Author: Michael Hannig, Analyst at DJE Kapital AG
The market for weight-loss drugs, often referred to as “anti-obesity injectables,” has changed fundamentally in a remarkably short period of time. What began as an early-stage hype cycle has now consolidated into an established duopoly. On one side stands the European maker of the semaglutide-based products Wegovy and Ozempic; on the other, Eli Lilly with the more potent active ingredient tirzepatide, marketed under the names Mounjaro and Zepbound. Eli Lilly has steadily taken market share from its rival and established itself as the leading player. At the same time, elevated valuations left both stocks vulnerable to setbacks. In parallel, pricing began to fall: the list price dropped from US$1,350 to a cash-pay price of US$450. In addition, semaglutide patent protection has expired in Canada and Brazil. Open questions remained around new competitors, long-term reimbursement by insurers and the market’s continued expansion. Against this backdrop, developments over recent months have confirmed some parts of the original thesis, while materially changing others.
Oral Drugs Broaden the Market
The most important new development is the launch of oral therapies. The maker of Wegovy introduced the Wegovy Pill, a tablet version of the franchise, and Eli Lilly followed with Foundayo. For now, the initial advantage appears to lie with the Wegovy Pill: it builds on an established brand and was the first product to reach the market. It also compares favorably on efficacy. Weight loss amounted to around 13.5% after 64 weeks, whereas Foundayo delivered 11.5% after 72 weeks.
There are, however, meaningful differences in administration. After taking the Wegovy Pill, patients must not eat or drink for 30 minutes, with the exception of water. Foundayo, by contrast, can be taken regardless of time of day or meals. That should make day-to-day use easier and may improve adherence.
Both tablets are seeing strong demand so far, without displacing demand for injectable products. The market is therefore expanding overall rather than merely shifting toward oral formulations. That underlines how large demand for these therapies has already become.
Falling Prices and Government Reimbursement Expand Access
Pricing pressure has continued to intensify. In the US, injectables now cost US$299, while the oral starter dose is priced at US$149. A key driver is the agreement reached with the Trump administration in November 2025. The expiration of semaglutide patent protection in Canada and Brazil also provides a glimpse of how pricing could evolve in the US and other markets once exclusivity ends. Dr. Reddy’s Laboratories expects the price in Canada to fall to around US$25 by the end of 2027.
At that kind of price point, patients could conceivably save more through lower food consumption or fewer restaurant visits than they spend on the drug itself. That also raises the possibility that lower-income consumers may use these products as a way to reduce food spending - a scenario that would have seemed highly unlikely just a few years ago.
Government reimbursement is also expanding access in the US. As part of the agreement between Eli Lilly, the maker of the semaglutide-based products and the US government, the relevant US health authority, CMS, decided to include GLP-1 therapies in Medicare and Medicaid. Under a “Medicare bridge” effective July 1, 2026, eligible beneficiaries with obesity and at least one comorbidity can receive the drugs for a monthly co-pay of US$50. The government covers around US$245 per injectable. Coverage includes Wegovy in both injectable and tablet form, as well as Zepbound and Foundayo. Individual states can add the drugs to their Medicaid programs from mid-2026 onward. That gives millions of patients access to therapies they previously had to fund out of pocket. Higher volumes could at least partially offset the decline in pricing.
Broader Use Cases and Tighter Rules for Compounding Pharmacies
Another development concerns the potential use of these drugs beyond weight reduction alone. GLP-1 agonists may dampen the brain’s reward system and thereby reduce addictive behaviors such as gambling, smoking or alcohol consumption. In addiction treatment, however, these therapies are still only rarely used off-label. Even so, this highlights the broad therapeutic potential of the drug class.
At the same time, the gray zone around so-called compounding pharmacies has narrowed significantly. These specialized pharmacies emerged when the FDA added the drugs to its shortage list. Hims & Hers, one of the leading players in this segment, marketed its own copycat version of the Wegovy Pill shortly after the branded product was launched. The FDA then stepped in and tightened the rules materially. Had it not done so, the pharma industry’s patent-based business model would have been put at risk.
Compounding pharmacies are now only allowed to offer such products in exceptional cases where a documented and physician-confirmed intolerance exists. Hims & Hers now distributes the branded products of Eli Lilly and the maker of the semaglutide franchise. In other words, the company has shifted from competitor to distribution partner.
New Molecules Expand the Treatment Landscape
There is also progress at the molecule level. In the pivotal Phase 3 TRIUMPH-1 study published in May 2026, retatrutide produced weight loss of around 28% after 80 weeks and more than 30% after 104 weeks. Those results approach outcomes typically associated with bariatric procedures. The study also used a low four-milligram dose, which showed a very favorable side-effect profile. That could make the drug relevant for a broader patient population rather than only for individuals with extreme obesity. The glucagon component appears to target visceral abdominal and liver fat in particular, potentially creating benefits beyond weight loss alone. A filing with the FDA is expected around the turn of 2026/2027.
The development pipeline extends even further. The next drug class moving into focus is amylins. These endogenous hormones regulate satiety. At a meeting in Miami, Eli Lilly expressed confidence in its amylin candidate Eloralintide and at the same time confirmed the largest Phase 3 study in the company’s history. Amylins are characterized by a favorable tolerability profile and their suitability for combination therapy. That also makes them relevant for patients who do not tolerate GLP-1 drugs well.
Alongside Eli Lilly, both the maker of the semaglutide franchise and Roche, via Zealand, are also working on amylin-based therapies. For now, Eloralintide appears to be the most promising candidate, strengthening Eli Lilly’s position further. Over time, the company could potentially cover the full spectrum - from cosmetic weight loss to standard obesity treatment and even therapy for the most severe cases.
Rapid Weight Loss Remains a Key Selling Point
One recurring theme is the “quality of weight loss,” meaning the preservation of muscle mass during weight reduction. In the lifestyle segment, however, many patients are less focused on a long-term reduction of 10% body fat than on visible weight loss within a short period of time - for example ahead of a wedding, a vacation or Christmas. For manufacturers, large absolute reductions in body weight over a short timeframe therefore remain an important selling point. The medical community, by contrast, is increasingly focusing on body composition across fat, muscle and bone.
A Pharmaceutical Industry in Transition?
So far, the “Most Favored Nation” decree has turned out to be less severe than initially feared. All 17 pharmaceutical companies that received letters have now reached agreements with the Trump administration, most recently Regeneron in April 2026. In return, the companies received a three-year tariff pause. The agreements mainly affect Medicaid and the cash-pay market, while actual net prices in the commercial segment have remained broadly unchanged. In addition, many companies received a so-called “Fast Pass” from the FDA. The new “Commissioner’s National Priority Voucher” accelerates approval timelines. Foundayo was among the beneficiaries.
Pricing pressure is therefore increasingly shifting toward Europe. The agreement between the US and the UK has already lifted UK net prices by around 25%. Some manufacturers are considering launching products later in Europe - or not at all - in order to protect pricing in the US. For European healthcare budgets, this could become a growing burden.
Conclusion: A Powerful Megatrend Does Not Justify Any Valuation
A powerful megatrend and an attractive stock are not the same thing. Eli Lilly has clearly established itself as the quality leader. The company has the broadest pipeline, the strongest molecule and, according to industry experts, the most compelling amylin outlook. At current valuation levels, however, much of that quality likely already appears priced in.
The maker of the semaglutide franchise shaped the market early on, but it now faces a structural overhang. The expiry of semaglutide patents is no longer an abstract long-term risk. Canada and Brazil are already showing how sharply prices can fall once exclusivity ends. That risk may not yet be fully reflected in the company’s current valuation.
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