Eli Lilly vs. AstraZeneca: Which Pharma Powerhouse is the Better Buy?
Though both companies have a diversified product profile, Lilly's largest segment is Cardiometabolic Health, which accounts for 72% of its total revenues. Lilly has a strong portfolio of medicines to treat diabetes and other cardiometabolic diseases. Its cardiometabolic business is its most successful business, particularly with the success of its popular GLP-1 drugs, Mounjaro for diabetes and Zepbound for obesity.
On the other hand, Oncology is AstraZeneca's biggest segment, comprising around 41% of its total revenues. The company is working on strengthening its oncology product portfolio through label expansions of existing products and advancement of oncology pipeline candidates.
Both Lilly and AstraZeneca are seeing strong sales and earnings growth. But which one is a better investment today? Let's take a closer look at their fundamentals, growth prospects and challenges to make an informed choice.
Lilly boasts a wide range of products that serve a vast number of therapeutic areas. The company focuses primarily on cardiometabolic health, neuroscience, oncology and immunology, which are all high-growth areas with significant commercial potential.
Despite being on the market for less than three years, Mounjaro and Zepbound became key top-line drivers for Lilly, with demand rising rapidly. Mounjaro and Zepbound generated combined sales of $6.15 billion in the first quarter of 2025, accounting for around 48% of the company's total revenues.
Though sales of Mounjaro and Zepbound were below expectations in the second half of 2024, hurt by slower-than-expected growth and unfavorable channel dynamics, their sales picked up in the first quarter of 2025, driven by launches of the drugs in new international markets and improved supply from ramped-up production. We believe that increased uptake in outside U.S. markets and deeper penetration in the U.S. market will continue to drive Mounjaro and Zepbound's growth in future quarters. Approvals for new indications can also drive sales of Mounjaro and Zepbound higher.
Other than Mounjaro and Zepbound, Lilly has gained approvals for some other new drugs in the past couple of years across different therapeutic areas like Omvoh, Jaypirca, Ebglyss and Kisunla (donanemab). Lilly expects its new drugs, Mounjaro, Zepbound, Omvoh, Jaypirca, Ebglyss and Kisunla, along with the expanded use of existing drugs, to drive sales growth in 2025.
Lilly is also making rapid pipeline progress in obesity, diabetes and cancer, with several key mid and late-stage data-readouts expected this year. Lilly is investing broadly in obesity and has several new molecules currently in clinical development.
In terms of capital allocation, LLY returned $2.5 billion to shareholders in the first quarter via share repurchases and dividends. The board of directors of Lilly approved a new $15 billion stock buyback plan and also announced a 15% increase in its quarterly dividend in 2024.
Lilly has its share of problems. Sales of its key medicine, Trulicity, are declining in the United States due to competitive dynamics, including Mounjaro switches and supply constraints. Prices of most of Lilly's products are declining in the United States. Potential competition in the GLP-1 diabetes/obesity market is another headwind.
The stock also took a hit this month because CVS Caremark, a major pharmacy benefit manager ('PBM'), announced a partnership with rival Novo Nordisk NVO to make NVO's Wegovy its preferred GLP-1 therapy for weight loss, effective July 1.
NVO also recently announced partnerships with telehealth providers Hims & Hers Health to offer Wegovy at a discounted price to cash-paying patients. Though Lilly's CEO, Dave Ricks does not expect CVS' decision to exclude Zepbound in favor of Wegovy to hurt Lilly's revenues, we believe it may hurt Zepbound's market share.
Headquartered in Cambridge, the United Kingdom, AstraZeneca boasts a diversified geographical footprint as well as a product portfolio with several blockbuster medicines. AstraZeneca now has 16 blockbuster medicines in its portfolio with sales exceeding $1 billion, including Tagrisso, Fasenra, Farxiga, Imfinzi, Lynparza, Calquence and Ultomiris. These drugs are driving the company's top line, backed by increasing demand trends. The company is confident that the growth will continue in 2025. Almost every new product it has launched in recent years has done well.
Newer drugs like Wainua, Airsupra, Saphnelo, Datroway (partnered with Daiichi Sankyo) and Truqap are also expected to continue to contribute to top-line growth in 2025.
Backed by its new products and pipeline drugs, AstraZeneca believes it can post industry-leading top-line growth in the 2025-2030 period. AstraZeneca expects to generate $80 billion in total revenues by 2030, a significant increase from the $54 billion it generated in 2024. By the said time frame, AstraZeneca plans to launch 20 new medicines, with nine new medicines already launched/approved. It believes that many of these new medicines will have the potential to generate more than $5 billion in peak-year revenues.
The company is also on track to achieve a mid-30s percentage core operating margin by 2026.
AstraZeneca faces its share of challenges. The impact of Part D redesign hurt sales of AZN's older drugs, Tagrisso, Lynparza and Ultomiris, as well as newer drugs, Truqap and Wainua, in the United States in the first quarter of 2025, with the trend expected to continue through the rest of the year. AstraZeneca expects Farxiga and Lynparza to be included in the volume-based procurement plans in China in mid-2025, which can hurt sales of these drugs in the country.
Pricing and competitive pressure in Europe and generic competition in some emerging markets are expected to hurt drug sales. In 2025, generic/biosimilar competition in the United States is expected to hurt sales of key drugs like Brilinta and Soliris. Sales in its Rare Disease segment are expected to be slower in 2025 than in 2024.
As regards shareholders' returns, AstraZeneca intends to increase its annual dividend per share to $3.20 per share in 2025.
The Zacks Consensus Estimate for LLY's 2025 sales and EPS implies a year-over-year increase of 32.6% and 70.0%, respectively. EPS estimates for 2025 as well as 2026 have declined over the past 60 days.
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The Zacks Consensus Estimate for AstraZeneca's 2025 sales and EPS implies a year-over-year increase of 6.7% and 9.3%, respectively. EPS estimates for both 2025 and 2026 have risen over the past 60 days.
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Year to date, while LLY's stock has declined 5.7%, AstraZeneca's stock has risen 9.8%. The industry has declined 4.5% in the said time frame.
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Both Lilly and AZN are priced higher than the industry from a valuation standpoint. Lilly is more expensive than AstraZeneca, going by the price/earnings ratio. Lilly's shares currently trade at 28.31 forward earnings, higher than 15.13 for AZN. However, both AZN and LLY are trading at discounts to their 5-year mean.
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Lilly's dividend yield is 0.8%, while AZN's is much higher at around 2.9%.
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Lilly's return on equity of 85.5% is higher than AZN's 33.1%.
Both Lilly and AstraZeneca have a Zacks Rank #3 (Hold), which makes choosing one stock a difficult task. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Lilly is a good stock to have in one's portfolio, considering its diversified product and pipeline portfolio and robust growth prospects despite its expensive valuation. Lilly's tremendous success with Mounjaro and Zepbound has made it the largest drugmaker with a market cap of more than $650 billion. In 2025, Lilly expects to record revenues in the range of $58.0 billion to $61.0 billion, indicating an impressive 32% year-over-year growth.
However, considering Lilly's several near-term challenges, AstraZeneca looks like a safer bet for short-term investors, given its price appreciation, cheaper valuation and robust growth prospects. Despite the potential impact from Part D redesign, AstraZeneca expects total revenues to grow by a high single-digit percentage at CER in 2025. AstraZeneca expects core EPS to increase by a low double-digit percentage. Consistently rising estimates also indicate analysts' optimistic outlook for growth.
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