Why Eli Lilly Stock Slumped Today
Key Points
A rival just cut the price of a competing medication.
This puts the list price of weight-loss drug Zepbound under pressure.
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A price war for weight-loss drugs is intensifying, and it's clear Eli Lilly (NYSE: LLY) investors weren't happy about it. On news that the company's arch-rival in the category had cut prices for several of its medications, those folks sold out of Eli Lilly stock to push it to a nearly 2% loss on Tuesday.
Slimming down
That rival is Danish pharmaceutical company Novo Nordisk, best-known for its Wegovy obesity treatment that directly competes with Eli Lilly's Zepbound. Early Tuesday morning, Novo Nordisk announced a set of price cuts to its leading products, including Wegovy.
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The European company said that the list price for the medication -- in addition to that of its sibling drug indicated for diabetes, Ozempic, and related diabetes drug Rybelsus -- would be cut to $675 for a one-month supply. That represents quite a chop, as all three treatments are currently listed at over $1,000. Novo Nordisk said the changes would take effect on Jan. 1, 2027.
Similarly, Zepbound's list price at present is more than $1,000 per monthly supply.
No reason to panic
Understandably, investors fear that this latest (and rather aggressive) pricing move will put a serious dent in Eli Lilly's revenue. That'll happen in the weight-loss segment for sure; however, we have to keep this in perspective -- the company is massive and sprawling, with both commercialized and developmental products in many therapeutic areas. Its fortunes are therefore not dependent on how the drug is selling.
That said, Zepbound is quite the contributor to Eli Lilly's overall revenue. Its sales more than doubled year over year in the fourth quarter of 2025 to nearly $4.3 billion, accounting for 22% of the company's total top line.
So yes, Zepbound matters for the company, but a reduced sale price won't make Eli Lilly stock a sell. I feel this company's equity is still worth owning, given the size of both its commercial and developmental portfolios.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
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