Forget Zepbound: Eli Lilly's Next Weight-Loss Drug Could Be Its Biggest Blockbuster Yet

Healthcare stocks have lagged broader equities over the past few years, but the company that is now the largest in that sector, Eli Lilly (NYSE:LLY), has delivered outstanding returns. One of the most important reasons for the drugmaker's run is that it has emerged as the leader in the anti-obesity market. Eli Lilly's Zepbound is currently the best-selling medicine in this niche, and it is posting outstanding sales growth. However, Eli Lilly has several pipeline candidates, and one of them could be even better than Zepbound.

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Triple G for the win

Zepbound was a breakthrough. It became the first medicine to mimic the GLP-1 and GIP gut hormones and be approved for weight loss. Its main competitor, Wegovy, only mimics GLP-1. The dual hormonal pathway approach has proved highly effective. Zepbound has produced greater weight loss than Wegovy in head-to-head trials.

Eli Lilly is going one step further with its next-gen medicine, retatrutide. This investigational therapy mimics the actions of GLP-1, GIP, and glucagon.

Eli Lilly dubbed it "Triple G." Does the fact that retatrutide mimics the action of three gut hormones result in greater weight loss than Zepbound?

So far, the data suggest an affirmative answer to that question. Phase 3 study results for retatrutide are out, and they are excellent. For instance, in one Phase 3 study, patients who had type 2 diabetes and were either overweight or obese lost an average of up to 20.8% of their body weight over 80 weeks.

This is significant because people with diabetes typically have a much harder time dropping pounds. It's always hard to compare across clinical trials, but note that Zepbound helped a similar population of patients lose up to 15.7% of their weight.

These weren't head-to-head studies, and retatrutide's trial was longer. Still, the medicine's results have been excellent. We could also point to retatrutide's up to 28.3% average weight loss in patients who were overweight or obese, compared to Zepbound's 20.2% average in a similar population.

Retatrutide has also shown strong clinical trial results in other conditions, including obstructive sleep apnea, reducing severity by up to 60.6% in a Phase 3 study. The medicine is undergoing several additional studies and could be used to treat many indications. Eli Lilly plans on formally requesting approval for the medicine in the first quarter of 2027.

An embarrassment of riches

Many companies are looking to enter the weight loss market and challenge Eli Lilly. On the one hand, that poses a problem for the pharmaceutical company. More weight loss drug launches will lead to more competition and, potentially, less pricing power for the healthcare giant. But there are at least two reasons why investors should be cautiously optimistic about the company's prospects.

First, the anti-obesity market is growing fast and should continue to do so for at least the next five years. Estimates vary, but according to some research, the weight-loss market will grow at a compound annual rate of 27% through 2036. So, there should be more than enough space for multiple winners.

Second, Eli Lilly's pipeline suggests the company could remain the undisputed leader in this market for a while.

It's not just retatrutide either. Consider another one of the company's promising candidates: eloralintide. This medicine mimics the action of the amylin hormone. Eli Lilly recently posted Phase 2 study results for the combination of eloralintide and tirzepatide (the active ingredient in Zepbound) for patients who were either overweight or obese and had type 2 diabetes.

The combo treatment led to a mean weight loss of 23.3% in a mere 48 weeks, beating tirzepatide's mean weight loss of up to 14.8% in the same study. Lilly plans to start Phase 3 clinical trials for this combination treatment in the fourth quarter. In another mid-stage clinical trial, eloralintide demonstrated GLP-1-like efficacy and strong tolerability, which could particularly appeal to patients who avoid weight-loss medicines due to side effects.

Eli Lilly has additional pipeline candidates, including many outside its core therapeutic area, as the company has sought to diversify in recent years. Investors should expect significant clinical and regulatory progress over the medium term. In the meantime, Eli Lilly could continue to post excellent financial results and deliver above-average market returns.

It's still time to invest in the stock.

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