Eli Lilly Remains Well Positioned for Industry-Leading Growth, Buoyed by Cardiometabolic Drugs

Sector Director

Damien Conover

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Diabetes

Oncology

Immunology

Neuroscience

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Eli Lilly's innovative culture and strong financial commitment to developing the next generation of drugs set the company apart from its peers and fuel its long-term growth. Following a very steep patent cliff in 2014, Lilly's growth prospects have improved as the company is launching several new blockbusters and patent losses are fading.

Lilly's internal pipeline is well positioned to mitigate the patent losses during the next decade. The company tends to spend a low- to mid-20s percentage of its sales on financing the development efforts of new drugs, much higher than the high-teens industry average. The robust pipeline is a result of Lilly's strong commitment to research. We believe cardiometabolic drugs Mounjaro, Trulicity, and Jardiance and immunology drug Taltz along with cancer drug Verzenio hold the highest sales potential of Lilly's currently launched drugs. Further, pipeline drugs lebrikizumab (atopic dermatitis), mirikizumab (immunology), and donanemab (Alzheimer's) hold major blockbuster potential. 

Lilly's strong entrenchment in insulin production should also help the company deal with patent losses. Unlike traditional drugs, Lilly's insulin drugs are very hard to copy by generics and create barriers to entry for noninsulin producers because of the large up-front investments needed to create scale efficiencies. A new weekly insulin in late-stage development offers another avenue of growth in this mature market.

The company is taking a hard look at its bottom line. Through a combination of cost savings and expected top-line growth, Lilly aims to expand operating margins over the next several years, which we believe is achievable. Lilly expects to increase gross margins through productivity initiatives and greater capacity utilization. Overall, we view the strong traction of recently launched high-margin drugs in several indications as supporting the overall profitability gains.

Business Strategy & Outlook

Patents, economies of scale, and a powerful distribution network support Eli Lilly’s wide moat. Lilly's patent-protected drugs carry strong pricing power, which enables the firm to generate returns on invested capital in excess of its cost of capital. Further, the patents give the company time to develop the next generation of drugs before generic competition arises. Lilly’s diversified product portfolio means the company’s top drugs represent only a moderate amount of total sales, with the largest drug, Trulicity, representing almost 20% of total sales, which sets up manageable cash flow declines as new products mitigate the generic competition. Also, Lilly’s operating structure allows for cost-cutting after patent losses to reduce the margin pressure from lost high-margin drug sales. Overall, Lilly's established product line creates the enormous cash flows needed to fund the average $800 million in development costs per new drug. In addition, the company's powerful distribution network sets up the company as a strong partner for smaller drug companies that lack Lilly's resources. Lilly's entrenched insulin franchise creates an added layer of competitive advantage, as interchangeable insulin competition seems many years away due to the complexity of gaining generic approval for insulin and the high cost to build the needed economy of scale for insulin production. Also, Lilly's recently launched biologic drugs create higher hurdles over traditional small molecule for biosimilars to gain market share following the eventual patent expirations.

We think the firm does face environmental, social, and governance risks, particularly related to potential U.S. drug price-related policy reform (close to 60% of total sales are generated by prescription drugs sales in the U.S.) to increase access by lowering drug prices. Ongoing product governance issues (including litigation related to side effects and patents) also weigh on the company. While we have factored these threats into our analysis, we don't see them as material to our moat rating for Eli Lilly.

Wide

Economic Moat

Eli Lilly

Cialis, ia a competitor to Pfizer's blockbuster Viagra for erectile dysfunction. Cialis maintains an active period of 36 hours.

Cialis

Cymbalta is a serotonin-norepinephrine reuptake inhibitor used predominantly in the treatment of major depressive disorders and generalized anxiety disorder, ranks with Prozac as one of the most financially successful pharmaceuticals in industry history. It is also used in the treatment of fibromyalgia, neuropathy, chronic pain and osteoarthritis.

