Eli Lilly, the world latest largest pharma with astonishing valuation

Reminder: It is strongly recommended that you read my other two highly relevant post after reading this article

“Weight loss is the future golden goose of the drug market “
“Novo Nordisk’s new diabetes drug Semaglutide,Ozempic,Wegovy and Mounjaro found to have surprising weight-loss effects“

Table of Contents

Company introduction

Founded in Indianapolis in 1876, Eli Lilly (ticker: LLY) was the first pharmaceutical company to sell insulin and distribute polio vaccines around the world. Beginning in the 1980s, it rose to prominence with a wave of groundbreaking psychotherapeutic drugs, including the antidepressant Prozac.

Lilly can be said to be the pioneer of insulin medicines. For this story, please refer to the explanation in my previous article: “Inventors are rarely successful, but improvers are successful and profitable“.

It didn’t go well previously

By the early 2000s, however, Lilly’s lab had suffered a series of failures. Experimental drugs for heart disease, schizophrenia, depression and Alzheimer’s have hit the rocks in large and expensive clinical trials. On the other hand, top sellers such as the psychiatric drug olanzapine (Zyprexa) are starting to face competition from lower-priced generics. As a result, Eli Lilly’s stock price plummeted.

He joined Lilly after it bought Skovronski’s brain-imaging business in 2010; he was used to moving fast because the startup was strapped for cash. Lilly’s lack of that sense of urgency, he says, has caused it to miss some big opportunities.

For example, Lilly scientists were among the first to discover the potential of a new breast cancer drug that targets CDK4 and CDK6, proteins that both play a role in tumor growth. However, it took them a long time to secure the internal funding they needed for clinical trials, allowing rivals Novo Nordisk (ticker: NVO) and Pfizer (ticker: PFE) to move ahead of Eli Lilly. products have been introduced to the market. In 2017, Eli Lilly’s breast cancer drug Verzenio was approved by the US Food and Drug Administration (FDA). Previously, Pfizer’s Ibrance and Novo Nordisk’s Kisqali had been approved in Approved in 2015 and early 2017.

Missed out on cancer immunotherapy

Eli Lilly also missed out on cancer immunotherapy, ceding the opportunity to rivals such as Merck & Co (ticker: MRK), Bristol-Myers Squibb (ticker: BMY) and other competitors. Their drug has since saved many skin and lung cancer patients and is today one of the best-selling drugs in the industry.

Redesign the development strategy

Skovronski suggested that Lilly pursue drug programs in areas of science it knows best, while relying less on commercial sales estimates. He concluded that Lilly was not very good at predicting future sales of a drug, but it might be more accurate at predicting the scientific probability of a drug’s success.

Lilly has given up research on diseases that have been relatively hard to make progress, including osteoporosis and mental illness, and has instead invested heavily in areas in which it has expertise — diabetes, oncology and Alzheimer’s disease.

Describing Lilly’s process of ditching some projects to focus on what it does best, Lilly Chief Executive Dave Darwin said, “We had to shrink on multiple lines to free up resources for other priorities.”

The future king of weight loss

Lilly’s main competitor, Novo Nordisk’s weight-loss products, has seized the market opportunity, but it is not the opponent of Mounjaro in the long run.

Note: Tirzepatide is a drug developed by Eli Lilly and Company to treat type II diabetes and obesity. Its commercial brand name is Mounjaro.

Mounjaro is the first drug in phase III clinical trials that can reduce weight by an average of more than 20%. “Mounjaro is like bariatric surgery, but without the invasive procedures or concerns about surgical complications. For a detailed description of this part, please refer to my previous two posts:

New drug for Alzheimer’s disease

Alzheimer’s drug is another blue ocean

Alzheimer’s disease is currently the only common global disease with a large number of patients, and there is no specific cure. Over the past few decades, almost every well-known global pharmaceutical giant has invested in research and development, hoping to be the first to seize the opportunity. One of the most active is Biogen (US stock code: BIIB).

Biogen is a pioneer in the industry

Biogen’s Aduhelm, which was launched in 2021, is suitable for patients with mild symptoms or early Alzheimer’s disease, but it has been slow to sell due to the rejection by the medical community because the medical community has determined that there is no evidence that Aduhelm brings net health benefits to patients.

In 2023, the new drug lecanemab, jointly developed by the Japanese pharmaceutical company “Eisai” and Biogen, can effectively remove “amyloid plaques” in the brain, and has been granted F in January 2023. DA conditional approval.

Eli Lilly’s antibody is a major turning point

Eli Lilly’s new Alzheimer’s antibody drug donanemab has been proven to delay the course of cognitive decline, which is regarded as a major turning point.

Eli Lilly announced the complete results of donanemab Phase III clinical trial, confirming that donanemab can remove wrongly accumulated proteins in brain tissue and play a role in the early stage of Alzheimer’s disease, slowing down the rate of decline by 1/3, allowing patients to resume more daily activities, Such as cooking and maintaining hobbies.

However, donanemab is not risk-free. In a clinical trial of 1,736 early-stage Alzheimer’s patients aged 60 to 85, up to 1/3 experienced side effects of cerebral edema, and most of them were improved. However, 2 volunteer subjects died due to rapid deterioration of hydrocephalus. In addition, donanemab is not suitable for vascular dementia.

World’s largest healthcare company by market capitalization

Eli Lilly become the world’s largest healthcare company by market capitalization on July 5, 2023, surpassing health insurance giant UnitedHealth (ticker: UNH; see my previous post “UnitedHealthcare, the world’s largest health insurer, role model of Dow Jones“)). Extending gains after four straight months of gains, it has added more than $94 billion in market value this year. Lilly closed at an all-time high in June. Eli Lilly’s rise has been fueled by its pipeline of obesity drugs led by Mounjaro, which has been approved to treat diabetes, as well as an experimental treatment for Alzheimer’s disease. The gains made Eli Lilly the best-performing stock in the S&P 500 pharmaceutical index so far this year.

Eli Lilly has become the world’s most valuable pharmaceutical company, and its stock price has increased by nearly 70% in the past year.

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