Betting on the next obesity battleground

Betting on the next obesity battleground: Eli Lilly and Novo Nordisk brace for a high-stakes clash

The battle for dominance in the booming market for anti-obesity medicines has entered a new, more brutal phase. Eli Lilly and Novo Nordisk — once comfortably separated by the early lead held by the Danish group — are now positioning to fight for market share, prescribing relationships and long-term contracts with health systems worldwide. What started as a two-horse race between semaglutide products from Novo and tirzepatide from Lilly has become a complex contest over efficacy claims, pricing, manufacturing capacity and where investors are willing to place their chips. 

The immediate headline came from Novo Nordisk itself. On Sept. 10 the company said it would cut about 9,000 jobs, roughly 11% of its workforce, as part of a sweeping restructure intended to sharpen its focus and preserve profitability as competitive pressures intensify. Management said the programme would free up roughly 8 billion Danish kroner ($1.25 billion) a year by 2026, but the move also underlines how quickly the company’s runaway growth story has been re-priced by markets and rivals. Analysts see the cuts as a sign that Novo is preparing for a more contested commercial phase, not conceding defeat but reducing costs to invest selectively. 

Eli Lilly’s rise has been the trigger. Tirzepatide — sold as Mounjaro for diabetes and repositioned for weight loss as Zepbound — produced deeper average weight losses in head-to-head studies than semaglutide, and that efficacy gap has translated into rapid gains in U.S. market share. Several market trackers and analysts reported that Lilly had overtaken Novo in key U.S. obesity segments by mid-2025, prompting payers and physicians to reconsider formularies and patient pathways. That dynamic has given Lilly negotiating leverage with large purchasers and emboldened the company to expand manufacturing and distribution commitments.

But the competition is not simply a question of “whose molecule is better.” The market is fragmenting into ecosystems: combinations of product formats (injectable versus oral), pricing strategies, contracting with health systems and the role of compounding pharmacies and generics. U.S. pricing pressure and falling net prices have already cut into headline margins across the sector, with independent reviewers noting that net prices “have fallen a ton” as competition grows and negotiated discounts bite. That legal and commercial squeeze is part of why Novo’s management concluded a structural reset was necessary. 

Lilly’s strategy has been to widen the product palate: beyond tirzepatide, the company has invested in next-generation oral agents such as orforglipron and in pipeline candidates that aim to push average weight loss higher or improve tolerability. Orforglipron’s development hit a speed bump earlier this summer when a trial disappointed some investor expectations, reminding markets that pipeline innovation is high-reward but high-risk. Still, Lilly’s broader platform and its success in rapidly scaling manufacturing have allowed it to press market share advantage even as competitors scramble to respond.

Novo, for its part, is not standing still. The company continues to tout the cardiovascular outcome data and long safety record tied to its semaglutide franchise, and it has pushed new formulations and combination approaches into trials. But the sheer speed of the market’s evolution — from scarcity to abundant supply to fierce competition inside a few years — has forced a re-examination of its go-to-market playbook. Cost cutting is a blunt tool, but the company’s leadership argues it will preserve the core R&D and manufacturing investments needed to defend long-run clinical and commercial relevance.

Investors and health-system purchasers are watching three variables closely. First, efficacy and safety: head-to-head and real-world comparative effectiveness data will determine which drugs become standard of care for severe obesity versus candidates for milder indications. Second, supply and scale: the ability to deliver consistent doses at large scale — amid a constrained global GPU-like bottleneck for biologic manufacturing components and filling lines — will shape which firms can meet payer and employer demand. Third, pricing and payer strategy: with net prices under pressure, companies will need to balance higher volume at lower margins versus premium pricing for superior efficacy. 

The payer calculus is evolving rapidly. U.S. drug-pricing panels and some insurers are already reassessing cost-effectiveness as drug prices fall and as new evidence about cardiovascular benefits and long-term outcomes accumulates. An influential pricing group recently said that GLP-1 and GIP/GLP-1 therapies are becoming more cost-effective as net prices decline and as evidence of broader health benefits mounts — a development that could expand access but compress margins for manufacturers. That, in turn, pressures companies to find new ways to extract value, including long-term contracting and outcomes-based deals. 

The strategic fight is also geopolitical and regulatory. Supply-chain vulnerabilities — notably in uranium-like dependencies for certain biologic inputs and concentration of production capacity in a few countries — mean that governments and companies alike are discussing reshoring and capacity commitments. Regulators in major markets are watching closely for safety signals amid huge increases in patient numbers, while antitrust and competition authorities are monitoring consolidation and exclusive contracting that could stiffen competition. Those policy angles complicate straightforward market forecasts. 

For patients the most immediate effect has been better access and, in many cases, deeper weight loss than was typical a decade ago. For health systems and employers, the calculus is harder: front-loaded drug costs versus long-term savings from fewer cardiovascular events, improved productivity and lower diabetes incidence. How the trade-off is measured — and whom policymakers make pay today for savings that may accrue over years — will influence market penetration and who ultimately benefits from the therapies. 

Analysis — the market’s next phase will be institutional, not just clinical

The early winners in the obesity-drug boom were those that could deliver clinical headlines: big weight-loss percentages, strong safety readouts, and fast regulatory approvals. The next phase will reward sophisticated commercial execution: manufacturing scale, smart contracting with payers, diversified formats (oral plus injectable) and resilience to price erosion. That environment advantages firms with deep balance sheets and flexible manufacturing networks — a category that includes both Lilly and Novo, but in different ways.

Eli Lilly today looks like the aggressor: rapid market gains, a broader pipeline and a willingness to push volume. Novo Nordisk still sits on entrenched clinical credibility and an incumbent distribution base, but its decision to cut 9,000 jobs signals the company believes the era of easy growth is over and that it must adapt. For investors, the sector remains a long-duration, binary bet: the upside is transformational market size and durable cash flows; the downside is execution failure, regulatory setbacks or sustained price competition that compresses returns.

In short, the obesity drug market is entering an institutional phase where clinical superiority matters, but operational competence, payer negotiation and political economy will decide who truly wins. Expect the headlines to be about deals, capacity expansions and payer contracts as much as new trial readouts.