No. of Recommendations: 4
But 6 months is way too soon to judge who's right.
Expanding on why I chose 24-60 months as my parameters: I think the two-year lower bound allowed for expansion of the market with increased FDA approvals and more pressure on insurance companies to fund as the data continued to pile up (here's my additional point: Lilly's Zepbound/tirzepatide just granted authorization for sleep apnea this week, a condition with very limited other therapies), and for pipeline issues to work out (e.g. the autoinjector bottleneck).Update: Just over a year has passed since the initial comparison, and I saw that Novo just dropped on profit warnings and the resignation of its CEO. These molecules continue to pile up encouraging data and indications, but I think a lot of that was already priced in, so it isn't helping the stock prices. Here's where we currently stand, in the faceoff between NOVO, LLY and BRK:
2025-07-30 stake 2024-12-20 stake 2025-07-11 initial stake shares bot
brk 476.5 46380.54 453.60 44145.99 411.00 $40,000 97.32
lly 762.95 16394.31 768.48 16513.13 930.75 $20,000 21.49
nov 53.93 7667.59 85.01 12086.44 140.67 $20,000 142.18
lly+nvo $24062 $28600 $40,000
(lly+nvo)/brk 0.52 0.65 1.00
12 months is still too soon to see whether this will work out, but it's not looking good. I still think these drugs will have a huge positive impact on health, and I still think Lilly is the one that will profit, not Novo Nordisk, and this is all looking more and more true, but it's awfully hard to win when you're starting at such a high price. Novo's price is not so high, but they have the inferior drug, and are losing patent protection. Lilly has much better drugs and could increase sales substantially, but the price is still quite high. Their great performance in the last 12 months (sales up from 8.8b to 12.7b in from Q1 2024 to Q1 2025) has done nothing for the share price, because its P/E has come down so much. At the end of 2023, market cap was $521.16b, with earnings of $5.24b, for a P/E of 99. At year end 2024, market cap was $695.31, earnings of $10.59b, so the P/E fell to 66; as we speak, the market cap is $684.93b, with trailing 12 month earnings of $11.11b, so the P/E is now 62. If it converges to 20 in 5 years, and earnings are 3 times as high, there will still be no share price gains. I think that is a realistic scenario, but to believe this investment will work out well, from the current price, you have to think earnings will be do even better than tripling. That might happen, but I don't know if it's the most likely scenario.
Regards, DTB
