Is Eli Lilly (LLY) Still the Undisputed Leader in the $150 Billion Obesity Drug Market?

Is Eli Lilly (LLY) Still the Undisputed Leader in the $150 Billion Obesity Drug Market? Soumya Eswaran Tue, August 4, 2026 at 5:15 PM GMT+2 3 min read LLY Baron Capital , an investment management company, released its Q2 2026 investor letter for the "Baron Health Care Fund". A copy of the letter is available to download here .

The Fund gained 11. 99% during the quarter, compared with the 10. 48% gain for the Russell 3000 Health Care Index and the 15.

44% gain for the Russell 3000 Index. Since inception, the Fund appreciated 10. 61% on an annualized basis, compared with 10.

02% for the Benchmark and 14. 83% for the Index. Strong stock selection in pharmaceuticals, biotechnology, health care equipment, and life sciences tools and services supported the Fund's outperformance, although limited exposure to managed care stocks reduced relative returns.

The Fund remains positive on health care due to improving biotechnology funding, strong acquisition activity, recovering managed care margins, and growth from an aging population, chronic disease, medical innovation, and higher health care spending. In addition, please check the Fund's top five holdings to know the best picks in 2026. In its second-quarter 2026 investor letter, Baron Health Care Fund highlighted Eli Lilly and Company (NYSE: LLY ) as a notable performance contributor.

Eli Lilly and Company (NYSE:LLY) discovers, develops, manufactures, and markets human pharmaceutical products in the United States and internationally. On August 03, 2026, Eli Lilly and Company (NYSE:LLY) closed at $1,121. 36 per share.

The one-month return of Eli Lilly and Company (NYSE:LLY) was -9. 24%, and its shares gained 46. 40% over the past 52 weeks.

Eli Lilly and Company (NYSE:LLY) has a market capitalization of $1. 06 trillion. Baron Health Care Fund stated the following regarding Eli Lilly and Company (NYSE:LLY) in its Q2 2026 investor letter: "Pharmaceutical company Eli Lilly and Company  (NYSE:LLY), currently best known for its diabetes and obesity GLP-1 therapies, contributed to performance as commercial execution and pipeline data reinforced investor confidence in the company's long-term leadership.

All three major pharmacy benefit managers now cover Lilly's obesity portfolio, including its new daily oral GLP-1, Foundayo. This marks a reversal from last summer, when CVS Caremark provided preferred coverage for Novo Nordisk's Wegovy and raised concerns about a potential price war. The shift suggests that patients and physicians prefer Zepbound and are driving demand.

Clinical trial data further reinforces our view that Lilly has one of the strongest next-generation metabolic pipelines in the industry. Phase 3 data showed retatrutide delivered weight loss in the high-20% range at higher doses and nearly 20% at lower doses, while maintaining excellent tolerability. We are also excited about eloralintide, where Phase 2 data showed Zepbound-like efficacy and tolerability, with combination data expected soon.

Long term, we continue to view Lilly's portfolio as the gold standard in a category that we believe can exceed $150 billion. " Story Continues Was Jim Cramer Right About Eli Lilly and Company (LLY)? Eli Lilly and Company (NYSE:LLY) ranks 16 on our list of the 40 Most Popular Stocks Among Hedge Funds .

As per our database, 132 hedge fund portfolios held Eli Lilly and Company (NYSE:LLY) at the end of the first quarter which was 137 in the previous quarter.   While we acknowledge the potential of Eli Lilly and Company (NYSE:LLY) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the  best short-term AI stock .

In another article , we discussed Eli Lilly and Company (NYSE: LLY) and shared Jim Cramer's views on the legal dispute between Novo Nordisk A/S (NYSE: NVO) and Eli Lilly and Company (NYSE: LLY). In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors. READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years .

Disclosure: None. This article is originally published at Insider Monkey .