The news: Eli Lilly became the first healthcare or pharma company to reach a $1 trillion valuation when its shares closed at $1,059.70 on Friday, November 21. Lilly’s market value is more than double that of the next-largest healthcare or pharma company, Johnson & Johnson (~$491 billion). For context, the nine other publicly traded companies with a $1 trillion market cap are mostly tech giants, including Nvidia, Amazon, Apple, and Microsoft.
What’s driving the news: Lilly added nearly $700 billion to its market cap just since the end of 2022.
- Lilly’s two GLP-1 drugs, Mounjaro and Zepbound, became blockbusters in 2023 and 2024 respectively, propelling the company to the top of the weight loss drug market, which Morgan Stanley expects could hit $150 billion within 10 years.
- Lilly’s tirzepatide, marketed as Mounjaro for type 2 diabetes (FDA approved in 2022) and Zepbound for obesity (FDA approved in 2023), recently surpassed Merck’s cancer drug Keytruda as the world’s best-selling medicine, per STAT.
- Heading into 2025, Mounjaro and Zepbound were projected to be the two fastest-growing drugs in the world in terms of year-over-year sales, according to a January 2025 Evaluate report.
- Lilly reported triple-digit YoY growth in Q3 for both drugs, which accounted for about 57% of the company’s overall revenues in the last quarter.
Why it matters: Lilly’s top rival, Novo Nordisk, also has two very successful GLP-1 drugs (Ozempic and Wegovy) and a third that is less popular, but still brings in over $1 billion in annual US sales (Rybelsus). However, Novo’s market cap is far lower, under $200 billion, having lost about $400 billion in value since its peak in mid-2024.
Novo was first-to-market with GLP-1s, but has failed to reassure investors about the drugs’ durability or convince doctors that Wegovy is better than Zepbound for weight loss.
- While still growing, sales of Ozempic and Wegovy have slowed from prior quarters and fallen short of Wall Street’s expectations.
- Meanwhile, clinicians view Zepbound as more effective than Wegovy, pushing weekly US prescriptions to almost double Wegovy’s last month, per Reuters.
- The compounded GLP-1 market has also hurt Novo more than Lilly since copycat versions of semaglutide are more prevalent than tirzepatide. Novo executives point to the availability of compounded GLP-1s as a key drag on branded GLP-1 sales.
Implications for pharma companies: Pharma’s entry into the “trillion-dollar club” is largely driven by success in a treatment category (obesity) poised to reshape consumer health and wellness, given the massive demand for better weight loss solutions.
However, Lilly’s particular rapid growth signals that while first-mover advantage in a high-demand disease area matters, it doesn’t guarantee staying on top. Pharma manufacturers can make up for not being first by committing to innovative drug developments that drive more efficacious products, pursuing new clinical indications, and correctly anticipating market developments that may impact supply and demand.
Implications for the GLP-1 market: Lilly is currently at the high point of its all-time market value, while Novo’s is plummeting. However, drugmakers’ market caps can experience significant fluctuations in either direction based on clinical trial results, FDA approvals, and pricing changes.
Novo shares, for instance, just fell to a four-year low following clinical trial results showing that its oral semaglutide failed to slow the progression of Alzheimer’s disease. Novo is still well-positioned to fend off new entrants and recoup some lost ground in the weight loss market, provided its forthcoming Wegovy pill wins the expected FDA approval soon.
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