The trillion-dollar market valuation club is currently dominated by the tech sector. Saudi Aramco is the sole exception. The other six members are all part of the Nasdaq’s Magnificent Seven. But if people keep getting prescriptions for popular weight loss drugs Mounjaro and Ozempic, it may not be long before the two Big Pharma firms that make those injectable medications wind up worth at least a trillion dollars as well.

Eli Lilly (NYSE:LLY), the company behind Mounjaro and Zepbound, is now worth nearly $670 billion. Shares are trading at an all-time high and are already up about 20% this year. Mounjaro now accounts for nearly a quarter of Lilly’s overall revenue.

Novo Nordisk (NYSE:NVO), the Danish drug maker that owns Ozempic and Wegovy, is up almost 15% as well this year and is also at a record high. The company, which is now worth more than $525 billion, reported superb earnings last week, led by its popular GLP-1 injectable medications. Novo Nordisk said that sales in its diabetes and obesity care business surged by 38% from a year ago.

Demand is so strong for Ozempic and Wegovy that Novo Nordisk is having trouble producing enough of the drugs. That’s why Novo Nordisk’s largest investor, Novo Holdings, announced Monday that it was buying Catalent (NYSE:CTLT), a specialty drug manufacturer that, among other medications, makes Ozempic and Wegovy for Novo Nordisk. Catalent shares soared 10% Monday and are up more than 30% this year.

As part of the Catalent deal, Novo Holdings said that it would sell Catalent manufacturing plants in Italy, Indiana, and Brussels to Novo Nordisk for $11 billion. These so-called fill-finish sites will be used to make more of Novo Nordisk’s weight loss and diabetes drugs. 

“The acquisition of the filling sites is aligned with Novo Nordisk’s strategy of reaching more people living with diabetes and obesity with current and future treatments,” Novo Nordisk said in a statement, adding that the deal “enables an expansion of the manufacturing capacity at scale and speed” and that the purchase will help “gradually increase Novo Nordisk’s filling capacity from 2026 and onwards.”

Production seems to be less of a concern for Eli Lilly though. Lilly CEO David Ricks said in Tuesday’s earnings release that the company has already “invested in the quality, reliability and resilience of our supply chain with new advanced manufacturing plants and lines in the U.S. and in Europe.”

So, it appears that both Novo Nordisk and Eli Lilly should continue to benefit from the strong investor and consumer appetite (pardon the pun) for weight loss drugs. Still, traders need to recognize some of the risks that the companies face on the road to a trillion-dollar valuation.

The Path for LLY, NVO to Join the Trillion-Dollar Club

For one, Novo Nordisk still would have to nearly double to get to a trillion-dollar market cap. Eli Lilly needs to climb about 50%. And there are some concerns that both stocks have risen too far, too fast. LLY has more than doubled in the past 12 months while NVO has skyrocketed nearly 75%.

As a result, the price-to-earnings ratios for NVO and LLY are more reminiscent of high-flying tech stocks from the late 1990s than supposedly stodgy, dividend paying pharmaceutical firms. Novo Nordisk trades at nearly 35 times 2024 earnings estimates while Lilly has a forward P/E of almost 60 times this year’s earnings forecasts. So, it’s no wonder that analysts are actually predicting price drops for both stocks over the next 12 months, according to TipRanks.

But could it be that earrings estimates are too low? After all, Novo Nordisk beat consensus forecasts by more than 10% in the fourth quarter while Eli Lilly’s fourth quarter earnings topped Wall Street estimates by 12%.

Competition from other drug companies could eventually eat into sales for Novo Nordisk’s and Lilly’s GLP-1 medications. But we’re not there yet. Both stocks appear to be in healthy shape as they continue their march toward a trillion-dollar market cap.

As of this writing, Paul R. La Monica did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.