novo nordisk (NYSE:NVO) and Eli Lilly (NYSE:LLY) are two of the hottest drug stocks of the past three years. Both companies posted well above-market profits thanks to the popularity of newly launched drugs to treat obesity and type 2 diabetes. Both drugs are blockbuster drugs, defined as drugs with combined annual sales of more than $1 billion. Blockbuster drugs tend to generate a lot of buzz, and companies that can bring more potentially blockbuster drugs to market outperform companies that can bring fewer drugs to market. More likely.

So which of these two giants has more potential for a big hit? We examine each drug company’s portfolio to identify the most likely candidates for multi-billion dollar drugs Let’s try to answer that question by:

For Novo Nordisk

Novo Nordisk currently has more than $1 billion in medicines and more on the way. The latest star performer, which you’ve probably already heard of, is something called Ozempic, which treats type 2 diabetes and is based on a molecule called semaglutide. The company’s flagship obesity drug, Wegoby, is based on the same compound and is similarly profitable. About 90% of Novo Nordisk’s 2023 revenue ($31.2 billion) came from sales of diabetes and obesity treatments.

Novo Nordisk hopes to use semaglutide in other indications in the future, and if approved, it could lead to the development of a blockbuster drug. The company has a Phase 3 program investigating whether it can treat the liver disease metabolic dysfunction-associated steatohepatitis (MASH, also known as NASH). One group predicts the market for such drugs will reach $16.3 billion by 2030. Another phase 3 trial is also underway for use in Alzheimer’s disease.

But semaglutide is not the only lucrative mineral in the company’s portfolio. There are two late-stage programs to treat atherosclerotic cardiovascular disease (ASCVD) and heart failure, as well as a late-stage program for chronic kidney disease (CKD). Given the huge size of the addressable market, any of these candidates could easily become blockbuster drugs.

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So Novo Nordisk has no shortage of potential big winners to step up to win recognition in the coming years. This means that if things go as planned by the Food and Drug Administration (FDA), investors have plenty of catalysts to potentially generate huge profits.

For Eli Lilly

Like Novo Nordisk, Eli Lilly’s pipeline is chock-full of near-term opportunities to launch promising treatments, and it also has a handful of strong performers. The current rising star is the obesity drug Zepbound, shortly after the debut of its sibling drug Mounjaro, which targets type 2 diabetes. Mounjaro brought in his $5.1 billion in 2023, and Zepbound brought in $175.8 million in sales in its first few months on the market.

Mounjaro and Zepbound are both based on a molecule called tirzepatide. In addition to testing in the Phase 2 MASH trial, Eli Lilly is also testing tirzepatide in a Phase 3 trial for the treatment of cardiovascular disease. So we could soon see signs that at least two more blockbusters are in the works, which is a bullish sign for the stock, to say the least.

The company is also looking to enter the Alzheimer’s disease market, and regulators are currently considering whether to grant approval to one of its candidates. As if that wasn’t enough, the company’s pipeline includes mid- to late-stage programs for pain, arthritis, Crohn’s disease, psoriasis, and cardiovascular diseases, all of which have annual spending in the millions. It is a large and growing market reaching 10 billion dollars. dollars per year. Not all attempts need to be successful in order to obtain multiple valuable new drugs in the near term.

Judgment is not the most meaningful

Comparing the pipelines, Eli Lilly has several times more chances to hit a home run than Novo Nordisk, but the competition is far from a blowout. Both companies are highly likely to produce multiple high-profit drugs in the short, medium and long term. Both companies could be good investments, and it may also make sense to acquire both to take advantage of the companies’ efforts to enter the type 2 diabetes and obesity market.

In that respect, the two companies are not strictly fighting to secure market share in these markets. In fact, Nordisk’s management expects that Ozempic and Wigovy will continue to be in such high demand that they will not have to compete directly for some time. If that’s not good news for both players, it’s not all that good news.

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Alex Karkidi has no position in any stocks mentioned. The Motley Fool recommends Nordisk. The Motley Fool has a disclosure policy.

The original article on Better Blockbuster Pharmaceutical Stocks: Novo Nordisk vs. Eli Lilly was published by The Motley Fool