Sales of some Eli Lilly drugs — including its top-selling product last year — appear to be slowing, Wall Street analysts say. But that might not be enough to keep its stock from climbing. Prescription data for several Eli Lilly drugs — particularly type 2 diabetes treatment Trulicity — indicate weaker trends in the first quarter, Wells Fargo analysts said in a note this week. This could mean that Lilly’s results for the three-month period will just live up to estimates. JPMorgan reported similar trends for Trulicity, which led all Lilly drugs with $7.13 billion in sales for all of 2023. The bottom line, however, is that the products investors are most interested in – the treatment of obesity Zepbound and the type 2 diabetes drug Mounjaro – are still viewed with fervor. demand, according to analysts. In fact, some of Trulicity’s declines are linked to patients continuing to switch to the more effective Mounjaro. Mounjaro’s quarterly sales eclipsed Trulicity for the first time in the fourth quarter of 2023, and are expected to do so again in the first quarter of 2024. “(As long as) Zepbound and Mounjaro deliver on their promises, investors might overlook the other products. » Wells Fargo analysts wrote to their clients – a logical prospect since these two drugs are central to the investment arguments of many shareholders, including the Club. The thesis rests on the fact that Eli Lilly will grow faster than the entire pharmaceutical industry in the coming years. Nothing is more important to this growth right now than tirzepatide, the active ingredient in Zepbound and Mounjaro. Even before U.S. regulators approved Mounjaro for diabetes in May 2022, Jim Cramer said tirzepatide, because of its weight-loss capabilities, could become the best-selling drug of all time. Zepbound won U.S. regulatory approval for obesity in November. Both drugs are injectable. LLY .SPX YTD increases Eli Lilly’s year-to-date stock performance relative to the S&P 500. Tirzepatide is part of a fast-growing class of drugs known as GLP-1, which mimic a hormone in the gut to improve blood sugar levels. effectively control and suppress appetite, thereby contributing to weight loss. Some analysts estimate that the GLP-1 market could reach $100 billion by the end of the decade. Eli Lilly shares have been falling for several years as Wall Street realizes the growth potential of GLP-1, particularly for obesity. The stock, while remaining flat over the past month, is up 30% year to date. Over the past three years, Eli Lilly shares have soared nearly 300%, compared with a 24% gain for the S&P 500. Lilly and Danish rival Novo Nordisk, which makes the first Ozempic for diabetes, and Wegovy for weight loss, dominate the GLP-1 market. Their success has led pharmaceutical companies large and small to invest heavily in an attempt to capture a share of the growing market in the future. However, some Wall Street analysts say it could be difficult to knock Eli Lilly and Novo Nordisk off their perch because manufacturing injectable versions of these drugs is a complex and capital-intensive process, and the companies have of new generation GLP-1. pike that look attractive. “The wide gap created by Novo and Lilly (…) will likely lead to the persistence of this duopoly in the medium (and potentially longer) term,” BMO Capital Markets analysts wrote in a note on Friday. The company, which has long been bullish on Eli Lilly, began covering Novo Nordisk with a buy rating on Friday. Lilly and Novo continue to experience supply constraints for their GLP-1s due to robust demand. Some doses of Zepbound and Mounjaro are expected to remain in short supply through April, according to a Food and Drug Administration website that tracks drug supplies. Most doses of Wegovy also have limited availability, with no current estimate of the shortage ending, according to the FDA. The Club owns Eli Lilly rather than Novo Nordisk because it believes the Indianopolis-based pharmaceutical maker has a broader drug portfolio, such as its experimental Alzheimer’s treatment, donanemab. The drug has hit a few hurdles with the FDA in the review process, including one last month, but regulatory approval of donanemab is still expected at some point this year. (Jim Cramer’s Charitable Trust is long LLY. See here for a complete list of stocks.) As a subscriber to CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after a trade alert is sent before buying or selling a stock in his charity’s portfolio. 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A box of the drug Trulicity, manufactured by Eli Lilly Pharmaceutical, sits on the counter of a pharmacy in Provo, Utah, January 9, 2020.
Georges Frey | Reuters
Sales of some Elie Lilly drugs — including its top-selling product last year — appear to be softening, Wall Street analysts say. But that might not be enough to keep its stock from climbing.
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