Shares of Eli Lilly and Company (LLY 1.19%) skyrocketed 59% in 2023. The big drugmaker delivered its second-best stock performance in the last 25 years, eclipsed only by a gain of nearly 64% in 2021.

Lilly's spectacular jump also enabled the company to claim the mantle of the world's largest pharmaceutical company based on market cap. The top spot had been held for more than a decade by Johnson & Johnson.

What drove Eli Lilly stock's huge gains last year?

2023 didn't start with a bang for Eli Lilly. Its shares fell as much as 15% during the first quarter. The company received a complete response letter from the U.S. Food and Drug Administration turning down accelerated approval of experimental Alzheimer's disease drug donanemab in January. Lilly also reported disappointing 2022 fourth-quarter results in early February.

However, things began to turn around in March. The S&P 500 mounted a comeback, with the rising tide lifting, if not all boats, many of them. Lilly also seemed to benefit somewhat from the craze over Novo Nordisk's drugs Ozempic and Wegovy.

Investors became even more excited when Lilly announced positive results on April 27 from a clinical study evaluating tirzepatide in helping people with type 2 diabetes lose weight. More good news soon followed. The company reported on May 3 that donanemab "significantly slowed cognitive and functional decline" in patients with early Alzheimer's disease in a late-stage clinical study.

Yet another surge came in late July. Lilly announced Q2 results, with revenue jumping 28% year over year and adjusted earnings soaring 68%. Thanks to that strong performance, the company raised its full-year earnings guidance. It also released the results from two late-stage clinical studies that showed impressive weight loss for patients receiving tirzepatide.

In August, Lilly completed three acquisitions, finalizing transactions to buy Dice Therapeutics, Sigilion Therapeutics, and Versanis Bio. The big drugmaker completed another buyout in December of Point Biopharma.

Arguably the most important news for Lilly arrived on Nov. 8. That's when the FDA approved tirzepatide for chronic weight management. Lilly announced that it would market the drug under the brand name Zepbound. The company already marketed tirzepatide in treating type 2 diabetes under the brand name Mounjaro.

Is Eli Lilly stock a buy now?

Some Wall Street analysts think that Lilly's momentum could slow significantly in 2024. Their main concern is valuation. Lilly's forward price-to-earnings ratio now stands at 51 after its huge gain last year.

However, I think that Eli Lilly stock is still a good pick for long-term investors. That forward earnings multiple doesn't fully reflect the growth prospects for Mounjaro, Zepbound, and donanemab. Although I don't expect Lilly's share price to vault 59% higher again this year, the pharma stock could deliver market-beating returns.