Pharmaceutical giant Elie Lilly (NYSE:LLY) is having a great year. Stocks rose more than 50% in the first half of the year, riding the heels of emerging markets blockbuster movie in the diabetes and obesity care markets.
As sales of Mounjaro and Zepbound come under increasing scrutiny, I encourage investors to stay up to date on Lilly’s other projects. In early June, Lilly received positive news from an advisory group working alongside the Food and Drug Administration (FDA).
Let’s break down what’s happening at the company and what it could mean for long-term investors.
Lilly’s Latest Batch of Positive News
One of Lilly’s top priorities right now is getting FDA approval for donanemab. Donanemab is the company’s drug candidate for treating Alzheimer’s disease. According to media reports, all members of the FDA panel that evaluated donanemab’s pros and cons voted in favor of its use. While this doesn’t mean donanemab is officially approved by the FDA, the positive sentiment from this group of advisors should encourage investors.
How big is the Alzheimer’s disease market?
According to Statista, the number of people aged 65 and older with Alzheimer’s disease in the United States could reach 8.5 million by 2030. Additionally, data suggests that this figure could reach 13.8 million by 2060.
Grand View Research predicts Alzheimer’s disease treatment market to grow 20% annual compound rate between 2023 and 2030. The company’s research suggests that treatments for Alzheimer’s disease could generate more than $15 billion by 2030.
Globally, however, these numbers could be much more significant. A report published by Market.us shows that the global Alzheimer’s disease market could reach $31 billion by 2033.
How could treating Alzheimer’s disease benefit Lilly?
Currently, the number of major players treating Alzheimer’s disease is limited. Two of the leading pharmaceutical companies treating this disease are Biogenic And Eisaiwho worked together to develop Leqembi.
Given Lilly’s relatively small number of competitors, coupled with the large size of the estimated Alzheimer’s market, the company may be in a favorable position. Again, it is important to note that donanemab is not yet approved by the FDA. Furthermore, despite the apparent recent approval by the FDA’s external panel, there is no guarantee that donanemab will reach the market.
That being said, I am cautiously optimistic that not only will donanemab be approved, but that approval will come later in 2024. The obvious upside to a new drug approval is that Lilly is likely to generate significant revenue .
Currently, almost half of Lilly’s revenue comes from three sources: Mounjaro, Trulicity and Verzenio. Mounjaro is the company’s diabetes medication and the most common alternative to Novo NordiskThis is Ozempic.
Additionally, Lilly also has an obesity drug called Zepbound, which works alongside Mounjaro as part of the company’s quest to reduce the prevalence of obesity. Although Zepbound isn’t approved until November 2023, sales of the drug have so far proven successful, with annual revenues expected to exceed $2 billion this year.
Verzenio is used in cancer patients and received an expanded indication from the FDA last year. Given that development, it’s not entirely surprising to see Verzenio’s growth starting to accelerate.
Lilly has a strong drug portfolio across key areas of the pharmaceutical spectrum, but approval of donanemab would further help the company diversify. For me, this is much more important than what donanemab could represent in terms of sales.
Lilly has a rich history of innovation in the medical world, and it is this momentum that has propelled the company to become a major force and a strong business. As a result, Lilly’s consistently strong performance has given the company strong financial flexibility that has been used to develop new medicines.
I see donanemab as another potential blockbuster in the making and, ultimately, a catalyst that can help fuel new growth for Lilly, which remains one of the most prolific healthcare companies in the world.
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Adam Spatacco holds positions in Eli Lilly and Novo Nordisk. The Motley Fool recommends Biogen and Novo Nordisk. The Motley Fool has a disclosure policy.
This is huge news for Eli Lilly investors was originally published by The Motley Fool
