Novo vs Lilly: the weight-loss drug war—and how to trade the outcome

From diabetes drug to Wall Street darling

Ozempic is not just changing waistlines – it's changing markets. Originally developed as a treatment for Type 2 diabetes, the drug quickly rose to prominence as a revolutionary weight-loss solution, capturing the imagination of consumers, celebrities and investors alike.

Behind its ascent lies a fierce rivalry between two pharmaceutical giants: Novo Nordisk and Eli Lilly. Their race to dominate the obesity drug market has generated record-breaking profits, intense investor scrutiny and, most recently, a stunning CEO exit that shook Wall Street.

The rise of Ozempic

Market disruption

Ozempic, powered by the active ingredient semaglutide, received FDA approval in 2021. What set it apart wasn't just its efficacy in managing blood sugar but its dramatic weight-loss side effect. That unintended benefit turned the drug into a cultural and commercial juggernaut. With endorsements from celebrities like Oprah Winfrey and Amy Schumer, Ozempic became a household name, frequently trending on social media and sparking debate about the ethics of off-label use and body image culture.

Sales success

The hype translated into real profits. In 2024 alone, Novo Nordisk reported a 26% increase in Ozempic sales, reaching DKK 120.3 billion. Its market penetration was equally impressive: anti-obesity medications are now prescribed to an estimated 6% of Americans, with prescriptions doubling annually since 2019. Novo's soaring valuation surpassed US$500 billion, placing it among the world's most valuable companies.

The competitive edge: Novo vs Lilly

Novo Nordisk's strategy

Novo Nordisk built its dominance on a strong GLP-1 drug portfolio, including Wegovy and Saxenda. Its strategic roadmap featured next-gen therapies like CagriSema, which combines semaglutide and cagrilintide to deliver even more powerful appetite suppression. However, despite its early lead, Novo struggled with supply shortages and increased scrutiny over off-label use, threatening to erode its competitive advantage.

Eli Lilly's counterattack

Eli Lilly aggressively countered with tirzepatide, marketed as Mounjaro for diabetes and Zepbound for obesity. Unlike Ozempic, which targets only the GLP-1 receptor, tirzepatide hits both GLP-1 and GIP receptors, offering even greater weight-loss potential. Clinical trials have shown Zepbound can help users lose up to 25% of their body weight, eclipsing Ozempic's results. By early 2025, Zepbound overtook Wegovy in US prescription volume, cementing Lilly's growing lead.

Average weight loss in trials: Zepbound vs Wegovy

Investor expectations vs reality

High hopes and harsh realities

Investors once viewed Novo Nordisk as an unstoppable force. In early 2025, the company beat earnings expectations with adjusted earnings per share (EPS) of $0.99 and revenue of $11.87 billion. But cracks began to show. The company downgraded its full-year sales guidance due to slower uptake of Wegovy in the US., partially driven by the emergence of cheaper, compounded semaglutide alternatives. Clinical trials for CagriSema also underwhelmed, delivering 23% weight loss against a 25% target in December 2024 and only 13.7% in follow-ups.

CEO's departure

In a move that stunned the market, Novo Nordisk's CEO Lars Fruergaard Jorgensen was forced to step down in May 2025. Despite his role in tripling the company's market value, Jorgensen paid the price for missing the mark on innovation and execution. This marked the first CEO exit at Novo since 1960, signaling a dramatic shift in leadership driven by mounting investor pressure.

Novo Nordisk's CEO Lars Fruergaard Jorgensen before his forced departure 

Market reactions and trading prospects

Stock market volatility

The fallout was swift. Novo Nordisk's share price plunged over 55% from mid-2024 to mid-2025. Meanwhile, Eli Lilly saw its market cap surge, driven by Zepbound's superior efficacy and rapid uptake. The contrasting performance between the two giants reflects shifting investor sentiment and the immense stakes involved in the obesity drug market.

Client sentiment indicators

Current IG client sentiment data reveals an intriguing disconnect in the weight-loss drug sector. While 97% of traders hold long positions on Novo Nordisk, recent trading activity shows 100% sells today and approximately 60% sells over the past month. This paradoxical positioning - overwhelmingly bullish sentiment paired with consistent selling pressure - may indicate profit-taking from early investors or growing skepticism about Novo's ability to regain market leadership. With 51-250 active clients trading this market, this positioning disparity could signal an upcoming sentiment shift worth monitoring.

Trading strategies

This market turbulence presents unique opportunities for traders. Short-term volatility around clinical trials, FDA approvals and quarterly earnings can create actionable entry and exit points. Traders may also consider:

• Event-driven trading: position around drug launches and earnings surprises
• Contrarian approaches: the current bullish positioning despite selling pressure may present opportunities for those willing to challenge prevailing sentiment
• Hedging: long Lilly/short Novo pairs trading strategies
• Thematic investing: broader exposure through healthcare and biotech ETFs like XLV or IBB
• Momentum tracking: monitor shifts in client sentiment as leading indicators of potential price reversals

IG clientsentiment for Novo Nordisk

Why this is just the beginning

The pipeline battle is far from over. Novo Nordisk is betting on CagriSema and next-generation amycretin-based therapies, which target multiple gut hormones to amplify weight-loss effects. Meanwhile, Eli Lilly is advancing pill-based GLP-1s and exploring new indications for tirzepatide.

The rise of GLP-1 drugs is reshaping the pharmaceutical landscape. Analysts forecast the obesity drug market could exceed $100 billion, with ripple effects across food, wellness, insurance and public health. Yet ethical concerns about access, pricing and long-term safety persist, adding complexity to this rapidly evolving sector.

The Ozempic saga is a vivid reminder that medical breakthroughs can upend entire industries—and investor expectations along with them. With Novo and Lilly battling for dominance, traders have an unprecedented opportunity to engage with a dynamic, high-growth sector.