Eli Lilly vs. AstraZeneca: Which Pharma Powerhouse is the Better Buy?

A comparison of Eli Lilly (LLY) and AstraZeneca (AZN) highlights their strengths in cardiometabolic health/oncology, respectively, and their investments in next-generation therapies. Lilly's Mounjaro and Zepbound drove significant revenue growth, with Q1 2025 sales reaching $6.15 billion, representing 48% of total revenue; however, the company faces challenges including declining Trulicity sales and increased competition. Conversely, AstraZeneca anticipates robust growth driven by its diversified portfolio and pipeline, projecting $80 billion in revenue by 2030, though it faces headwinds from Part D redesign impacts and pricing pressures; despite Lilly's higher growth estimates, AstraZeneca is viewed as a potentially safer short-term investment due to its cheaper valuation and recent price appreciation.

Analysis

Eli Lilly (LLY) and AstraZeneca (AZN) are prominent pharmaceutical firms with distinct strategic focuses: Lilly's Cardiometabolic Health division, contributing 72% of its revenue, is significantly bolstered by its GLP-1 drugs Mounjaro and Zepbound, which achieved combined sales of $6.15 billion in the first quarter of 2025, constituting approximately 48% of total revenues. Lilly projects strong top-line growth for 2025, with expected revenues between $58.0 billion and $61.0 billion, a 32% year-over-year increase, supported by new drug launches and expanded indications. The company is also actively returning capital, with $2.5 billion distributed in Q1 through buybacks and dividends, a new $15 billion share repurchase authorization, and a 15% dividend increase in 2024. However, LLY faces headwinds including declining sales of Trulicity, US pricing pressures, and significant GLP-1 market competition, evidenced by CVS Caremark's preference for Novo Nordisk's Wegovy, which could impact Zepbound's market share. Lilly's stock has declined 5.7% year-to-date, and it trades at a premium forward P/E of 28.31, with its 2025 and 2026 EPS estimates having declined recently, despite projected full-year 2025 EPS growth of 70.0%.

AstraZeneca, with Oncology as its largest segment (41% of revenue), presents a diversified portfolio of 16 blockbuster drugs and aims for $80 billion in total revenue by 2030, up from $54 billion in 2024, driven by an ambitious plan to launch 20 new medicines by 2030. The company targets a mid-30s percentage core operating margin by 2026 and anticipates high single-digit revenue growth in 2025. AZN's stock has appreciated 9.8% year-to-date, trades at a lower forward P/E of 15.13, offers a higher dividend yield of 2.9%, and has seen its 2025 and 2026 EPS estimates rise. Challenges for AstraZeneca include the negative impact of the US Part D redesign on sales of key drugs, potential volume-based procurement in China for Farxiga and Lynparza, and generic competition. While both companies trade above industry valuation levels, they are below their 5-year mean P/E ratios. The article suggests AstraZeneca may be a safer short-term investment due to its valuation, recent stock performance, and robust, albeit lower than Lilly's, growth outlook.

Key Decisions for Investors

• Investors considering Eli Lilly should carefully evaluate its substantial long-term growth prospects, primarily from its GLP-1 franchise and pipeline, against its premium valuation (forward P/E of 28.31), recent stock underperformance, declining analyst EPS estimates, and escalating competitive pressures in the cardiometabolic space.
• AstraZeneca may appeal to investors seeking a potentially more defensive pharmaceutical investment in the near term, given its more attractive valuation (forward P/E of 15.13), positive year-to-date stock performance (+9.8%), rising EPS estimates, and higher dividend yield (2.9%), though they must monitor ongoing challenges from Part D redesign and international pricing pressures.
• For both companies, investors should closely track the sales performance of key growth drivers like Mounjaro/Zepbound for Lilly and AstraZeneca's new oncology and rare disease products, upcoming clinical trial data, and the evolving landscape of drug pricing and market access in key geographies.