Pharmaceutical giant Eli Lilly (NYSE: LLY) is having a great year. Shares are up more than 50% in the first half of the year, following emerging blockbusters in the diabetes and obesity care markets.
As the sales of Mounjaro and Zepbound continue to come under increasing scrutiny, I’d encourage investors to get up to speed on what else Lilly is working on. In early June, Lilly received positive news from an advisory panel working with the Food and Drug Administration (FDA).
Let’s take a look at what’s happening at the company and what it could mean for long-term investors.
Lilly’s Latest Positive News
One of Lilly’s biggest priorities right now is obtaining FDA approval for donanemab. Donanemab is the company’s candidate for the treatment of Alzheimer’s disease. According to media outlets, every member of the FDA panel that reviewed the benefits and harms of donanemab voted in favor of its use. While this doesn’t mean that donanemab has been formally approved by the FDA, the positive sentiment from this group of advisors should encourage investors.
How big is the market for Alzheimer’s disease?
According to Statista, the number of people aged 65 and older with Alzheimer’s in the US could reach 8.5 million by 2030. Furthermore, data suggests that this number could rise to 13.8 million by 2060.
Grand View Research predicts that the Alzheimer’s disease drug market will grow 20% annually between 2023 and 2030. The company’s research shows that treatments for Alzheimer’s disease could generate more than $15 billion by 2030.
On a global scale, however, these numbers could be much more significant. A report published by Market.us suggests that the global Alzheimer’s market could reach $31 billion by 2033.
What could treating Alzheimer’s mean for Lilly’s business?
Currently, the number of major players treating Alzheimer’s is limited. Two of the leading pharmaceutical companies treating the disease are Biogen And Eisaiwho worked together to develop Leqembi.
Given Lilly’s relatively small number of competitors, combined with the large estimated market size for Alzheimer’s, the company may be in a favorable position. Again, it’s crucial to note that donanemab has not yet been approved by the FDA. Furthermore, despite the apparent nod of approval recently from the FDA’s outside panel, there’s no guarantee that donanemab will reach the market.
That said, I am cautiously optimistic that not only will donanemab be approved, but that approval will occur sometime later in 2024. The obvious benefit of approving a new drug is that Lilly can generate significant revenue.
Currently, almost half of Lilly’s revenue comes from three sources: Mounjaro, Trulicity and Verzenio. Mounjaro is the company’s diabetes drug and essentially the most prevalent alternative to New Nordisk‘s Ozempic.
Additionally, Lilly also has an obesity drug called Zepbound that is working with Mounjaro as part of the company’s mission to reduce the prevalence of obesity. While Zepbound isn’t approved until November 2023, sales of the drug have been successful so far, with annual sales this year totaling more than $2 billion.
Verzenio is used in cancer patients and received an expanded indication from the FDA last year. Given that development, it is not entirely surprising that Verzenio’s growth is starting to accelerate.
While Lilly clearly has a strong portfolio of drugs in key areas of the pharmaceutical spectrum, the approval of donanemab would help the company further diversify. To me, this is much more important than what donanemab could represent in terms of sales.
Lilly has a rich history of innovation in the medical world, and it is that dynamism that has made the company a great strength and a strong business. As a result, Lilly’s continued strong performance has given the company robust financial flexibility that has been used to develop new medicines.
I see donanemab as a potential blockbuster in the making and ultimately as a catalyst that could drive new growth for Lilly, as it remains one of the most productive healthcare companies in the world.
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Adam Spatacco has positions in Eli Lilly and Novo Nordisk. The Motley Fool recommends Biogen and Novo Nordisk. The Motley Fool has a disclosure policy.
This is big news for investors in Eli Lilly was originally published by The Motley Fool
