There's no healthcare company that's worth anywhere near $1 trillion today. But within the next 10 years, that's likely to change, given the many growth opportunities emerging in the industry. Two companies that I can see eclipsing $1 trillion by 2033 are Eli Lilly (LLY 1.19%) and UnitedHealth Group (UNH 0.30%). Here's why these stocks could deliver some fantastic returns for investors in the long run.
1. Eli Lilly
Eli Lilly's market capitalization is at $425 billion today. To reach the $1 trillion mark, it would need to rise by 135% in value. That may seem like a lot, but to do that over a period of 10 years would only require it to achieve a compound annual growth rate of around 8.9%. And given the products the company has in its pipeline and the growth they might achieve, that's not an outlandish prospect.
One big opportunity for the company is in weight loss, where Eli Lilly has not just one but multiple promising products. Diabetes drug Mounjaro has shown encouraging results in clinical trials as a weight loss aid. Among the cohort taking the highest prescribed dose in a phase 3 study, participants lost an average of 22.5% of their body weight over a 72-week period.
And last month, another candidate, retatrutide, demonstrated even better results, with study participants shedding an average of 24% of their weight after 48 weeks. The company is also working on an oral drug for weight loss, orforglipron, which may be more appealing than Mounjaro and retatrutide, which are delivered via injections.
Eli Lilly also has an Alzheimer's treatment candidate, donanemab, that could obtain regulatory approval either late this year or early next year. In clinical trials, it achieved slightly better results than Biogen's recently approved Alzheimer's treatment, Leqembi.
With an already strong business that has profit margins in excess of 20%, Eli Lilly is on a path that should enable it to hit a $1 trillion valuation within the next decade.
2. UnitedHealth Group
Health insurance and managed care giant UnitedHealth, with a valuation of $450 billion, also looks to be a safe bet to hit $1 trillion in a decade. There are multiple reasons to expect it will remain one of the largest healthcare companies in the world.
The first is simply that the nation's population is getting older, and the fraction of the populace in their senior years is growing. That is driving an increasing need for healthcare, and with UnitedHealth already dominating the market -- it's the largest healthcare company by revenue -- it will remain in an excellent position to benefit from those trends. The Census Bureau projects that by 2030, 21% of the U.S. population will be 65 or older. That's up from 17% in 2020, and amounts to 17 million more seniors.
And today, the business remains as strong as ever. UnitedHealth released its second-quarter numbers last week. While there were concerns that its expenses would be higher due to an uptick in surgeries, its operating earnings totaled $8.1 billion, up $1 billion year over year. And revenue rose by 16% to $92.9 billion.
UnitedHealth is also focused on acquisitions and diversifying its business -- both of which should accelerate its growth even further. In February, it completed its $5.4 billion acquisition of home health and hospice care company LHC Group, which UnitedHealth's management said would help reduce fragmentation in the industry. As the population ages, the need for more convenient home care options is likely to rise, making the LHC deal an important part of UnitedHealth's future growth.
UnitedHealth gives investors the best of both worlds as its business is fairly low risk in nature, and at the same time, its focus on long-term growth makes it an appealing investment to buy and hold for years.