Cymbalta

Gemzar is a treatment of pancreatic cancer. Gemzar is commonly used in the treatment of pancreatic cancer, usually in coordination with 5-FU chemotherapy and radiology. Gemzar also is routinely used in the treatment of non-small cell lung cancer.

Gemzar

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Methadone

Prozac was one of the first therapies in its class to treat clinical depression by blocking the uptake of serotonin within the human brain. It is prescribed to more than fifty-four million people worldwide.

Prozac

Eli Lilly & Co. engages in the discovery, development, manufacture, and sale of pharmaceutical products. The firm's products consist of diabetes, oncology, immunology, neuroscience, and other products and therapies. The company was founded by Eli Lilly in May 1876 and is headquartered in Indianapolis, IN.

Earnings data Q3 2023

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Eli Lilly (LLY) beats second-quarter estimates for earnings and sales. It raises its financial guidance for 2023.

Eli Lilly (LLY) Q2 Earnings Beat, Mounjaro Powers Sales Growth

Eli Lilly shares rose to a record after the company posted better-than-expected results and raised its guidance on soaring demand soared for its diabetes drug, Mounjaro.

Eli Lilly Beats Estimates and Boosts Its Guidance as Diabetes Drug Sales Soar

While the top- and bottom-line numbers for Lilly (LLY) give a sense of how the business performed in the quarter ended June 2023, it could be worth looking at how some of its key metrics compare to Wall Street estimates and year-ago values.

Compared to Estimates, Lilly (LLY) Q2 Earnings: A Look at Key Metrics

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A new class of weight loss drugs are powering massive stock market gains for Novo Nordisk and Eli Lilly. Both stocks surged more than 16% on Tuesday, boosting the combined valuation of both companies to nearly $1 trillion.

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The shares of Eli Lilly And Co (NYSE:LLY) are trading at record highs today, last seen up 16% at $522.45, following a blockbuster trip to the earnings confessional.

Call Traders Blast Ely Lilly Stock Amid Post-Earnings Peak

Eli Lilly (LLY) came out with quarterly earnings of $2.11 per share, beating the Zacks Consensus Estimate of $1.98 per share. This compares to earnings of $1.25 per share a year ago.

Eli Lilly (LLY) Q2 Earnings and Revenues Top Estimates

Eli Lilly stock surged early Tuesday after the company reported strong second-quarter results on the back of its diabetes drug, Mounjaro.

Lilly Stock Rockets After Diabetes Powerhouse Mounjaro Drives Beat And Raise

7.50am: Banks hit by Moody's downgrades, Eli Lilly ups guidance US stocks are expected to open lower with banks under pressure after Moody's downgraded ratings for a number of small to mid-sized lenders and as weak trade data in China saw commodity prices fall. In pre-market trading, futures for the Dow Jones Industrial Average were 0.7% lower, while those for the S&P 500 fell 0.8%, and contracts for the Nasdaq 100 futures were down 0.9%.

Dow seen lower as Moody's hits banks but Eli Lilly set to fly

Eli Lilly and Co (NYSE:LLY) stock is seen higher ahead of Tuesday's open after reporting a strong, expectation-beating, second-quarter performance led by type-2 diabetes drug Mounjaro. Revenue for the quarter increased by 28% year-over-year, totalling US$8.3 billion, beating Wall Street forecasts for US$7.58 billion, with the company highlighting ‘volume-driven growth'.

Eli Lilly stock up in premarket as Mounjaro diabetes drug sales surge

Eli Lilly's stock has been on a tear, driven by positive trial results for its Alzheimer's drug and progress with its promising obesity drug pipeline.

Eli Lilly raises full-year guidance as drug pipeline drives second-quarter profit up 85%

Shares of Eli Lilly & Co. LLY, +1.02% shot up 9.0% into record territory in premarket trading Tuesday, after the drug giant reported second-quarter profit and revenue that climbed above expectations and provided a big boost its full-year outlook, as results were helped by the $579 million received from the sale of rights for Baqsimi. Net income jumped to $1.76 billion, or $1.95 a share, from $952.5 million, or $1.05 a share, in the year-ago period.

