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The Metabolic Split: Why Eli Lilly Soars as Novo Stumbles
Reported by Jeffrey Neal Johnson. Published: 2/5/2026.
Key Points
- Eli Lilly projects robust revenue growth, driven by aggressive investments in new manufacturing facilities now fully operational.
- The pipeline features next-generation treatments, including a triple agonist and an oral pill that promise to set new industry standards for efficacy.
- Releasing single-dose vials allows the company to bypass supply bottlenecks and expand access to weight loss medicines for a broader patient base.
The first week of February 2026 will be remembered as the day the pharmaceutical sector's most prominent partnership effectively split. For years, Eli Lilly and Company (NYSE: LLY) and Novo Nordisk A/S (NYSE: NVO) moved in near lockstep, their stock charts almost identical as they raced to supply the world with weight‑loss medicines. That era appears to be over.
The market issued a swift verdict after both companies' financial updates. Eli Lilly shares jumped more than 7%, pushing the Indianapolis-based company back above the $1 trillion market capitalization mark. Conversely, Novo Nordisk stock fell nearly 6%, wiping out billions in shareholder value.
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The catalyst wasn't just a single earnings beat; it was a fundamental decoupling of expectations. Lilly is projecting growth for 2026, while Novo Nordisk warned investors of a sales decline. That divergence signals a new reality in which manufacturing capacity and pipeline breadth — not just first-mover advantage — will help determine the winner.
The Financial Divide: Boom vs. Bust
The quarterly reports show two companies moving at different speeds. Eli Lilly posted an impressive result in the fourth quarter of 2025, reporting $19.3 billion in revenue, a 43% year‑over‑year increase. Profits were solid, with earnings per share (EPS) of $7.54, slightly ahead of Wall Street's $7.48 consensus.
But the stock's rally was driven more by forward guidance than by the quarter alone. Lilly projected 2026 revenue of $80 billion to $83 billion — roughly a 25% growth rate, an extraordinary target for a company of its size.
By contrast, Novo Nordisk's fourth-quarter update was a sobering reminder of short‑term headwinds. Full‑year 2025 sales were solid at DKK 309 billion (about $44 billion), but the company forecast a 5% to 13% decline in sales for 2026. Management pointed to specific pressures that are expected to weigh on the Danish drugmaker's near‑term performance, in stark contrast to Lilly's aggressive expansion plans.
The Volume Defense Strategy
Both companies now face a common challenge: U.S. drug pricing reforms tied to the TrumpRx initiatives. The implementation of Most Favored Nation (MFN) pricing clauses has effectively capped reimbursements for government‑insured patients, forcing drugmakers to absorb lower net prices.
Lilly has deployed a clear volume strategy to blunt the impact. In the fourth quarter, U.S. volume rose about 50%, which more than offset a roughly 7% decline in realized price.
Two strategic pillars are behind that volume growth:
- Greenfield manufacturing: Since 2020, Lilly has committed more than $50 billion to building new factories from the ground up. Large facilities in Wisconsin and North Carolina are now up and running, easing prior supply constraints.
- The vial workaround: Lilly's release of Zepbound in single‑dose vials has changed prescribing dynamics. These vials now account for nearly 50% of new prescriptions. By selling vials directly to consumers, Lilly can sidestep parts of the Pharmacy Benefit Manager (PBM) ecosystem and offer a price point that undercuts compounding pharmacies.
Novo Nordisk's production response has been slower. The company acquired three fill‑finish sites from Catalent to expand capacity, but the ramp has not kept pace with demand. Without the ability to materially increase pen sales in 2026, Novo will struggle to offset mandated price cuts with higher volume, which helps explain the forecasted revenue contraction.
The Pipeline Advantage
Looking beyond 2026, investors see another reason to favor Lilly: a higher efficacy ceiling.
Lilly's lead candidate, Retatrutide — nicknamed "Triple G" because it targets GLP‑1, GIP and glucagon receptors — produced eye‑catching Phase 3 results. Trials showed average weight losses of roughly 29% over 68 weeks, a magnitude that rivals bariatric surgery and raises the bar for the industry.
Novo Nordisk's response, CagriSema, delivered strong results as well — about 22.7% weight loss in Phase 3 — which outperforms the current market leader, Wegovy, but trails the Retatrutide benchmark on the metrics released so far.
The competition is also shifting toward oral therapies, which are the key to mass adoption. Novo Nordisk recently launched its Wegovy Pill (oral semaglutide 25 mg) in the U.S. and saw solid early uptake. Lilly's oral candidate, Orforglipron, is a small‑molecule drug rather than a complex peptide, making it significantly cheaper and easier to manufacture at scale. That manufacturing advantage could translate into a long‑term margin edge in the high‑volume oral market.
Capital Allocation Strategies: Buybacks vs. Bulldozers
How each company deploys cash reveals a lot about its priorities. Novo Nordisk announced a new share repurchase program of up to DKK 15 billion (roughly $2.15 billion), a shareholder‑friendly but defensive move intended to support the stock and return cash while growth slows.
Eli Lilly is taking a different tack: it continues to invest heavily in physical capacity, most recently announcing a $3.5 billion facility in Pennsylvania. Rather than buying back shares, Lilly is buying manufacturing scale — a deliberate strategy to widen its supply moat and ensure it can meet future demand.
A New Era for Metabolic Investors
The days of buying the entire metabolic sector and expecting uniform gains are coming to an end. The market action in early February 2026 is a clear reminder that execution now separates winners from also‑rans.
Eli Lilly offers a straightforward 2026 thesis: double‑digit growth driven by manufacturing scale that can blunt regulatory price pressure. The company has shifted from a supply‑constrained position to a volume‑driven growth engine.
Novo Nordisk remains a formidable, highly profitable company, but it faces a gap year. Between restructuring, capacity ramping and pricing headwinds, the Danish giant needs time to recover. For investors seeking immediate exposure to the next phase of the metabolic revolution, momentum appears to have tilted toward Indianapolis and Eli Lilly.
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