One of many hottest areas within the pharmaceutical house proper now’s weight reduction. Glucagon-like peptide-1 (GLP-1) drugs reminiscent of Ozempic, Wegovy, Rybelsus, Mounjaro, and Zepbound have develop into staples for treating diabetes and weight problems.
Eli Lilly (NYSE: LLY) is the developer of Mounjaro and Zepbound, two common drugs used to deal with these situations. The principle compound in every drug is known as tirzepatide, and Lilly has been actively exploring further use instances for the breakthrough drugs.
Let’s break down the GLP-1 market, and analyze why buyers could not need to sleep on Lilly’s future.
The rise of GLP-1 medicines
As we speak, GLP-1 agonists are primarily used for diabetes sufferers and weight problems care. J.P. Morgan is forecasting that 9% of the U.S. inhabitants can be utilizing a GLP-1 medicine by 2030. In keeping with the financial institution’s analysis, the U.S. weight problems market is ready to develop at a 53% compound annual charge via 2030, with an addressable market reaching $44 billion.
Though it is nonetheless early, there are some indicators that GLP-1 agonists have way more potential past present use instances.
Picture supply: Getty Pictures.
Expanded indications are on the rise
On the subject of weight reduction, Lilly’s greatest rival is Novo Nordisk — the developer of Ozempic, Rybelsus, Saxenda, and Wegovy. As we speak, Novo Nordisk holds roughly 60% of the GLP-1 market share, largely due to Ozempic. Nevertheless, the Danish pharmaceutical company has proven that it is trying to develop past treating weight reduction.
In March, Wegovy was granted an expanded indication by the Meals and Drug Administration (FDA) to deal with heart problems. This is smart as diabetes and weight problems are sometimes extremely correlated with cardiovascular points reminiscent of hypertension or danger of stroke. Some analysis means that the market for cardiovascular treatments might eclipse $200 billion by subsequent decade, so Novo Nordisk could have unlocked yet one more blockbuster alternative.
The extra delicate theme right here is that GLP-1 agonists could possibly be used for a lot of extra situations than simply diabetes and power weight administration.
Do not sleep on Eli Lilly
J.P. Morgan’s analysis additionally famous that GLP-1 drugs may have constructive implications for arthritis, kidney illness, Alzheimer’s illness, and sleep apnea.
Earlier this month, Eli Lilly introduced that it had examined tirzepatide’s efficacy in weight problems sufferers who additionally endure from obstructive sleep apnea (OSA). In keeping with the examine, tirzepatide decreased the apnea-hypopnea index (AHI) by “62.8% in comparison with 6.4% from baseline for placebo.”
Though it is solely been commercially out there since Might 2022, the drug has already develop into a blockbuster. Gross sales of Mounjaro rocketed greater than tenfold in 2023, reaching $5.2 billion and turning into Lilly’s second highest income stream.
Regardless that the FDA has not but authorised Mounjaro or Zepbound to deal with something outdoors of diabetes and weight problems, the sleep apnea alternative could possibly be huge, contemplating that 80 million adults within the U.S. alone endure from OSA.
Moreover, with expanded indications already granted to competing merchandise, I am optimistic that tirzepatide will assist Lilly launch in lots of different markets. Observe that the sleep apnea examine just isn’t cause alone to purchase Eli Lilly inventory. Quite, it is a testomony to the corporate’s analysis and innovation efforts.
Eli Lilly shares presently commerce at a forward price-to-earnings (P/E) ratio of almost 60, so the inventory is a bit expensive in comparison with the S&P 500. With first-quarter earnings looming on April 30, I feel buyers are greatest off dialing into the decision and listening to administration’s commentary.
The decision ought to present a radical replace on the corporate’s pipeline, and the expansion outlook for its whole portfolio. Affected person buyers may have a possibility to digest administration’s steering, and assess whether or not Eli Lilly is on tempo to proceed disrupting within the GLP-1 market and past.
Must you make investments $1,000 in Eli Lilly proper now?
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JPMorgan Chase is an promoting associate of The Ascent, a Motley Idiot firm. Adam Spatacco has positions in Eli Lilly and Novo Nordisk. The Motley Idiot has positions in and recommends JPMorgan Chase. The Motley Idiot recommends Novo Nordisk. The Motley Idiot has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the creator and don’t essentially replicate these of Nasdaq, Inc.
