Better Pharmaceutical Buy: Eli Lilly vs. Novo Nordisk

Eli Lilly (NYSE: LLY) and Novo Nordisk (NYSE: NVO) are two of the leading companies in the fast-growing GLP-1 weight loss market. These healthcare companies have tremendous long-term growth prospects due to their promising GLP-1 products.

Lately, however, they've been going in opposite directions. Shares of Eli Lilly are up 35% over the past 12 months, while Novo Nordisk is down 53% (returns are as of Dec. 15). But will those trends hold up over the long haul? Here's a closer look at which healthcare stock may be the better buy right now.

Image source: Getty Images.

The case for Eli Lilly

Eli Lilly recently crossed $1 trillion in market cap, becoming the first healthcare company to do so. The only real surprise was how quickly it happened, but given the company's incredible growth prospects, it's something I expected would happen eventually.

The business has been booming thanks to Lilly's highly popular and effective GLP-1 drugs. Through the first nine months of the year, Mounjaro (for diabetes) and Zepbound (for weight loss) have generated a combined $25 billion in revenue. That's more than half of the $46 billion in total sales the company reported over that time frame.

In a head-to-head trial against Novo Nordisk's top weight loss drug, Wegovy, Zepbound has proven to be more effective in helping people shed pounds (with a 20.2% average weight loss versus 13.7%, over a 72-week trial). Going with the leading GLP-1 brand could be a no-brainer move for investors. Plus, Lilly has a promising Alzheimer's drug in Kisunla, which regulators approved last year.

Eli Lilly's been a growth machine. Although it has soared more than 570% in five years, it could still go even higher in the long term.

The case for Novo Nordisk

Novo Nordisk has been a troubled stock over the past 12 months, but it's a company that I believe can turn things around. Investing in Novo Nordisk, the company behind the popular diabetes drug Ozempic, does come with a bit of risk these days. It's changed CEOs, and it slashed its guidance due to competition from compounded versions of its drugs, which explains the sharp reduction in its share price.

But these problems are temporary in nature, so I remain bullish on the stock over the long haul. And it's during "temporary trouble" that billionaire investor Warren Buffett says is a great time to invest in a company. Novo Nordisk is trading at a heavily discounted valuation -- just 14 times its trailing earnings. By comparison, Eli Lilly trades at a price-to-earnings (P/E) multiple of over 50. Expectations are far lower for Novo Nordisk than they are for its rival, and that can work to the advantage of investors who buy the healthcare stock now.

During the first nine months of 2025, Ozempic has generated sales growth of 13% at constant exchange rates, while Wegovy has grown by 54%. Ozempic was first approved in 2017 and has a long track record; its ability to still rise at such a decent pace is a strong testament to its brand. (Lilly's Mounjaro, by comparison, was approved in 2022.) Wegovy's approval came in 2021.

There's a lot of bad news and bearish expectations baked into Novo Nordisk's stock right now, but the reality is that its fundamentals remain solid. Investors who stay the course could be rewarded handsomely.

Novo Nordisk looks like the better stock today

I continue to own shares of Novo Nordisk despite its recent adversity because I'm confident the business can and will turn things around. It's still developing more GLP-1 drugs, and all it takes is one promising study to remind investors just how much growth there is in the GLP-1 market; it's not a winner-take-all arena, and there's room for multiple big players.

With its severely undervalued shares, Novo Nordisk has much more upside than Eli Lilly. While both stocks are excellent investments when looking at the long haul, the Danish drugmaker gives investors more value for their money today.

David Jagielski, CPA has positions in Novo Nordisk. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.