July 29 (Reuters) - Investors and analysts say they

expect Eli Lilly ( LLY ) to report stronger quarterly sales and

profit next week than Danish rival Novo Nordisk did

on Tuesday, and are anxiously awaiting a full-year outlook and

updates on an experimental obesity drug to gauge the U.S.

drugmaker's longer-term health.

Lilly's weight-loss drug Zepbound leads the U.S. market and

has faced less competition from cheaper copies made by

compounding pharmacies, giving it an edge, they said, after

investors wiped $70 billion from Novo's market value.

Novo, which sells the obesity drug Wegovy and related

diabetes medicine Ozempic, on Tuesday issued a profit warning,

citing lower U.S. growth expectations and competition including

from compounded versions.

"I think that this is a pretty positive report for Lilly

just because it shows the competitive note it has against their

largest competitor," said Dave Wagner, portfolio manager at

Aptus Capital Advisors.

Analysts expect Lilly to post second-quarter earnings of

$5.57 per share on revenue of $14.71 billion, according to LSEG

data. They are also looking for a full-year profit of $21.83 per

share.

Lilly has forecast adjusted earnings of $20.78 to $22.28 per

share for 2025.

Still, Lilly's shares fell nearly 5% on Tuesday, reflecting

concern that the company could be vulnerable if Novo cuts prices

aggressively or if its growth in the obesity market also slows

more than expected, analysts and investors said.

Zepbound holds just under 60% of the obesity market, while

Lilly's diabetes drug Mounjaro - containing the same active

ingredient - accounts for over half of its segment against

Ozempic, according to IQVIA data shared with Reuters by an

analyst. IQVIA did not immediately respond to a request for

confirmation.

UBS analyst Trung Huynh said data also showed Lilly was

getting around two-thirds of new patients onto Zepbound. The

company in December posted results from a large head-to-head

trial showing patients on Zepbound lost an average of 20.2% of

their weight after 72 weeks compared to 13.7% for the group

treated with Wegovy.

Lilly is also expected to be first to the market with the

next generation of oral obesity drugs. Lilly has said it intends

to seek approval for its experimental drug orforglipron by the

end of the year.

Lilly has felt less heat from compounded versions of its

medicines than Novo Nordisk, Huynh said, largely because Wegovy

and Ozempic both hit the market before Lilly's drugs and built

up patient recognition sooner.

Compounding pharmacies earlier this year were restricted

under U.S. law from making drugs that were essentially copies of

Wegovy and Zepbound, but can still make personalized doses for

patients who need them, or formulations not offered by

FDA-approved medicines.

Investors earlier this year were rattled by CVS Health's ( CVS )

decision to drop Zepbound from some lists of medicines

it covers for reimbursement starting on July 1, triggering a 10%

share price plunge.

But Lilly's stock has declined marginally so far this year,

compared to a more than 40% fall in Novo Nordisk's shares,

including Tuesday's moves.

Barclays analyst Emily Field said Lilly could calm investors

next week by reaffirming or boosting revenue and profit

outlooks, or simply by delivering strong financial results.

Brian Mulberry at Zacks Investment Management said signs of

softness in the obesity or diabetes drug market, especially from

a peer like Novo, typically trigger broad-based selling, which

might account for Lilly's share drop on Tuesday.