Eli Lilly Q4 - Solid weight loss growth

Pharma giant Eli Lilly had results out earlier this week. These are becoming highly anticipated by the market because of their fast-growing weight-loss drug Zepbound, along with the more established diabetes drug Mounjaro. Those drugs both have the same active ingredient.

Company-wide sales comfortably beat expectations, coming in at $9.35 billion. Mounjaro contributed $2.2 billion to the mix and Zepbound just $176 million, but it's only been on the market for a few months. Earnings per share for the quarter were $2.49 versus the expected $2.30.

Note that Eli Lilly is already an established player with other top-selling products. Verzenio which is used to treat breast cancer brought in $1.1 billion in the quarter and Trulicity is a type-2 diabetes drug (has a reduced weight-loss side effect) that made over $1.6 billion in sales.

Eli Lilly also has a leading candidate in the race to find a cure for Alzheimer's, but that still seems a few years away.

Given the extent of obesity around the world, weight-loss drugs are a tremendous opportunity. Studies suggest that their side effects are minimal. Health insurers seem very likely to cover the costs of these drugs because thinner people have fewer long-term health problems.

Eli Lilly's biggest challenge is to meet the high demand for Zepbound. Management has set aside a lot of money to expand manufacturing capacity by at least 50% this year.

Expectations are high with this stock but we are comfortable with that. We like to pick established businesses with exciting prospects that we believe can beat those targets. We recommend Eli Lilly as a smaller "side bet" in a Vestact account that already owns all our core shares.