Eli Lilly stock shoots up into record territory after earnings beat, a big increase in the full-year outlook

Eli Lilly beat Wall Street estimates for second-quarter profit on Tuesday, buoyed by strong demand for its new diabetes drugs Mounjaro, ahead of a decision on the medicine's use as a weight-loss treatment.

Eli Lilly beats profit estimates on strength of new diabetes drug

Revenue in Q2 2023 increased 28% as a result of volume-driven growth from Mounjaro, Verzenio, Jardiance and Taltz, as well as $579.0 million from the sale of rights for Baqsimi. Excluding revenue from Baqsimi, and COVID-19 antibodies in 2022, revenue in Q2 2023 increased 22%.

Lilly Reports Second-Quarter 2023 Financial Results, Highlights Accelerating Revenue Growth and Key Pipeline Advancements

Nektar Therapeutics

Nektar Therapeutics on Monday sued Eli Lilly , accusing the drugmaker of undermining the prospects for Rezpeg, which Nektar was developing as a treatment for various autoimmune diseases.

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Eli Lilly and Company is slated to unveil its second-quarter 2023 results on Tuesday (August), prior to the market opening, with Wall Street expecting earnings of $1.98 a share. That's up around 9% on the same period last year, and 15% ahead of the first quarter.

Eli Lilly expected to deliver a solid if unspectacular earnings update

Nektar Therapeutics (NASDAQ:NKTR) shares rallied more than 15% in Monday pre-market trading after the company released new efficacy data from phase 1b studies from rezpegaldesleukin (rezpeg) after the data were previously incorrectly calculated by Eli Lilly.  The new and corrected data highlight the important potential of REZPEG to help patients battling atopic AtD, a chronic skin condition that afflicts nearly 10% of Americans, Nektar said in a statement.

Nektar rallies after releasing new data for rezpeg after Eli Lilly got it wrong

Nektar Therapeutics' stock NKTR, +3.14% jumped 12.7% in premarket trade Monday, after the company said that efficacy data previously generated by its former partner Eli Lilly & Co. LLY, +0.07% for its atopic dermatitis treatment rezpegaldesleukin and presented at the Sept. 22922 EADV Congress were incorrectly calculated.

Nektar Therapeutics' stock jumps premarket after it says data presented by Eli Lilly for a skin treatment was incorrectly calculated

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Eli Lilly & Co. LLY, -1.17% said Friday a late-stage trial of a treatment for a type of non-small cell lung cancer met its main goal. The Phase 3 trial dubbed Libretto-431 showed a statistically significant and clinically meaningful improvement in progression-free survival for Retevmo versus platinum-based chemotherapy in treating adults with rearranged during transfection (RET) fusion-positive advanced or metastatic non-small cell lung cancer.

Eli Lilly reports positive results in trial of tretment for non-small cell lung cancer

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INDIANAPOLIS , Aug. 4, 2023 /PRNewswire/ -- Eli Lilly and Company (NYSE: LLY) today announced topline results from the LIBRETTO-431 study evaluating Retevmo versus platinum-based chemotherapy plus pemetrexed – with or without pembrolizumab – as an initial treatment for patients with rearranged during transfection (RET) fusion-positive advanced or metastatic non-small cell lung cancer (NSCLC). The study met its primary endpoint, demonstrating a statistically significant and clinically meaningful improvement in progression-free survival (PFS).

Lilly's Retevmo® (selpercatinib) is the First Targeted Therapy to Demonstrate Superior Progression-Free Survival Compared to a PD-1 Inhibitor Plus Chemotherapy for Adults with Newly-Diagnosed Advanced or Metastatic RET Fusion-Positive Non-Small Cell Lung Cancer

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News for Eli Lilly Stock (LLY)