Key Points
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Eli Lilly and dominance in weight loss and diabetes treatments continues to fuel massive revenue growth.
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Teva Pharmaceutical Industries offers a value-oriented play as it moves past legal hurdles and expands its biosimilar portfolio.
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Which pharmaceutical stock deserves a spot in your portfolio in 2026?
- 10 stocks we like better than Eli Lilly ›
Can high-flying growth justify a premium valuation, or is a recovered value play the safer bet for 2026? Investors are weighing Eli Lilly and (NYSE:LLY) against Teva Pharmaceutical Industries (NYSE:TEVA) today.
Eli Lilly dominates the innovative brand-name drug market with blockbusters in metabolic health and oncology. Conversely, Teva focuses on generic medicines and biosimilars, looking to stabilize its business after years of legal and debt-related challenges. Both companies operate in the essential healthcare space but appeal to very different investor profiles.
The case for Eli Lilly
Eli Lilly discovers and manufactures medicines globally, focusing on areas like diabetes, obesity, and oncology. The company relies on major wholesale distributors such as McKesson Corp (NYSE:MCK), Cencora Inc. (NYSE:COR), and Cardinal Health (NYSE:CAH) for the majority of its U.S. distribution, meaning customer concentration adds a layer of risk. These partnerships are essential for getting products to patients within the pharmaceutical stocks category.
In FY 2025, revenue reached nearly $65.2 billion, representing a significant 44% increase over the previous year. This surge helped the company generate a net income of roughly $20.6 billion, about double that of 2024.
As of the December 2025 balance sheet, the debt-to-equity ratio is roughly 1.6x. This ratio, which compares total debt (including both short- and long-term obligations) to shareholders’ equity, indicates how much debt is used to fund assets. Free cash flow reached close to $9 billion.
The case for Teva Pharmaceutical
Teva focuses on a mix of generic medicines, biosimilars, and innovative biopharmaceuticals across 57 international markets. Its business depends on a concentrated customer base of retail drug chains and large wholesalers, which adds a layer of risk. The company is actively moving toward biosimilars and innovative new drugs to offset the competitive pressures of the generic market.
For FY 2025, the company reported revenue of nearly $17.3 billion, an increase of roughly 4% year over year. Unlike previous years of losses, the company achieved a net income of approximately $1.4 billion. This resulted in a net margin of close to 8.2% for the fiscal year.
As of its December 2025 balance sheet, the debt-to-equity ratio is approximately 2.2x. This indicates that total debt exceeds shareholder equity, reflecting significant leverage on the books. Free cash flow for the year was roughly $1.2 billion.
Risk profile comparison
Eli Lilly faces regulatory hurdles from the Inflation Reduction Act, which mandates price discounts on top sellers like Jardiance and Trulicity. Competition is intense from rivals like Novo Nordisk (NYSE:NVO), and the company also deals with the threat of generic versions of its drugs. Litigation involving a $200 million drug rebate fraud scheme and reliance on suppliers in China create additional financial and supply risks.
Teva is managing significant debt that limits its financial flexibility and requires high interest payments. The generic market is prone to price erosion and heavy competition from firms like Viatris (NASDAQ:VTRS), while legal risks remain regarding past opioid-related litigation. Finally, its complex global manufacturing network is vulnerable to geopolitical tensions and regulatory compliance issues.
Valuation comparison
Teva Pharmaceutical Industries appears significantly cheaper based on the Forward P/E, which compares the stock price to future earnings estimates.
MetricEli Lilly andTeva Pharmaceutical IndustriesSector BenchmarkForward P/E33.1×16.4×389.1xP/S ratio15.2×2.3xn/a
Sector benchmark uses the SPDR XLV sector ETF.Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.
Which stock would I buy in 2026?
Eli Lilly and Teva operate in different parts of the pharmaceutical business, with Eli Lilly focused on developing treatments that can command a premium under patent protection, while Teva plays a crucial role in producing generics that make health care more affordable for many patients.
Eli Lilly is riding a wave of success with its GLP-1 drugs Zepbound for weight loss and Mounjaro, which is the same drug for diabetes control. There is still plenty of growth left in the treatment, and that is expected to power revenue up as high as 30% in 2026, to $85.2 billion, with close to $31 billion in net income. Its next weight-loss drug, Retatrutide, is hotly anticipated for its triple-agonist approach that exceeds the weight-loss results of Zepbound. The company is also targeting less affluent customers with a cheaper GLP pill called Foundayo, which it is selling directly to consumers.
Besides GLP-1s, Lilly is working on a small interfering RNA therapeutic targeting lipoprotein(a) for the prevention of atherosclerotic cardiovascular disease in patients with elevated lipoprotein(a) levels. Analysts believe it will be a blockbuster ($1 billion or more lifetime revenue) if approved.
Teva, meanwhile, has had its own generic GLP-1 approved, similar to Novo’s Saxenda. Still, that isn’t expected to generate enough sales to push Teva to growth this year. Wall Street sees Teva’s sales declining to $16.6 billion in 2026, while net income is projected to grow to $1.54 billion. Still, Teva has some very well-selling generics, including Ajovy, Uzedy, and Austedo, which will be joined by olanzapine, which treats schizophrenia. The pipeline of new drugs will get Teva back to growth for 2027.
Still, even while Eli Lilly trades at a premium compared to Teva in terms of price-to-earnings and price-to-sales, Lilly is the easy choice here, given it is still in the midst of a GLP-1-driven growth spurt.
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Brendan Coffey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Eli Lilly and Novo Nordisk. The Motley Fool recommends McKesson. The Motley Fool has a disclosure policy.
