If you’re too busy to keep monitoring your stock portfolio every other day, then investing in stocks that won’t cause you a lot of headache down the road is a necessity. In order to do so, it’s important to find reliable businesses that are also on a growth trajectory.
Eli Lilly (LLY -1.38%) and Novo Nordisk (NVO -0.32%) have attracted a lot of attention over the past two years thanks to their advances in the weight loss therapy market. Both companies are longtime leaders in the pharmaceutical industry and have been making breakthroughs and delivering excellent returns for decades. Moreover, both healthcare giants appear likely to have plenty of growth fuel left in the tank, making them worth investing in for the long haul.
1. Eli Lilly
Eli Lilly continues to break new ground. Its famous weight loss medicine, Zepbound (tirzepatide), just became the first to earn approval from the Food and Drug Administration as a treatment for moderate to severe obstructive sleep apnea in adults with obesity. Zepbound’s sales were already growing fast. Its approval in this new indication should help increase the medicine’s strong performance, and it’s pursuing several other label expansions. Eli Lilly can also count on many years of sales growth from its diabetes medicine Mounjaro (a different brand for the same underlying compound, tirzepatide).
In the third quarter, Eli Lilly’s sales grew by 20% year over year to $11.4 billion, largely thanks to Zepbound and Mounjaro. But the company’s portfolio is diversified. Newer products like Kisunla, an early-stage treatment for Alzheimer’s disease, will eventually make an impact. So, Eli Lilly’s lineup looks strong enough for the company to deliver excellent financial results for the foreseeable future.
Beyond that, the pharmaceutical company has a robust pipeline. Its weight loss candidates, including retatrutide, look promising. It’s working on a once-weekly insulin product, too. Beyond its core indications, Eli Lilly is developing new drugs in oncology, immunology, and rare diseases. The company’s investigational gene therapy for genetic deafness looks particularly promising.
For investors, Eli Lilly also has an excellent dividend program. With its latest payout increase, management has now tripled its dividend over the past decade.
So, Eli Lilly can offer strong growth and dividends to patient investors. While the company’s current medicines are grabbing headlines, its real strength is its ability to develop newer and better ones, as it has done for a long time. Eli Lilly should continue doing so and delivering excellent returns to investors.
2. Novo Nordisk
Novo Nordisk’s shares recently fell by nearly 20% after it reported results from a phase 3 study of a new weight-loss drug candidate that failed to impress the market. These things happen even to the best pharmaceutical companies, but does this episode significantly change Novo Nordisk’s prospects? Not at all.
Novo Nordisk’s investigational weight loss therapy, CagriSema, combines semaglutide (the active ingredient in Wegovy) with an additional appetite suppressant, cagrilintide. Patients in the study taking CagriSema experienced a mean weight loss of 22.7% after 68 weeks, compared to 16.1% for those on semaglutide alone and 2.3% for those taking a placebo.
For that matter, CagriSema performed better than Eli LIlly’s rival drug, Zepbound, which led to a mean weight loss of 20.2% in a 72-week phase 3 study. Investors were still disappointed since Novo Nordisk’s management had predicted a 25% mean weight loss for CagriSema, but it still looks like the company has a better product on its hands.
NVO Revenue (Quarterly) data by YCharts.
CagriSema is just one of several promising weight loss programs in the company’s pipeline, and it should be an improvement over Wegovy (and Zepbound). Meanwhile, Novo Nordisk remains a leader in the diabetes care market, with a 33.9% share of this space as of August, up from the 33.3% it held a year prior. Given its solid pipeline in that niche, it’s unlikely to yield its strong position in it anytime soon. And although competition in the space is growing, the company is diversifying.
Novo Nordisk is developing therapies across many other indications beyond those that its GLP-1 drugs could target. For example, it is working on medicines for sickle cell disease and beta-thalassemia, two rare blood disorders, and that’s just the tip of the iceberg. In short, despite its recent share price dip, Novo Nordisk remains an outstanding stock to hold onto for decades. If anything, that setback represents an excellent buying opportunity.
