Eli Lilly, the world’s first healthcare business to join the exclusive club dominated by tech companies, reached a $1 trillion market valuation on Friday. The historic valuation comes at a time when broader market sentiment has grown increasingly fragile, with investors becoming more reactive to shifts in sector leadership.
Eli Lilly Hits $1 Trillion Amid Market Fragility
In early trading, Eli Lilly momentarily reached $1 trillion before pulling down. The share price was last trading at about $1,048. After Warren Buffett’s Berkshire Hathaway, Eli Lilly is the second nontechnology business in the United States to reach the coveted $1 trillion milestone.
Investors have praised the drugmaker’s advantages over its main competitor, Novo Nordisk, in the GLP-1 medication market, causing its shares to rise more than 36% this year. The stock of the Indianapolis-based firm has been soaring due to the success of its diabetic medication Mounjaro and weight loss injectable Zepbound.
Eli Lilly’s sales have skyrocketed thanks to the two medications. The company reported last month that Mounjaro’s third-quarter revenue was $6.52 billion, a 109% rise over the prior year. Zepbound reported $3.59 billion in sales at that time, an 184% increase over the same period last year.
As their use is approved and insurance coverage increases, demand for the therapies will only increase. Competition in the obesity-therapy market is accelerating rapidly, as illustrated by Pfizer’s high-stakes acquisition of Metsera to challenge both Eli Lilly and Novo Nordisk. Moreover, Eli Lilly is looking forward to a 2019 release of a less invasive oral version of its famous drugs, which may give patients a more straightforward dosing method without injections.
Eli Lilly is likely to keep the dominant position in the market of weight-loss drugs, which some analysts foresee to have a valuation of more than $150 billion by the early 2030s, that is, till the next decade.
Despite some recent issues and changes in the management structure, Novo Nordisk remains a formidable challenger for Eli Lilly in the market.
How Zepbound and Mounjaro Became Breakout Blockbusters
Due to Zepbound’s enormous success, Mounjaro Eli Lilly, a pharmaceutical chemist and Union soldier of the American Civil War, established the corporation that bears his name in 1876. With the introduction of the first commercial insulin in 1923, it has long been at the forefront of the diabetes treatment industry.
By 1952, Eli Lilly was listed on the New York Stock Exchange as a publicly traded corporation. For quite a long time, the company derived the majority of its profits and revenue from a range of popular products. Among these are the first polio vaccine, insulin, and the psychiatric medication Prozac.
It was a lucky break for Eli Lilly when tirzepatide, sold under the name Mounjaro, was given the green light in May 2022. The company started to compete with Ozempic, a diabetes injection from Novo Nordisk, that had been available for a few years.
However, Eli Lilly introduced a novel approach to the treatment of diabetes and, subsequently, obesity. GLP-1 and GIP, two hormones generated in the gut, are mimicked by tirzepatide. GLP-1 aids in lowering appetite and food consumption. In addition to suppressing hunger, GIP may enhance the body’s metabolism of fat and sugar.
Semaglutide, the active component of Ozempic and Novo Nordisk’s weight-loss medication Wegovy, solely targets GLP-1.
In its first full year, Mounjaro became a “blockbuster,” earning over $1 billion in sales. In late 2023, Eli Lilly won approval for tirzepatide, sold as Zepbound, which now competes with Novo Nordisk’s Wegovy.
Zepbound reported $4.93 billion in revenue by 2024, compared to $11.54 billion for Mounjaro.
Analysts See Expanding Medical Uses and Long-Term Momentum for Eli Lilly
Industry analysts say both drugs are likely to stay on track, especially as clinical research shows they could help treat conditions beyond diabetes and obesity. Trials at the very beginning stage are testing tirzepatide’s impacts on sleep apnea, heart failure, and metabolic dysfunction-related liver disease, diseases that, as a consequence, could enormously increase the total addressable market for Eli Lilly in the next ten years.
Alongside this, the doctors note that the patients and the doctors’ communication on adherence to the therapy is much stronger than in the case of the previous generations of weight-management drugs, which is an important positive aspect for future income from sales.
The constraints on the supply, which were the main reasons for the limitation, are slowly going away as Eli Lilly is extending its production capacity and putting billions of dollars into large-scale production at several sites in the US. Accordingly, the absence of medicines is still possible on most days, and the impatient parties are having a hard time due to the shortage of drugs, which has led to tightening healthcare providers and insurers in defining patient eligibility.
Expanding Uses, Policy Concerns, and Market Dominance
During the same period, politicians and public health advocates warned that high treatment costs without insurance could block many people from getting care unless reforms happen.
On the contrary, Wall Street still shares the view that the firm has achieved a multiyear lead in one of the fastest-growing categories of modern medicine, which is a commendable feat. In case of more approval anticipated and new formulations already in the pipeline, many analysts think that Eli Lilly has entered a period of sustained market dominance, which will have the effect of not only reshaping the pharmaceutical landscape but also changing obesity care worldwide for the years to come.