Sanmit Amin
6 min read
Eli Lilly and Company (NYSE:LLY) has returned 36.37% over the last six months, as of October 15. This compares to a 21.5% return for the Insider Monkey Billionaire Index and 15.74% for the State Street SPDR S&P 500 ETF Trust.
Eli Lilly is no longer just a pharmaceutical company benefiting from the popularity of weight-loss drugs. It is building a business around them, from manufacturing capacity and easier access to treatment to a pipeline that could keep patients coming back for years. The opportunity is massive, but the challenge is making sure all that growth translates into lasting profits.
Mounjaro and Zepbound continue to drive most of Lilly’s growth, but the company is also looking to expand its reach with oral drugs, international markets, and treatments beyond obesity. The question is whether these new opportunities can sustain growth as the company’s current blockbusters mature.
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Growth Is About Reaching More Patients
One of the more interesting things about Lilly’s business is that its next phase of growth may depend as much on access as on developing better drugs. Management said obesity treatment still reaches only a small share of eligible patients. That leaves considerable room for growth, particularly as insurance coverage improves and Lilly expands into markets where these medicines are still relatively new.
Foundayo, Lilly’s oral obesity drug, could help bring more people into treatment. Not everyone wants a weekly injection, and a pill that is easier to take could broaden the market. Its early sales are still modest, so it is too soon to know how large the opportunity will become. Still, the potential matters because Lilly does not need every new product to replace Mounjaro or Zepbound. It needs to reach patients who might otherwise never use an obesity drug.
Eli Lilly and Company (NYSE:LLY) is also investing heavily in manufacturing to keep up with demand, including an additional $4.5 billion for its Indiana facilities. The investment makes sense, but the returns will depend on how quickly the new capacity translates into sales. Building more factories is one thing. Keeping them productive enough to justify the cost is another. Even a successful drug can fall short of expectations if the economics don’t work out.
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