Pharmaceutical giant Eli Lilly (LLY 1.65%) is having a great year. Shares are up over 50% through the first half of the year on the heels of emerging blockbusters in the diabetes and obesity-care markets.
While sales of Mounjaro and Zepbound are becoming increasingly scrutinized, I'd encourage investors to get up to speed on what else Lilly is working on. In early June, Lilly received some positive news from an advisory panel working alongside the Food and Drug Administration (FDA).
Let's break down what's going on at the company, and what it could mean for long-term investors.
NYSE: LLY
Key Data Points
Lilly's latest batch of positive news
One of Lilly's biggest priorities right now is attaining FDA approval for donanemab. Donanemab is the company's candidate to treat Alzheimer's disease. According to media outlets, each member of the FDA panel that assessed the pros and cons of donanemab voted in favor of its use. While this does not mean that donanemab is formally approved by the FDA, the positive sentiment from this group of advisors should encourage investors.
Image source: Getty Images.
How big is the Alzheimer's disease market
According to Statista, the number of people aged 65 and older in the U.S. with Alzheimer's could reach 8.5 million by 2030. Moreover, data suggests this figure could reach 13.8 million by 2060.
Grand View Research is forecasting the market for Alzheimer's therapeutics to grow at a 20% compound annual rate between 2023 and 2030. The firm's research suggests that treatments used for Alzheimer's could generate over $15 billion by 2030.
On a global scale, however, these figures could be much more significant. A report published by Market.us shows that the global Alzheimer's disease market could be worth $31 billion by 2033.
What could treating Alzheimer's do for Lilly's business?
Right now, the number of major players treating Alzheimer's is limited. Two of the leading pharmaceutical companies treating the disease are Biogen and Eisai, which worked together to develop Leqembi.
Given Lilly's relatively small number of competitors, coupled with the large estimated market size for Alzheimer's disease, the company could be in a favorable position. Again, it's paramount to note that donanemab is not yet FDA approved. Moreover, despite the apparent nod of approval recently from the FDA's external panel, there is no guarantee that donanemab will hit the market.
With all of that said, I am cautiously optimistic that not only will donanemab be approved, but the approval will come sometime later in 2024. The obvious benefit of a new medicine approval is that Lilly stands to generate significant revenue.
Right now, nearly half of Lilly's revenue stems from three sources: Mounjaro, Trulicity, and Verzenio. Mounjaro is the company's diabetes medication and essentially the most common alternative to Novo Nordisk's Ozempic.
Furthermore, Lilly also has an obesity-care drug called Zepbound that operates alongside Mounjaro as part of the company's quest to reduce the prevalence of obesity. While Zepbound was only approved in November 2023, sales of the medicine have so far proved successful and are on an annual revenue run rate in excess of $2 billion for this year.
Verzenio is used in cancer patients and last year received an expanded indication from the FDA. Given that development, it's not entirely surprising to see Verzenio's growth begin to accelerate.
While Lilly clearly has a strong portfolio of medicines across major areas of the pharmaceutical spectrum, the approval of donanemab would further help the company diversify. To me, this is far more important than what donanemab could represent in terms of sales.
Lilly has a rich history of innovation in the medical world, and it's that dynamic that has propelled the company into a major force and strong business. As a result, Lilly's consistently strong performance has provided the company with robust financial flexibility which has been used to develop new medicines.
I see donanemab as yet another potential blockbuster in the making and ultimately a catalyst that can help fuel new growth for Lilly as it remains one of the world's most-prolific healthcare companies.
