Investors are starting to breathe a sigh of relief as 2023 sets off on a more positive note for the stock market. However, some companies are failing to keep up the pace and have been struggling since the year started.
That's the case with leading drugmaker Eli Lilly (LLY -0.12%), which actually crushed the bear market in 2022, gaining an astonishing 32%. Despite its poorer fortunes so far this year -- the stock is down 9% -- there are excellent reasons to load up on Eli Lilly's shares with expectations of even better days ahead.
A leader in diabetes care
Eli Lilly recently made news when it announced it was slashing the price of its insulin products by 70% and capped out-of-pocket costs at $35 per month. One of the reasons the move generated so much attention is that Eli Lilly is one of just three companies that control nearly the entire insulin market worldwide. A study published in 2020 found that Eli Lilly had a 23% market share by revenue in the U.S. alone.
Beyond insulin, Eli Lilly offers a range of medicines to people with diabetes. The company has long been an innovator in this area and is still at it. Last year, Eli Lilly earned approval for Mounjaro, a diabetes medicine that some analysts think could achieve peak annual sales of $25 billion. The company is working on other products, including a once-weekly insulin option, basal insulin Fc, that could greatly simplify the lives of patients who typically need to take insulin daily.
Trulicity, Eli Lilly's medicine that targets type 2 diabetes patients, is still going strong. Decreasing the prices of its current insulin should do little to affect Eli Lilly's overall business in the long run. For the most part, these medicines' sales were already dropping, and the company had planned to replace them with newer therapies like Mounjaro.
Further, with the prevalence of diabetes on the rise, there will be a constant need for innovation. Eli Lilly has an excellent track record to that effect in this therapeutic area. The company can continue developing new products to help manage this chronic health condition, something that will allow it to maintain its success.
Looking elsewhere for growth
Eli Lilly isn't just a diabetes specialist, however. The company produces medicines in several other therapeutic areas. The biotech's cancer drug Verzenio has been performing well, and so has immunosuppressant Taltz. Sales of Verzenio soared by 84% year over year to $2.5 billion in 2022, while Taltz's revenue of (also) $2.5 billion jumped by 12% compared to 2021.
What's more, Eli Lilly will seek approvals for key new products this year. They include potential Alzheimer's disease therapy donanemab, investigational ulcerative colitis therapy mirikizumab, and lebrikizumab, which could target atopic dermatitis (eczema). In January, Eli Lilly earned approval for a brand new product, cancer drug Jaypirca.
There has also been some news with donanemab as the U.S. Food and Drug Administration (FDA) declined to grant the medicine accelerated approval back in January. But that could actually be good news for Eli Lilly. The company is running a late-stage study that will serve as the basis for full approval for donanemab.
That's in addition to the several dozen other programs in Eli Lilly's pipeline, which typically yield important regulatory and clinical wins every single year.
An outstanding "forever" stock
The key to Eli Lilly's success lies in its ability to develop newer and better products, whether in the market for diabetes drugs or elsewhere. The company is still doing that, and considering that the need for lifesaving medicines will only increase as the world's population ages, the biotech is in a strong position for long-term growth.
Further, Eli Lilly is an excellent dividend stock, having more than doubled its payouts in the past five years alone. Stable financial results, a knack for innovation, and a solid dividend make a strong case for Eli Lilly being a stock investors can hold onto for good.
