Generally, investors turn to pharmaceutical stocks to add an element of safety to their portfolios. These stocks aren't known for rapid growth, but instead, for steady growth that you can count on over time -- this reliability is due to the fact that patients need their medicines, and that supports drugmakers' revenue through any economic environment.
But in recent years, one pharma stock in particular has been behaving like a growth stock -- in fact, it's become a growth stock. I'm talking about Eli Lilly (LLY +1.80%), the maker of medicines across a range of treatment areas, from diabetes to cancer. It isn't the breadth of this portfolio, though, that's supercharging Lilly's revenue; instead, it's one particular specialty area. Lilly's weight loss drugs have helped the company deliver double-digit revenue growth in recent quarters, and this has pushed the stock to a gain of more than 30% this year.
And the picture is getting even brighter, thanks to the following fantastic news Lilly just delivered to investors. Let's check out the details.
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Lilly's weight loss portfolio
Before we get to the news, though, let's zoom in on the company's weight loss drug portfolio. At the moment, it's led by tirzepatide, commercialized under the name Zepbound for weight control and as Mounjaro for type 2 diabetes. Doctors have been known to prescribe either of these drugs to patients aiming to lose weight, and results have been spectacular.
Tirzepatide is a dual GIP/GLP-1 receptor agonist, acting on two hormones involved in the digestion process. The drug, sold in injectable formats, helps control appetite and blood sugar levels. Zepbound and Mounjaro both have become blockbuster products for Lilly, and they've been so popular that they even were on a national shortage list last year.
Lilly recently delivered positive results from a phase 3 study of its oral weight loss candidate, orforglipron, and aims to submit it for regulatory review in the coming weeks.
Now, let's consider the latest fantastic news from Lilly. This week, the pharma giant said its weight loss candidate retatrutide delivered an average weight loss of more than 28% over 68 weeks and reduced pain in patients with obesity and knee osteoarthritis. The weight reduction applies to participants receiving the highest dose of the drug and continuing with it throughout the trial.
NYSE: LLY
Key Data Points
The best weight loss performance
The big news here is that this is the best performance of a weight loss drug so far. (By comparison, a Lilly funded trial studying tirzepatide versus rival Novo Nordisk's semaglutide resulted in more than 20% weight loss for patients on the Lilly drug and almost 14% weight loss for patients on the Novo drug at 72 weeks.)
Getting back to the retatrutide trial, discontinuation rates, due to side effects such as nausea and vomiting, were between 12% for volunteers on the lowest dose to about 18% for those on the highest dose. The company pointed out that discontinuation rates were much lower for participants with a high body mass index (BMI) -- and that some trial dropouts were linked to what was perceived as too much weight loss. This suggests that retatrutide may be an attractive option for patients with higher BMIs.
The reason for retatrutide's strength may be linked to its three-pronged approach. While current weight loss drugs stimulate one or two hormonal pathways, retatrutide acts on GLP-1, GIP, and glucagon.
Potential catalysts ahead
Lilly says it will deliver seven more retatrutide phase 3 trial readouts in 2026, suggesting this top pharma stock may have many catalysts ahead -- if these readouts are positive, the stock could have a lot farther to run.
Of course, it's important to keep in mind that retatrutide still is involved in clinical studies, which means it's not yet ready to supercharge Lilly's revenue. The company hasn't yet said when it will approach regulators with a review request, and review periods take months. But the outstanding performance of retatrutide is key because it shows that Lilly has promising candidates in late-stage development that could be the weight loss winners of the future. That positions Lilly well to lead in what analysts predict may be a $100 billion market in the next decade.
All of this is fantastic news for Lilly's current shareholders -- and investors who are getting ready to add this pharma growth stock to their portfolios.
