Eli Lilly became the most valuable healthcare company in the U.S. after a stock price surge Tuesday morning propelled the Indianapolis drugmaker’s market value above $500 billion for the first time in its 147-year history.
Shares jumped 15% on second quarter earnings that showed the company’s revenue rose by 28%, driven by fast sales of its diabetes medicine Mounjaro. The drug has attracted intense interest for its potential as an obesity treatment, a use for which it’s expected to earn Food and Drug Administration approval later this year.
Analysts view Mounjaro as a strong competitor to rival Novo Nordisk’s medicines Ozempic and Wegovy, which have benefited from viral demand so strong that Novo has been unable to keep them in stock. Collectively known as GLP-1 agonists, the drugs can reduce weight by around 15% to 20% when added to changes in exercise and diet.
This degree of benefit is far superior to earlier obesity medicines, fueling forecasts of tens of billions of dollars in potential sales — a market that Novo and Lilly are now poised to dominate.
And on Tuesday, clinical trial results from a large international study run by Novo suggested GLP-1 agonists could also protect the heart. Data from the trial, dubbed SELECT, showed treatment with Wegovy cut the risk of heart attack, stroke or cardiovascular death by 20% compared to placebo, meeting the study’s goal. Shares in Novo climbed by 17% on the New York Stock Exchange Tuesday.
Lilly has a similar heart outcomes study ongoing and, while results aren’t expected until 2027, Mounjaro could benefit from Wegovy’s success.
“The results are great for the anti-obesity medication class,” said Mike Mason, head of Lilly’s diabetes division, on an earnings conference call Tuesday. “[They] should turn the conversation on the benefits of weight loss from aesthetics and more toward the health benefits for people living with obesity.”
SELECT’s result could convince payers who are currently on the fence, Mason said, although he cautioned that Lilly doesn’t expect insurance policies to change “overnight.”
Sales of Mounjaro — for now only approved to treat diabetes — totaled $980 million between April and June, according to Lilly’s financial results. Over the first six months of the year, sales were $1.5 billion.
Like Novo, Lilly has also faced supply shortages due to significant demand for the drug, leading to “intermittent delays fulfilling orders,” the company said Tuesday.
Lilly has brought online a new manufacturing facility in North Carolina, which it expects will soon help ease its production bottlenecks. However, tight supply and some spot shortages could continue through the end of the year, according to Mason.
Elsewhere, Lilly reported growth of around 50% for its breast cancer drug Verzenio and diabetes treatment Jardiance, although revenue from its top-selling diabetes injection Trulicity declined 5% year over year.
Investors are also paying close attention to the company’s experimental drug donanemab for Alzheimer’s disease, which is currently under FDA review and could win approval later this year.
If the regulator’s decisions on Mounjaro and donanemab both go Lilly’s way, the Indianapolis company will have marketed medicines for both obesity and Alzheimer’s — an advantage no drugmaker currently holds.