Eli Lilly (LLY +2.35%) recently made history. It became the first healthcare stock to reach a market cap of $1 trillion. Although it has since dipped below that, the company's performance over the past few years has been phenomenal, and there could be more of that in store next year. How will 2026 unfold for Eli Lilly? Let's look at two potential developments to watch out for.
1. A pair of new launches in weight management
Eli Lilly has now firmly established itself as the leader in the market for anti-obesity drugs. However, it could solidify its position next year with a pair of new launches. First, there is orforglipron, an oral GLP-1 medicine that performed well in phase 3 studies across weight management and Type 2 diabetes this year. Not only did orforglipron induce significant weight loss and declines in A1C levels, but the therapy also outperformed competing medicines in head-to-head clinical trials, positioning it as the best-in-class in its niche.
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Orforglipron has also been the recipient of a new voucher, introduced this year by the U.S. Food and Drug Administration (FDA), that allows for much shorter approval times for medicines -- between one and two months, compared to the usual 10 to 12 months. So, orforglipron could earn regulatory approvals early next year -- hopefully in the first quarter.
Then there is retatrutide. This medicine is still undergoing phase 3 studies, but it could reach the market by the end of next year. Retatrutide's differentiator is that it mimics the action of three different gut hormones, an approach not yet seen in the weight loss industry. This triple hormonal pathway approach could lead to even more significant efficacy than Eli Lilly's current main growth driver, tirzepatide.
In a late-stage study, retatrutide led to a mean weight loss of 28.7% at the highest dose. These are efficacy numbers not seen in the industry until now. Eli Lilly is hoping to address an underserved corner of the market with retatrutide: people with high body mass indexes who aren't eligible for surgery and for whom existing anti-obesity therapies would not be sufficient.
NYSE: LLY
Key Data Points
Here's why all that is important. The FDA's new voucher, which allows for a one- to two-month review, prioritizes drugs that target public health concerns. Obesity certainly fills the bill. That's why orforglipron was chosen as part of this program. Retatrutide could, too, considering the patients it targets. If Eli Lilly releases more positive data for the medicine within the first half of 2026 -- and gets this new voucher for retatrutide -- it could launch it by the end of the year.
2. There could be a stock split on the horizon
Here's another bold prediction for Eli Lilly next year: I believe the company will announce a stock split. It has been a while since it did so; the last time was in the late 1990s. However, Eli Lilly's shares have skyrocketed since. The stock price is currently around $1,000. Stock splits don't improve a company's underlying operations, but besides reducing an expensive-looking stock price, companies also resort to this move when management has confidence in the business' medium-term prospects.
That should be the case here. Eli Lilly has been firing on all cylinders. Revenue and earnings growth have been phenomenal, and with exciting pipeline candidates like orforglipron and retatrutide, the pharmaceutical giant should be able to maintain that pace over the next few years. And if it does so, its share price will become even more expensive. So, the time may be right for Eli Lilly to announce a stock split, which it could do sometime in 2026.
Is the stock a buy?
One argument against investing in Eli Lilly is that competition in its core therapeutic area is expected to intensify. However, hardly any company has produced mid- or late-stage clinical trial results that match those of Eli Lilly's candidates. Additionally, the pharmaceutical giant offers attractive programs and approved medicines in other areas. That includes Kisunla in Alzheimer's disease, Verzenio in cancer, and Omvoh and Taltz in immunology.
Some might also point out that its shares look expensive. Eli Lilly is trading at 32 times forward earnings, which is much higher than the 17.8 average for healthcare stocks. Even so, Eli Lilly is growing its revenue and earnings at a pace that justifies its premium. The company remains attractive at current levels and could deliver market-beating returns over the next five years.
