Amid a turbulent year for the US pharmaceutical sector, the iShares U.S. Pharmaceuticals ETF (IHE), tracking major domestic pharma companies, has struggled, recording a meager 1% gain in 2023.
However, amid this lackluster performance, Eli Lilly (NASDAQ: LLY) emerged as a standout performer, closing the year with remarkable gains exceeding 60%.
Notably, January 2024 underscored the stock’s relentless surge, reaching three all-time highs within a week, with the latest peak at $639.76 on January 11, subsequently closing at $635.72.
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Today, on January 12, the stock was trading at $636.31 at the time of writing.
What’s fueling LLY’s rise?
Simply put, the notable uptrend in Eli Lilly’s stock over the past year has been primarily driven by exceptional success of its blockbuster drugs.
Mounjaro, Eli Lilly’s drug for chronic weight management, received FDA approval in May 2022 as a unique treatment for improving blood sugar control in type 2 diabetes patients.
Thanks to an innovative approach, coupled with proven efficacy in managing weight and blood sugar levels, Mounjaro’s sales skyrocketed to $3 billion in the first nine months of 2023.
Additionally, Eli Lilly’s oncology products, notably Verzenio, experienced significant growth, with third-quarter sales surging 68% year over year to an annualized rate of $4.2 billion, aided by the FDA’s removal of a testing requirement.
Mounjaro’s sales growth is anticipated to taper off in the fourth quarter, influenced by the recent FDA approval of its active ingredient, tirzepatide, as a weight-management treatment named Zepbound by Lilly.
Industry experts predict varying revenue potentials for Zepbound, with most anticipating around $2.2 billion in sales for 2024 and substantial growth thereafter. This outlook aligns with the significant market potential, as over two-fifths of Americans grapple with obesity.
The pharma giant’s CEO Dave Ricks said recently that Lilly plans to continue significant research and development spending in the coming years, strategically focusing on tirzepatide.
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