Frankfurt In the past two years, the headlines in the pharmaceutical industry have been dominated by the American industry leader Pfizer with its Covid vaccine Comirnaty – developed together with the German company Biontech – and sensational sales increases of more than 80 percent.
But in terms of price development and value growth, a completely different company shone during this time: the much smaller US competitor Eli Lilly.
Thanks to its successful product development in the fields of diabetes, immunology and cancer therapy, the Indianapolis-based group has become the secret star among the big pharmaceutical companies. The company could now rise to become the highest-rated pure-play pharmaceutical company and thus also surpass the pharmaceutical giant Pfizer, which is almost three times as large in terms of sales.
A few days ago, Eli Lilly received further confirmation of its successful innovation strategy with the first approval for its novel diabetes drug Mounjaro in the USA. Overall, CEO Dave Ricks is planning five new launches over the next 18 months.
The Mounjaro approval gave the Lilly share a further six percent price gain. Since the beginning of 2020, the group’s valuation has more than doubled to around 286 billion dollars. Lilly has overtaken competitors such as Roche, Abbvie and Novartis and has roughly drawn level with Pfizer. At the beginning of the week, the rating was briefly even higher than that of the industry leader. A number of analysts see a further 15 to 20 percent upside potential.
In the healthcare sector, only the diversified conglomerate Johnson & Johnson currently has a higher market capitalization, which, in addition to pharmaceuticals, is also heavily involved in the business with over-the-counter healthcare products and medical technology.
Based on sales of $28 billion and net profit of $5.6 billion, Lilly is not even one of the top ten in the pharmaceutical industry. But the group’s research pipeline is considered first-class and, from the point of view of many investors, promises stronger and more constant growth in the long term than, for example, at Pfizer, where after the Covid boom has subsided from 2023, a sharp decline in sales in the pandemic business is to be expected and the traditional core business only moderately gains.
Lilly was founded in 1876 by the trained pharmacist Eli Lilly and is one of the more reserved players in the pharmaceutical sector. Unlike most of its peers, the company has made virtually no major acquisitions over the past two decades, just a few smaller biotech acquisitions. This means that the growth is largely generated organically and with significantly less capital than that of the competition.
Pioneer role in the field of diabetes
The Group has played a pioneering role in the field of diabetes for almost a century. The company is now underscoring this competence with the new development Mounjaro, which is regarded as a central, although not the only factor behind the favorable growth prospects.
The drug with the active ingredient tirzepatide is based on a new mechanism of action against diabetes, has delivered promising results in several clinical studies and, according to experts, could herald a new era in the fight against diabetes. Patrick Archdeacon, chief of the FDA’s diabetes division, called the approval a “significant advance in the treatment of type 2 diabetes.”
The active ingredient is characterized by the fact that it combines the effect of two messenger substances that are crucial for blood sugar control in the body, the hormones GLP 1 (glucagon-like peptide-1) and GIP (glucose-dependent insulinotropic polypeptide). An additional effect is the promotion of weight loss, also through higher energy consumption.
Mounjaro is therefore considered one of the most promising new developments of recent years and a possible bestseller with multi-billion potential. Analysts at Mizuhi Securities believe the drug will have global sales of more than $14 billion by 2030. More optimistic assumptions even assume $20 billion. Approval in Europe is expected in the middle of the year.
>>> Also read: Diabetes and Covid-19: Researchers investigate possible connection
The high expectations are not only based on the use of tirzepatide in the treatment of diabetes. In clinical studies, the drug has also shown that it can provide a significant weight reduction. Lilly last underpinned this at the end of April with promising data from tests with overweight people who did not suffer from diabetes.
Analysts therefore assume that the drug can also be used in the fight against obesity in the future. Lilly is also investigating tirzepatide in clinical trials as a therapy for non-alcoholic fatty liver disease (Nash) and as a treatment for heart failure.
The US group is likely to become a very strong competitor for the Danish diabetes world market leader Novo Nordisk, whose drugs Ozempic, Rybelsus and Victoza are also based on the hormone GLP-1 (but not on GIP) and most recently around 8.5 billion dollars generated sales.
New drugs against cancer, Alzheimer’s and neurodermatitis
In addition to Mounjaro, Lilly’s product and research program includes a number of other hopefuls. This includes, for example, the diabetes drug Jardiance, which was developed by Boehringer Ingelheim and has been approved for several years, which was recently also approved for heart failure and also showed good results for kidney failure. Lilly sells the drug as a partner of Boehringer.
With the immunology preparation Lebrikizumab, the US group hopes to compete with Sanofi’s blockbuster Dupixent in the field of atopic dermatitis (neurodermatitis). In cancer therapy, Lilly is testing the active ingredient pirtobrutinib in an advanced phase against various types of blood cancer. For the cancer drug Verzenio, the group received approval for use against certain forms of breast cancer in 2021.
With the antibody Donanemab, Lilly also has a product candidate against Alzheimer’s in the running. The drug is based on the same principle of action as Biogen’s Alzheimer’s drug Aduhelm, which has largely failed in the meantime. But there are hopes that it could provide more consistent results. It is in a rolling approval process with the FDA while the phase 3 study is still ongoing.
Another advantage for Lilly is that there are comparatively few patent expirations to deal with in the next few years, so only moderate losses in the traditional business have to be feared. CEO Dave Ricks sees only a tenth of current sales threatened by generic competition in the next five years. “The durability of our growth perspective is therefore quite strong,” he assured in the most recent analyst call. And in this, most investors seem to follow him.
More: New remedies for heart failure, cancer, schizophrenia: This is how Boehringer wants to start the next growth phase.