Eli Lilly (LLY 1.82%) has been a top growth stock in the healthcare industry for years. The company's vast pipeline and diverse business have allowed it to continue to find ways to grow -- and Trulicity has been a key growth catalyst for the business in recent years.
But now, other drugs are growing at much faster rates today and could soon eclipse Trulicity in revenue. Let's see what this could all mean for Eli Lilly and its shareholders.
Trulicity remains the company's top drug -- for now
Diabetes drug Trulicity generated more than $7.4 billion in revenue for Eli Lilly last year, accounting for more than one-quarter of the company's top line, which totaled $28.5 billion.
In the company's second-quarter results, for the period ended June 30, the drug was still far and away the top seller, generating more than $1.8 billion in revenue. However, there are a couple of fast-growing drugs that are starting to close the gap, including breast cancer drug Verzenio and diabetes drug Mounjaro, both of which generated more than $900 million in sales for the period.
Image source: company filings. Chart by author.
The growth is coming from other drugs
Trulicity's sales were down 5% last quarter, and much of the company's growth came from just three drugs: Verzenio, Mounjaro, and Jardiance, another diabetes drug. Those drugs all generated sales growth of more than 40%.
The real rock star was Mounjaro, however, which was approved as a diabetes treatment just last year. Its revenue skyrocketed from $16 million in the prior-year period to just under $980 million.
Image source: company filings. Chart by author.
Lilly's top line rose by $1.8 billion this past quarter, and Mounjaro, Verzenio, and Jardiance combined for $1.5 billion of that additional revenue. Those three drugs could be key to the company's future, especially Mounjaro. Although it is approved to treat diabetes, it has the potential to be a game changer in weight management. In clinical trials, it has helped people lose up to 26% of their body weight.
According to a recent analyst estimate, the drug's peak annual sales could top $68 billion. That would not only blow Trulicity's revenue out of the water but would also more than double the revenue Lilly's entire business generated last year.
NYSE: LLY
Key Data Points
Is the stock a buy despite its expensive valuation?
At more than 70 times earnings, Eli Lilly looks like an absurdly expensive stock. But for a company that has perhaps its best drug ever in its portfolio, the valuation might not matter a whole heck of a lot right now. If the Food and Drug Administration gives Mounjaro the green light this year to treat weight management, it could be off to the races for the stock.
CEO Dave Ricks says that ensuring the company meets demand for Mounjaro and Lilly's other coveted drugs is a top priority. If management can deliver on that promise and there isn't a shortage of drugs the way there has been with Ozempic and Wegovy -- which are popular diabetes and weight-loss drugs from Novo Nordisk -- Lilly's sales and profits could go through the roof.
Eli Lilly is one of the few stocks I'd call a no-brainer buy at this stage. It could be the first trillion-dollar company in the healthcare industry with the potential that the business possesses. As well as it is doing right now, it's likely to perform even better in the years ahead.
