Thierry from arvy
CFA, Co-Founder & CIO of arvy, Quality Investing
Eli Lilly and Novo Nordisk have one of the best businesses on earth because their weight-loss drugs treat obesity's symptom, not its cause. Patients cannot stop taking them without the weight returning, while the food, behavior and environment that drove US obesity from 13% in 1962 to over 40% today remain. A drug taken forever for a worsening problem beats a one-time cure. High cost, GI side effects, muscle loss, dropout and incomplete long-term data limit use. x.comÂ
Eli Lilly's retatrutide should accelerate adoption because it raises calorie burn rather than merely suppressing appetite, a bigger leap than the previous generational change. Visible results could turn users into walking advertisements and create peer pressure. Lilly will probably become at least a $5 trillion company in the coming years, roughly 5x with a near-straight-line climb, on a projection of as many as a billion users. x.comÂ
Hims & Hers' distribution case is stronger because Novo Nordisk chose to sell through it after suing it. Nearly 2.9 million subscribers spend $92 monthly on average, up 21%, as customers add products. The base case is $117-$156 by 2030. Branded weight-loss drugs broke margin expansion for a year, maybe more. FTC cancellation claims pose a retention risk, though growth does not suggest trapped customers. Subscriber growth stalling or retention built on friction would prompt a sale. x.comÂ
Novo Nordisk's management showed too little action against near-term problems, leaving the case in real doubt for the first time. A 5-10-year recovery plan clashes with the semaglutide patent expiring within that window, already lost in Canada, India and Turkey, while Eli Lilly poses real threats. Pipeline work in blood/endocrine, liver and cardiovascular is exciting and diversifying would be a game changer, and NovoCare is a positive, but the clock is running and management is uninspiring. … Show more
GLP-1 adoption is still early, leaving room for Novo Nordisk and Eli Lilly to remain leaders. Use has climbed from 4% in 2024 to 11% now, but obesity is unlikely to become rare within a decade. Novo is much more compelling at current levels than Lilly. x.comÂ
Eli Lilly should see further positive revenue revisions as it expands the weight-loss market by reducing gastrointestinal side effects and lowering treatment costs. Strong demand for Mounjaro and Zepbound drove a second FY2026 revenue guidance raise in three months, to $91B-$92B from $85B-$87B. Lilly Direct and the Medicare Bridge program for seniors aim to make treatment cheaper. At 29x 2027 earnings against 15% revenue and 20% EPS growth projected for 2027-30, Lilly still looks cheap. x.comÂ
Eli Lilly cannot keep charging 2-4x the price of Novo Nordisk's older weight-loss drugs if Novo aggressively defends market share on price, because Lilly's drugs are only marginally more effective. That makes HSBC's view that weight-loss drug expectations are overinflated look obviously correct. x.comÂ
ResMed faces substitution from GLP-1 drugs and forthcoming oral therapies, while US intermediaries make it difficult to turn new sleep-apnea diagnoses into treatment. Better detection could help, but that penetration hurdle persists; amid these pressures, the stock's gains this year and proximity to all-time highs are puzzling. How much severe apnea overlaps with obesity remains an open question. x.com x.com x.comÂ
Novo Nordisk could run with healthcare stocks as tech sells off, helped by the midterm health trend of the last 20 years. The market seems to be looking for value in health and pharma. Novo's $11.8 billion in free cash flow and major buybacks at these levels should eventually lift its depressed price once investors realize Novo and Eli Lilly can both do well in oral GLP-1s, where Novo leads. Novo might have found a bottom. x.comÂ
Novo Nordisk's AI partnerships won't pay off in the stock until its R&D bill starts behaving differently. R&D rose from DKK 14.2bn in 2019 to DKK 52.0bn in 2025, from 11.7% to 16.8% of sales, and 2026 brought a failed ZEUS trial, DKK 6.3bn of pipeline impairments and sales guided at 0% to -6%. The stock fell hard on those events but barely moved on the OpenAI, AWS and Anthropic deals. Disclosing a metric like time from target to first human dose would make them priceable. x.comÂ
Eli Lilly's Foundayo demand looks stronger than its Q3 sales miss implies. The miss looks like timing and inventory, not weak demand: the pill now has about 40% of new US oral GLP-1 prescriptions, roughly double last quarter. Lilly has 63% of the US GLP-1 market; new overseas pill launches could add another leg next quarter. Foundayo could eventually outsell both Mounjaro and Zepbound. GLP-1 revenue funds Lilly's AI drug-discovery ambitions. x.comÂ
