Eli Lilly: Where is the top?
Recently, medicines used for diabetes have received greater media exposure as they have also had proven effects on weight loss. Studies show that with lifestyle changes and the new type of medicine, patients can lose over 20% of their weight over a year, compared to a reference group that lost around 2% without taking the medicine. This opens a whole new world and a market that could potentially grow very strong.
One of the companies producing this type of medicine and spending large amounts on research and development is the American pharmaceutical company, Eli Lilly. The company has a drug called Mounjaro that has received a lot of attention, especially in the US, for both the treatment of diabetes and for its impact on patients' weight. The drug is already approved by the US FDA for the treatment of diabetes and several companies, including Eli Lilly, are investing significant resources in refining one of the active ingredients to create a drug that is solely for use in weight loss. Estimates suggest that the weight loss drug industry could be worth up to USD 100 billion. Even a small market share can mean big revenues for companies like Eli Lilly. The active ingredient Orfogliprone reduces appetite but there is evidence that maintaining the results requires constant intake over several years. This development means that several players are competing to be first on the market and gain market share, including the Danish company Novo Nordisk, which can be read about here.
Eli Lilly's market capitalisation has also emerged as the most valued pharmaceutical company globally in terms of market capitalisation. Over a three-year period the share has had a strong performance which can be seen as unusual in the industry. However, results from clinical studies and regulatory approvals can have a major impact on the share price and hence market capitalisation. Turning to the company's fundamentals, revenue has grown steadily over the years since 2018. However, growth is also based on the company's Alzheimer's drug Donanemab, which has been fast-tracked for approval by the US FDA. One consequence of the company's rise is that Eli Lilly is now also the highest valued insurance company in healthcare.
At Vontobel we have now launched Mini Futures on Eli Lilly, which enables investors to participate with leverage in the development of the underlying share. You can find all Mini Futures on Eli Lilly here.
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