lilly and Novo Nordisk NVO presently dominate the market.

Mounjaro and Zepbound face strong competition from Novo Nordisk’s semaglutide medicines, Ozempic for diabetes and Wegovy for obesity.

Several companies like Amgen AMGN and Viking Therapeutics VKTX are also making rapid progress in the development of GLP-1-based candidates in their clinical pipeline.

Amgen has begun a broad phase III program on its dual GIPR/GLP-1 receptor agonist, MariTide, across obesity, obesity-related conditions and type II diabetes, with the first two phase III studies initiated in March. Viking Therapeutics’ dual GIPR/GLP-1 receptor agonist, VK2735, is being developed both as oral and subcutaneous formulations for the treatment of obesity. Phase III studies with the subcutaneous formulation of VK2735 are on track to begin this year.

Others like Roche, Merck and AbbVie are also looking to enter the obesity space by in-licensing obesity candidates from smaller biotechs, which could threaten Novo Nordisk and Eli Lilly’s dominance in the market.

LLY’s Price Performance, Valuation and Estimates

Lilly’s stock has risen 5% so far this year compared with the industry’s increase of 0.6%.

From a valuation standpoint, Lilly’s stock is expensive. Going by the price/earnings ratio, the company’s shares currently trade at 31.21 forward earnings, higher than 15.17 for the industry. However, the stock is trading below its 5-year mean of 34.54.

Estimates for Lilly’s 2025 earnings have declined from $23.49 to $21.95 per share in the past 60 days, while those for 2026 have declined from $31.28 to $30.91 over the same timeframe.

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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