Eli Lilly Gains Ground in Obesity Market Despite CVS Deal with Novo Nordisk

Eli Lilly's weight loss medication Zepbound is making significant strides in the highly competitive obesity market, even as rival Novo Nordisk secures strategic partnerships with major pharmacy chains. This development comes amid a backdrop of potential tariffs and regulatory challenges in the pharmaceutical industry.

Zepbound's Market Performance

Eli Lilly reported impressive first-quarter sales of $2.31 billion for Zepbound, signaling strong market penetration. CEO David Ricks expressed confidence in the drug's performance, stating, "Most of the growth in the category is happening with our benefit." This surge in sales has positioned Lilly ahead of Novo Nordisk in the obesity market, according to analysts.

Despite CVS Health's recent announcement to include Novo Nordisk's Wegovy in its formulary at a reduced price of $499 per month, Ricks remained unfazed. He noted, "We're not surprised this kind of thing was announced," and emphasized Lilly's focus on expanding its primary pay segment through initiatives like LillyDirect, a direct-to-consumer program.

Strategic Partnerships and Market Dynamics

The obesity medication landscape is becoming increasingly competitive, with both Eli Lilly and Novo Nordisk employing different strategies to capture market share. While Novo Nordisk has secured deals with CVS Health and telehealth pharmacy Hims & Hers, offering Wegovy at $599, Lilly is concentrating on direct patient engagement and market innovation.

Truist Securities analysts suggest that CVS's choice may exert some near-term pressure on Lilly. However, Ricks downplayed the significance of these partnerships, stating, "This type of thing isn't too interesting to us," and instead emphasized the company's desire for expanded choice and access in the primary pay market.

Regulatory Challenges and Future Outlook

Eli Lilly faces regulatory hurdles beyond the competitive obesity market. The company recently withdrew its application for tirzepatide (the active ingredient in Zepbound) in heart failure with preserved ejection fraction (HFpEF) after the FDA requested an additional confirmatory clinical trial. Chief Scientific Officer Dan Skovronsky expressed disappointment with this decision, citing strong evidence from the Phase III SUMMIT trial, which showed a 38% drop in the relative risk of heart failure outcomes.

Skovronsky raised concerns about the potential chilling effect on investment in HFpEF treatments, an area with significant unmet medical needs. He stated, "It's kind of hard to think of the incentive for doing large outcome trials in this population that's already covered under an existing indication."

In the broader industry context, Eli Lilly, like its peers, is navigating the potential impact of tariffs on the pharmaceutical sector. Ricks urged the Trump administration to consider tax policy changes instead of tariffs, aligning with other industry leaders such as Johnson & Johnson's Joaquin Duato. While current tariffs are not expected to affect Lilly's 2025 financial outlook, the company remains vigilant about possible expansions or retaliatory measures.