On Thursday, Leerink Partners maintained its Outperform rating and $990.00 price target on shares of pharmaceutical giant Eli Lilly (NYSE:LLY). The firm's stance comes in light of recent developments in the United Kingdom, where plans are in motion to assess the impact of Eli Lilly's drug tirzepatide on the economic strain caused by obesity.
The UK government has signaled its intention to explore the potential of tirzepatide to alleviate healthcare and employment costs linked to obesity. Eli Lilly has pledged £279 million ($364 million) to fund a comprehensive study to evaluate tirzepatide's effectiveness in improving the health of obese individuals and in reducing the country's economic burden.
The study, which will involve 3,000 participants, aims to gather data on the health-related quality of life, as well as any changes in the employment status and sick days among the subjects. This research will be overseen by the University of Manchester.
UK's Health Minister, Wes Streeting, highlighted the weight of the issue in an article dated October 14, noting that obesity costs the National Health Service (NHS) approximately £11 billion each year. He also pointed out that individuals affected by obesity tend to take more sick days compared to their healthier counterparts.
Leerink Partners' reaffirmation of its rating underscores the firm's optimistic view of Eli Lilly's prospects, particularly as tirzepatide becomes a focal point of study for its potential societal and economic benefits in the UK.
In other recent news, Eli Lilly's investigational treatment for Crohn's disease, mirikizumab, has shown promising results in the VIVID-1 Phase 3 study. The drug achieved a higher rate of histologic response compared to ustekinumab after 52 weeks of treatment. In terms of financial updates, Leerink Partners has maintained its Outperform rating on Eli Lilly, raising its third-quarter revenue estimate from $12.0 billion to $12.2 billion. Truist Securities also raised the company's share price target, citing ongoing investments in manufacturing, particularly for the drug Zepbound.
Eli Lilly is involved in a legal dispute with the U.S. Food and Drug Administration and the Outsourcing Facilities Association over its weight loss and diabetes medication, tirzepatide. The association alleges that the drug is still in short supply, contradicting the FDA's recent update. Furthermore, Texas Attorney General Ken Paxton has initiated a lawsuit against three major insulin manufacturers, including Eli Lilly, alleging that these entities have conspired to artificially inflate the price of insulin.
Eli Lilly and U.S. Senator Elizabeth Warren have expressed concerns about Novo Holdings' acquisition of Catalent (NYSE:CTLT) for $16.5 billion, suggesting it could give Novo Nordisk (NYSE:NVO) an unfair competitive advantage in the market for weight loss and obesity medications.
InvestingPro Insights
Eli Lilly's strong market position and financial performance are reflected in the latest data from InvestingPro. The company's market capitalization stands at an impressive $826 billion, underscoring its significant presence in the pharmaceutical industry. This aligns with the InvestingPro Tip highlighting Eli Lilly as a "prominent player in the Pharmaceuticals industry."
The company's revenue growth is particularly noteworthy, with a 31.87% increase over the last twelve months as of Q2 2024. This robust growth is complemented by a strong gross profit margin of 80.75%, indicating efficient cost management and pricing power. These metrics support the optimistic outlook expressed by Leerink Partners and suggest that Eli Lilly is well-positioned to fund and potentially benefit from the tirzepatide study in the UK.
Another InvestingPro Tip notes that Eli Lilly "has maintained dividend payments for 54 consecutive years," reflecting the company's financial stability and commitment to shareholder returns. This long-term consistency could be attractive to investors looking for both growth potential and income.
For readers interested in a more comprehensive analysis, InvestingPro offers 18 additional tips for Eli Lilly, providing a deeper understanding of the company's financial health and market position.
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