Eli Lilly's (LLY +1.53%) broad range of drugs has helped build its success over time, but in recent years, one particular portfolio has supercharged growth. I'm talking about the company's weight loss drugs. The key product is tirzepatide, sold under the names Mounjaro for type 2 diabetes and Zepbound for weight loss.
They are part of the GLP-1 class of drugs that have taken the world by storm -- demand for these products has been so high at times that it's even created supply shortages. (Supply is fine now, due to Lilly's major investment in manufacturing.) And these products have generated enormous levels of revenue growth for the pharma giant.
Of course, Lilly isn't alone in this market -- it shares the space with Novo Nordisk, seller of blockbuster drugs Ozempic and Wegovy. And Lilly also faces the possibility of more competition down the road as big pharma players and biotech companies -- for example, Pfizer and Viking Therapeutics -- aim to enter the market.
This pressure has weighed on Lilly stock from time to time, particularly after Novo became the first to win approval for a weight loss drug in pill form. That happened late last year, and so far this year, Lilly's stock has slipped.
But the growth story may be far from over for this market leader. Lilly recently won approval for its oral weight loss drug, and during the company's earnings call last week, announced fantastic news for shareholders. Let's check it out.
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Lilly's position in the weight loss drug market
So, first, a quick summary of what's happened in the weight loss drug market so far. Novo Nordisk was first to market with a GLP-1 drug, winning approval for Ozempic back in 2017. Lilly's drugs reached the market in the following years, and over the past year, the company surged into the leadership position. In the U.S. market for this class of medicines, Lilly now holds 60% market share. Doctors and patients may have liked the results of a head-to-head study, showing superior weight loss for patients taking the Lilly drug.
GLP-1 drugs have gained in popularity because they're easy to administer -- weekly by self-injection -- and have a solid safety profile. They have also delivered great results for patients worldwide, who have shared this message, helping the drug class gain in popularity. These drugs act by stimulating hormonal pathways involved in digestion, therefore helping with appetite control and the management of blood sugar levels.
All of this has resulted in explosive revenue growth for Lilly, and this continued in the recent quarter. Lilly reported a 125% increase in Mounjaro revenue to $8.6 billion and an 80% increase in Zepbound revenue to $4.1 billion.
But what really may drive growth in future quarters is another product -- the new weight loss pill, Foundayo. And this brings me to the fantastic news Lilly delivered to shareholders during its report.
NYSE: LLY
Key Data Points
Foundayo's launch
Foundayo launched last month and already has reached 20,000 patients -- importantly, 80% of those patients are new to this class of drugs. This is key because it shows that Foundayo isn't just a replacement for injectable GLP-1 drugs; instead, it's a growth opportunity for Lilly, allowing the company to touch a completely new group of patients as well as current GLP-1 patients who prefer a pill to an injection.
On top of this bright news, Lilly said it's making progress in key areas that lead to growth: introducing the drug to healthcare providers and consumers, and making the drug easy to access through common healthcare channels.
But what about competition with Novo's oral Wegovy? Foundayo offers one particular advantage: While oral Wegovy must be taken on an empty stomach, Foundayo doesn't come with food and beverage restrictions. This adds to the convenience for patients.
All of this suggests that Lilly may continue to gain market share in the GLP-1 market, opening the door to more quarters of high growth for the pharma giant. Meanwhile, Lilly continues to advance other weight loss candidates through the pipeline, and they may lead to growth opportunities down the road. This complete picture represents fantastic news for Lilly shareholders.
