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Eli Lilly's Rise to a $600 Billion Weight-Loss Empire: A Tale of Missed Opportunities and Fortuitous Discoveries
Ticker Tea
January 27, 2024
📝 SUMMARY: Eli Lilly & Co. ($LLY) has remarkably transformed into a $600 billion weight-loss drug empire, a journey marked by initial skepticism and a fortuitous discovery. Three decades ago, Richard DiMarchi, a scientist at Lilly, recognized the potential of the glucagon-like peptide-1 (GLP-1) hormone for weight loss. Despite his findings and a patent filing, Lilly, focused on diabetes, antidepressants, and cancer drugs, dismissed obesity as a target market.
After leaving Lilly in 2003, DiMarchi's ventures in obesity and diabetes biotech led to lucrative sales to Novo Nordisk A/S ($NVO) and Roche Holding AG. Meanwhile, Lilly's research on GLP-1s for obesity stalled, and the patent expired in 2017. Novo Nordisk seized the opportunity, launching Ozempic and Wegovy, generating an estimated $33 billion in revenue.
Lilly's fortunes changed under CEO David Ricks, who in 2017 tasked scientist Daniel Skovronsky to revitalize diabetes research. Skovronsky's focus on a small study of tirzepatide, a GLP-1 and GIP hormone combination, revealed significant weight loss in participants. This discovery accelerated Lilly's entry into the weight-loss drug market, leading to the FDA approval of Zepbound for weight loss.
Hershey vs Eli Lilly
Zepbound, with its dual agonist design, has shown promising results, potentially surpassing Novo's offerings in efficacy. Lilly's strategic pricing and market positioning have positioned Zepbound as a key player in the obesity drug market. The company's pipeline includes promising treatments like retatrutide and innovations in GLP-1 formulations.
Lilly's valuation reflects high expectations, with the company being considered a potential trillion-dollar pharmaceutical firm. However, this optimism brings challenges, including competition, safety concerns, and the need for continual innovation. Lilly's journey, from overlooking GLP-1's potential to leading the weight-loss drug market, highlights the complexities and unpredictability of pharmaceutical development.
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