Lilly gains after FDA approves weight-loss pill, sizing down investor doubts

By Mrinalika Roy

April 1 (Reuters) – Eli Lilly shares jumped nearly 6% on Wednesday after the U.S. Food and Drug Administration approved its weight-loss pill, Foundayo, marking a significant milestone in the drugmaker’s efforts to expand its foothold in the lucrative obesity market.

The approval will likely intensify the rivalry between Lilly and Novo Nordisk, as they battle for dominance in the fast-growing market for obesity drugs, with competition shifting from blockbuster injectables to more convenient oral therapies that could help widen access to a broader patient base.

Foundayo, a once-daily pill known chemically as orforglipron, will compete with Novo’s oral Wegovy, which was launched in January and is off to a great start.

Despite launching after Novo’s Wegovy pill, Foundayo’s ease of use more than offsets its slightly lower efficacy versus semaglutide (active ingredient in Novo’s drugs) in head-to-head trials, putting it in a strong position to eventually capture the lion’s share of this rapidly expanding market, said Citi analyst Geoff Meacham.

Analysts also said the decision removes a key overhang for investors, who had flagged potential delays in approval for orforglipron and raised concerns regarding the pricing environment.

Last month, HSBC had downgraded the stock, citing concerns that expectations for the obesity market and Lilly’s growth may be overstretched.

“Approval puts bears to bed… marks major positive milestone in the evolution of LLY’s metabolic franchise,” analysts at BMO Capital Markets said.

They expect Lilly’s stock to trade higher through the session and Novo Nordisk’s shares to face modest pressure. U.S.-listed shares of Novo were down marginally in afternoon trading.

Lilly’s pill has a convenience advantage over Novo’s, as it can be taken without any restrictions and at any time of day. The company is also aiming to drive uptake through aggressive pricing.

Eligible patients could pay as little as $25 per month with savings programs, while certain Medicare Part D beneficiaries may access the drug for $50 per month, starting July.

Truist analysts said the pricing was on par with expectations and lower than that of Novo’s oral Wegovy. They expect 2026 sales of $1.2 billion, and peak 2036 U.S. sales of $26 billion.

Shares of other obesity drug developers, such as Viking Therapeutics, Altimmune < ALT.O> and Structure Therapeutics, were up between 2% and 7%.

(Reporting by Mrinalika Roy, Mariam Sunny, Christy Santhosh in Bengaluru; Editing by Diti Pujara)