It's hard to argue with the kinds of results Eli Lilly (LLY +2.22%) has produced over the past five years. The company has been one of the best-performing pharmaceutical giants, with its shares leaving the broader market in the dust.
Some might argue that it's too late for investors to get in on Eli Lilly, while others could feel that its work in the diabetes and obesity markets still makes it an attractive long-term option. Which side is right? Let's figure out how Lilly could perform through the end of the decade, and decide whether it's still worth investing in the stock.
Expect strong revenue growth throughout
First, let's consider how Eli Lilly's newest products will affect its performance in the next half-decade. These new medicines include Alzheimer's disease treatment Kisunla, ulcerative colitis medication Omvoh, and cancer drug Jaypirca.
Of course, Lilly's most important new products are diabetes treatment Mounjaro and weight management medicine Zepbound, which share the active ingredient tirzepatide. In 2024, Eli Lilly's revenue increased by 32% year over year to $45 billion. The tirzepatide franchise contributed about $16.5 billion -- despite having been on the market for less than three years.
NYSE: LLY
Key Data Points
Analysts have predicted peak annual sales of $25 billion for this compound. They may have been lowballing it. I expect Zepbound and Mounjaro to continue on their upward trajectory through 2030, although increased competition will probably lead to their delivering less impressive sales growth.
However, the other medicines in Lilly's new portfolio, which aren't yet contributing much, will rise in prominence. Consider Kisunla, which fills a significant need in treating Alzheimer's disease. According to some estimates, it could generate about $2.5 billion in revenue by 2030. Jaypirca and Omvoh should also contribute meaningfully through the end of the decade.
In other words, Eli Lilly's revenue should continue growing at a good clip. The midpoint of the company's guidance for 2025 implies sales growth of about 32% for the year, a terrific performance for a pharmaceutical giant. I'd be surprised if its annual top-line growth goes lower than 15% in any year through 2030.
There will be solid pipeline progress
Eli Lilly has several exciting products in its pipeline, some of which are likely to earn approval in the next five years. Consider two of the company's leading candidates in weight loss: orforglipron and retatrutide. Both medicines are in phase 3 studies, but not just as weight loss management products: They're being developed as potential therapies for diabetes, sleep apnea, and several other conditions.
What makes them so promising? Consider retatrutide, a triple agonist -- it mimics the action of three hormones: GLP-1, GIP, and GCG. That could be an improvement on even tirzepatide, which mimics GLP-1 and GIP. Tirzepatide was the first of its kind. Retatrutide still has to prove its worth in clinical trials.
The point is that Lilly's pipeline in the increasingly competitive GLP-1 market looks stronger than that of any of its peers not named Novo Nordisk. According to some estimates, retatrutide could generate $5 billion by 2030, while orforglipron might reach $8.3 billion in sales by then.
Naturally, other new Lilly products could see the light of day by 2030, and others will progress to late-stage studies. That could be the case for the drugmaker's highly promising investigational gene therapy for deafness. Furthermore, many of its existing products will likely earn label expansions. The lineup should look even stronger by the end of the decade.
Is the stock a buy?
Bears might point out Eli Lilly's forward price-to-earnings (P/E) of 39.
LLY PE Ratio (Forward) data by YCharts.
The healthcare industry's average is 17.7 as of this writing. If Lilly is overvalued right now, it might underperform broader equities in the medium term. Would it be best for investors to wait for a better entry point?
My view is that the stock is fairly valued. Lilly's revenue and earnings have been growing much faster than those of most of its similarly sized peers in the healthcare industry, so it only makes sense that it has a higher forward P/E.
I expect Eli Lilly to beat the market through the next five years. Beyond that, considering its incredible innovative abilities, it will still be an excellent stock.
