Pfizer's CEO Sends a Warning to Eli Lilly. Is the Stock a Buy?

Oncology is the largest therapeutic area in the pharmaceutical industry by sales, but right now, weight management is the hottest. This market is predicted to grow rapidly in the next decade, handsomely rewarding any drugmaker that establishes itself as a leader in the field.

Right now, that's none other than Eli Lilly (NYSE: LLY). However, others are looking to challenge its dominance. Recent comments from Pfizer's (NYSE: PFE) CEO, Albert Bourla, suggest it could become one of the companies that successfully carve out a niche in the weight management space. Let's see what Bourla said, and what it means for investors.

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This acquisition catapulted Pfizer near the front of the line

On Nov. 13, Pfizer finalized its acquisition of Metsera, a smaller drugmaker with several weight loss candidates in the pipeline. The deal cost Pfizer $7 billion in cash and could be worth up to $10 billion once milestone payments kick in. There are at least two important clues that tell us Metsera has its hands on some exciting candidates.

The first is that Pfizer had to battle an established leader in the field, Novo Nordisk, to complete this acquisition. After the former company put in a bid, the latter stepped in with a higher one. Pfizer eventually won the race. But the fact that two pharmaceutical giants, including one with a proven history of developing breakthrough medicines in this area, wanted Metsera under their wings is worth mentioning.

Second, Metsera's actual clinical trial results look promising. In a phase 2 study, Metsera's leading candidate, MET-097i, demonstrated substantial weight loss and highly encouraging tolerability. It might be one of the more promising mid-stage assets, especially once we set aside those being developed by Eli Lilly and Novo Nordisk.

Pfizer's CEO certainly thinks so. In a TV interview, Bourla said: "Pfizer, when it plays, plays big. And we will -- as we did in COVID, as we did with Lipitor, as we did with ... Viagra, as we did with all the medicines that we have invented and brought to the market -- we will do the same with obesity."

Lipitor, a medicine used to manage blood cholesterol levels, was the best-selling drug in history at one point, though it has since been supplanted. Pfizer's COVID products peaked at near $57 billion in revenue in 2022 and helped it become the first biopharma company to generate $100 billion in annual sales. Comparing its weight management efforts to those successes speaks volumes about where Bourla thinks Pfizer will land in this field.

But is it enough to dethrone Eli Lilly?

Pfizer expects to launch its first anti-obesity drug by the end of 2028. In the meantime, though, Eli Lilly has a considerable lead. The latter company already has Zepbound on the market, a medicine whose sales have been growing exceptionally well. Meanwhile, Lilly could launch a few more products in this field by 2028.

First, there's orforglipron, an oral GLP-1 medicine that posted strong phase 3 results in both diabetes and obesity this year. Orforglipron could earn approval by early next year, given that Eli Lilly has received a new voucher from the U.S. Food and Drug Administration that allows for expedited review.

Then, there's Eli Lilly's retatrutide, a medicine currently in phase 3 studies. Retatrutide mimics the action of three gut hormones -- GLP-1, GIP, and glucagon -- and this approach could lead to increased efficacy. The therapy performed very well in mid-stage studies and could post phase 3 results relatively soon.

Next month, Eli Lilly plans to start a phase 3 study for another candidate, eloralintide, which recently completed phase 2 studies. In short, Lilly's existing lineup and pipeline in anti-obesity looks strong enough to fend off the competition. Though others will eventually join the market and generate strong sales from their weight loss medicines, Eli Lilly seems likely to remain the leader for the foreseeable future.

Is Pfizer stock a buy?

Pfizer's financial results have been disappointing over the past few years. And one of its top growth drivers, Eliquis, an anticoagulant, is facing a patent cliff within a few years, so at first glance, the drugmaker's outlook does not look bright. But with a deep pipeline, Pfizer seems likely to turn things around.

Metsera's assets will take center stage now, given the rapid growth of the weight-loss market. If Pfizer can achieve the kind of success in this area that Bourla is predicting, the company should rebound. But it has other exciting candidates, especially in oncology. My view is that Pfizer will succeed in its turnaround, thanks to its pipeline and to a lineup of newer products that should eventually contribute to its top line.

That's to say nothing of the company's strong dividend program, which should appeal to investors. With all that in mind, Pfizer's shares look attractive at current levels.

Prosper Junior Bakiny has positions in Eli Lilly and Novo Nordisk. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.