Pharma Stocks: Eli Lilly Shines Amidst Novo Nordisk's Challenges and Merck's Patent Cliff
The pharmaceutical sector is abuzz with GLP-1 economics and Merck's KEYTRUDA patent cliff, affecting shares of Eli Lilly, Novo Nordisk, and Merck. Eli Lilly stands out as a leader in the incretin market, with its Q2 revenue reaching $14.9 billion and non-GAAP EPS of $8.38. The company has raised its 2026 guidance to $85 to $87 billion in revenue and $35.50 to $36.50 in EPS.
The launch of Mounjaro and Zepbound, as well as the scaling of oral GLP-1 Foundeo from 8,000 to 36,000 prescribers, contribute to Lilly's strong setup. CEO Dave Ricks believes Retratrutide's TRIUMPH readouts give Lilly a significant lead over competitors with a triple-acting medicine.
Novo Nordisk, on the other hand, looks range-bound at $45.92 due to its bear case, which includes full-year 2026 guidance of -6% sales growth at CER and the SUSE cardiovascular trial's failed results for siltivecumab. The company's valuation appears cheap with a forward P/E of 14x.
Merck trades near fair value after a strong run, with its 2027 catalyst calendar deciding the next leg. Despite the KEYTRUDA loss of exclusivity, CEO Rob Davis believes it is 'more of a hill than a cliff.'