As you know, I have dubbed the GLP-1 receptor agonist drug class as the “drugs of the decade.” And rightfully so! The demand for these drugs has been overwhelming. Originally invented for the control blood sugar in diabetic patients, GLP-1’s were discovered to cause patients prescribed the drug to lose 20%, or more, of their body weight. Tirzepatide is one GLP-1 that accomplishes this quite effectively by suppressing the patient’s appetite. It works by delaying emptying of the stomach and slowing the transit of food through the intestinal tract. The patient feels full all the time, eats much less, and the excess weight melts away.
Tirzepatide is made by Eli Lilly and Company in Indianapolis. Lilly actually produces Tirzepatide under two brand names: Zepbound and Mounjaro. The FDA approved Mounjaro for the treatment of elevated blood sugar in diabetics, terzepatide’s original indication, but when Lilly, and others, discovered GLP-1’s were highly effective for causing significant weight loss, they re-introduced terzepatide as Zepbound, and received FDA approval for weight-loss management in adults. Needless to say, Zepbound has been in great demand, much to the delight of the company and its shareholders.
Last week, I spoke to a very good friend who has been on weekly injections of Zepbound for 7 and 1/2 months. His weight has dropped from 259lbs to 184lbs, 75 pounds! That’s amazing! He feels much much better and has gone from a 44” waist-size to a 36”. That’s amazing, too, but it has come at a cost to him of $970 per month. During our conversation, he asked if I had been paying attention to the stock price of Eli Lilly. I admitted I had not, but he said the price has gone up to $952 a share. That’s unbelievable! Over the past year, the 52-week low was $516/share while the 52-week high was $967, a $451/share increase; quite a nice profit. If you owned Lilly stock 5 years ago when it was $110/share, you have done extremely well. The price has increased over 8.6 times.
If you are a stock market savant, you bought LLY many years ago and have held on to it. If you’re currently an Eli Lilly employee, or if you are a Lilly retiree, you are in a very good place financially! Stock options and income received in the form of shares of Lilly stock have augmented the value of your portfolio quite nicely. There’s a good likelihood the stock price will continue to increase, too, because there is no indication demand for Zepbound and Mounjaro will let up anytime soon. If anything, the demand will continue to increase. But it is hard to fork over $952 for one share of stock, and even harder to spend $95,200 for 100 shares. To make the stock price more appealing, a stock split of 10:1 would have to occur. I don’t know if a stock has ever split 10:1, but if it did, a share would still be $95.20.
Unfortunately, my portfolio doesn’t currently, nor in the past has it, owned shares of Eli Lilly and Co. That’s a huge mistake! Lilly is one of the most innovative and profitable pharmaceutical companies in the world. They had a corner on the insulin market for decades, and developed the first human insulin. They introduced propoxyphene (Darvon) a non-narcotic analgesic, developed cephalexin (Keflex) and cefaclor (Ceclor) broad spectrum antibiotic alternatives to penicillin, and blew the lid off the antidepressant market with the first SSRI, fluoxetine (Prozac). Then, they developed the first long-acting drug for erectile dysfunction, tadalafil (Cialis)—remember ads showing the couple sitting in separate bathtubs? Evista (raloxifene) is Lilly’s osteoporosis drug that also reduces breast cancer risk in post menopausal women. The diabetes market was broadened by the development of Trulicity, Zepbound, Mounjaro, and Jardiance. The ADHD market was aided by Strattera. Chemotherapeutic drugs like Gemzar, anti-psychotics like Zyprexa, and duloxetine (Cymbalta), an SSRI for chronic pain, are other “blockbusters” in Lilly’s stable of drugs. They produced some the earliest supplies of methadone as well. Lilly tapped the migraine market with Emgality, and the dementia issue with Kisunla.
The array of different disorders and diseases for which Eli Lilly and Co. has developed treatments is amazing. As is always the case, Lilly most certainly has many other new drugs in various phases of development. They always have something waiting its turn to change medical practice and improve patients’ lives. Doing an assessment of Lilly’s “formulary” as I have for this blog, I was reminded of just how diversified their discoveries are. Most of these drugs are new developments, new drug classes, and not “me too” drugs. Lilly has broken ground on new drug classes time and time again, and has played a prominent role in better understanding the disease for which their pharmaceutical is intended.
Before I began this article, I didn’t look at any investment advisors’ recommendations on Eli Lilly (LLY) stock. However, from my perspective, Lilly has the potential for continued success represented by the high demand for their two GLP-1’s receptor agonists plus their numerous other products in other drug categories. That leads me to declare LLY a strong BUY, that is, if you can afford it.
Reference: Coppenrath V, Mazyck B. Tirzepatide (Zepbound) for the treatment of Obesity Am Fam Phys 2024 August;110(2):199-200.
