Eli Lilly beats Johnson & Johnson to become world's most valuable drugmaker
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After a nearly 42% gain over the past 12 months, Eli Lilly (NYSE:LLY) has dethroned Johnson & Johnson (NYSE:JNJ) as the world's most valuable drugmaker amid prospects for its experimental therapies targeted at Alzheimer's disease and obesity.
According to Bloomberg data, Lilly (LLY) shares rallied ~9% in May to reach a record high, lifting its market capitalization to ~$408B, while JNJ's (JNJ) market cap came at ~$403B following a ~5% decline.
LLY's rise to the top follows recent late-stage readouts for its Alzheimer's candidate donanemab and obesity therapy tirzepatide ahead of potential regulatory decisions expected before the year-end.
"Lilly is participating in arguably the two areas of therapeutics that investors are kind of most interested in," Bloomberg reported quoting Jared Holz, a managing director at Mizuho Securities.
"The street is essentially saying that they're willing to ascribe very significant value for the large market opportunities and then very little for what they believe are more niche," Holz added.
Meanwhile, Novo Nordisk (NVO), Lilly's (LLY) dominant rival in the weight loss space, has more than doubled its market cap since the beginning of 2021. In March, the Danish drugmaker became Europe's second most valuable company behind Swiss consumer giant Nestle SA (OTCPK:NSRGY) (OTCPK:NSRGF).
Johnson & Johnson (JNJ) has lost ~11% over the past 12 months amid overhang from a multitude of cancer lawsuits related to its talc-based baby powder and its recent spinoff of consumer unit Kenvue.
The loss of pole position "could put a little bit more pressure or urgency on the part of J&J to augment both its medical device and pharmaceuticals businesses over time," Mizuho's Holz added.