Eli Lilly and Company (LLY) stock has accumulated a 400% increase over the past five years. Over the same period, Novo Nordisk (NVO) has risen only 20% and has fallen 60% from its 2024 highs. Despite Eli Lilly’s impressive performance, concerns over its stock being overvalued are becoming a focal point for investors.
In the first quarter of 2026, sales of Eli Lilly’s GLP-1 weight-loss drugs, Mounjaro and Zepbound, grew by 125% and 80% respectively. Management is cautiously using the strong cash flow generated by these two drugs to bolster its R&D pipeline. However, the company’s price-to-earnings (P/E) ratio stands at 34 times. Although this is below its five-year average of 56 times, it remains significantly higher than the pharmaceutical industry average of 23 times. Investors are digesting a wealth of positive news about Eli Lilly, which makes the struggling Novo Nordisk and Pfizer appear to have greater upside potential.
Novo Nordisk was the first to bring a GLP-1 drug to market, but Eli Lilly’s product has proven more effective. Nevertheless, Novo Nordisk beat Eli Lilly to market with a GLP-1 pill, which garnered 1.3 million prescriptions in its first quarter post-launch. Moreover, this pill appears to be superior to Eli Lilly’s recently launched product in terms of weight-loss effects. Consequently, the company has raised its full-year 2026 earnings guidance. It is worth noting that Novo Nordisk offers a 4% dividend yield, far higher than Eli Lilly’s meager 0.7%. Additionally, its payout ratio is only 40%, making it worthy of in-depth research for conservative dividend investors seeking a turnaround.
Sales of Novo Nordisk’s diabetes and weight-loss drugs in India surged 40% last month, driven by significant price cuts that boosted demand for branded medications. According to Pharmarack data, 32,000 units of Wegovy, Ozempic, and co-branded versions were sold in April. Effective April 1, Novo Nordisk reduced the prices of the starting doses of the two drugs by 36% and 48%, respectively, to approximately 5,660 rupees (about $60). Sheetal Sapale, Vice President at Pharmarack, stated that this aggressive pricing strategy “effectively enhanced drug affordability,” helping the Danish pharmaceutical company fend off lower-priced competitors. Meanwhile, unbranded GLP-1 therapies costing as little as $14 per month are rapidly expanding the overall market size, driving a 56% month-on-month market surge in April to a total of 414,000 doses.
Novo Nordisk’s price reduction is also a preemptive defensive move. India is currently known as the “diabetes capital of the world,” with a potential patient base exceeding 100 million. By proactively cutting prices, Novo Nordisk aims to establish semaglutide (the active ingredient in Ozempic and Wegovy) as the cornerstone therapy for metabolic diseases in the country. India is the first market where Novo Nordisk faces generic competition for semaglutide and could serve as a bellwether for the drug’s global rollout. Canada approved the generic version last month, but the commercial launch timeline remains unclear. In China, the launch of generic versions is expected to be delayed until next year. As of now, representatives from Novo Nordisk and Eli Lilly have not responded to these matters.
