Eli Lilly (LLY +2.55%) is firing on all cylinders. That's not news to anyone paying close attention to the biotech industry, nor is the company a newcomer to success. The drugmaker's stock has crushed the broader market over the past five years.
Here's the million-dollar question, though: Can Eli Lilly keep up the momentum? Past success doesn't guarantee anything, after all. And some investors might fear that they have missed the boat. Perhaps it's too late to invest in Eli Lilly. But is that the case?
Let's find out how things might evolve for the company over the next half-decade.
Eli Lilly's booming weight-loss business
The top reason behind Eli Lilly's recent success is the company's work in the anti-obesity drug market. The biotech is one of the undisputed leaders in this field. In 2022, it earned approval for Mounjaro (tirzepatide) in treating type 2 diabetes, and last year, it earned a label expansion for the medicine in targeting obesity. The therapy will go by Zepbound in this market.
How will the next five years develop for Eli Lilly's new crown jewel? While estimates vary, analysts predict that the weight-loss market will skyrocket through the end of the decade.
NYSE: LLY
Key Data Points
Eli Lilly has a lot of competitors, most notably its eternal rival, Novo Nordisk. Many other companies want to join the fun, from pharmaceutical giants like Pfizer to smaller drugmakers like Viking Therapeutics. However, there is little doubt that Tirzepatide will be the leader -- or at the very least, one of the leaders -- in this area. Some analysts predict that it could become one of the best-selling medicines in the history of the industry, with peak annual sales of about $25 billion.
These projections don't come out of thin air. They result from the increased demand for weight-loss drugs and the fact that tirzepatide was a groundbreaking approval. It was the first dual GLP-1/GIP agonist to get the green light from the U.S. Food and Drug Administration (FDA). GLP-1 and GIP drugs both help patients control hunger and appetite but with different mechanisms. Tirzepatide combines both mechanisms into one clinical compound, which is likely a key reason why it was shown to be more effective than its biggest direct rival, Novo Nordisk's Ozempic.
So expect tirzepatide to grow its sales rapidly in the next five years, likely closing in on $15 billion in sales by then (it generated more than $5 billion last year).
There is more to the company
While Eli Lilly's efforts in the weight-loss market are important, the company has made solid clinical progress in other areas as well. The biotech is rejuvenating its lineup enough that other products should significantly contribute to its top-line growth.
Chief among them could be donanemab, a potential Alzheimer's disease (AD) therapy. Donanemab could earn FDA approval pretty soon. It's been challenging to develop new therapies for AD in the past 20 years. Despite some successes, such as Biogen's Leqembi, there remains an unmet need. Donanemab could help fill this need. If approved, expect it to easily surpass the $1 billion mark within the next half a decade.
But that's not all. Last year, Eli Lilly earned other regulatory nods, including for cancer medicine Jaypirca and ulcerative colitis therapy Omvoh. Eli Lilly's rich pipeline should allow for significantly more clinical and regulatory progress in the next five years. The company recently reported encouraging data for an innovative gene therapy for hearing loss. This program may or may not reach the finish line in the next half-decade, but some will.
A trillion-dollar stock by 2029
Eli Lilly's market capitalization currently tops $715 billion. The company needs a compound annual growth rate of about 7% to reach the coveted trillion-dollar mark in five years. That should be easy for the biotech considering the strength of its underlying business. In my view, it would take something catastrophic for Eli Lilly not to become a trillion-dollar company in the next five years.
And even beyond that, the drugmaker should continue innovating and delivering excellent stock market performance. In other words, Eli Lilly's stock is worth buying and holding through the next five years and beyond.
