It’s tough to dispute the impressive track record that Eli Lilly (LLY, 1.71% up) has carved out over the past five years. Among the pharmaceutical heavyweights, Eli Lilly’s performance stands out, with its stock outpacing the broader market by a considerable margin.
Opinions on whether it’s the right time to invest in Eli Lilly are divided. Some think it might be too late to jump in, while others believe its advancements in diabetes and obesity treatments offer a promising long-term opportunity. So, who’s right? Let’s take a closer look at how Eli Lilly might shape up as the decade progresses and see if it’s still a stock worth considering for investors.
Expect Strong Revenue Growth Moving Forward
First up, let’s assess the impact of Eli Lilly’s latest products on its performance over the next five years. Among its new offerings are Kisunla for Alzheimer’s, Omvoh for ulcerative colitis, and Jaypirca for cancer treatment.
However, the real game-changers are diabetes treatment Mounjaro and weight management drug Zepbound, both containing the active ingredient tirzepatide. By 2024, Eli Lilly’s revenue saw a 32% surge, reaching $45 billion. Remarkably, the tirzepatide products alone generated around $16.5 billion, even though they’ve been available for under three years.
Analysts have forecast peak annual sales of $25 billion for tirzepatide, but they might be underestimating its potential. I believe Zepbound and Mounjaro will maintain their growth momentum through 2030, although increased competition could somewhat dampen their sales growth.
Meanwhile, other new entries in Lilly’s lineup, which currently contribute less, are poised to gain traction. Take Kisunla, filling a critical gap in Alzheimer’s treatment, is expected to generate about $2.5 billion in revenue by 2030. Jaypirca and Omvoh are also set to make significant contributions by the decade’s end.
In essence, Eli Lilly is on track to continue its brisk revenue growth. Based on the company’s 2025 guidance, we’re looking at an expected sales growth of roughly 32% for the year, an impressive feat for a giant in pharma. I’d be surprised to see its annual growth dip below 15% anytime before 2030.
Solid Pipeline Progress is on the Horizon
Eli Lilly’s pipeline features several promising products that could earn approval in the coming five years. Take orforglipron and retatrutide, two leading candidates in the weight loss arena. Both are in phase 3 trials, but not just as weight management treatments—they’re being developed for diabetes, sleep apnea, and other conditions too.
What makes these drugs stand out? Retatrutide is a triple agonist that mimics the action of three hormones: GLP-1, GIP, and GCG. This could be a step up from tirzepatide, which targets GLP-1 and GIP. While tirzepatide was groundbreaking, retatrutide is still proving its worth in clinical trials.
The takeaway here is that Lilly’s pipeline, especially in the competitive GLP-1 market, seems stronger than most competitors except Novo Nordisk. Some forecasts predict that retatrutide could net $5 billion by 2030, with orforglipron possibly reaching $8.3 billion in sales by then.
Moreover, other new products could emerge by 2030, alongside advancements to late-stage trials. Such could be the case for Lilly’s promising investigational gene therapy for deafness. Plus, many of its existing drugs will likely see label expansions. By the end of the decade, Eli Lilly’s portfolio should only get stronger.
Is the Stock a Buy?
Critics might highlight Eli Lilly’s forward price-to-earnings (P/E) ratio of 39.
The healthcare sector’s average is 17.7 as we speak. If Eli Lilly is indeed overpriced, it could underperform compared to broader stocks in the short to medium term. Would investors be better off waiting for a more favorable entry point?
In my opinion, the stock is rightly valued. With revenues and earnings climbing faster than most of its large healthcare peers, a higher forward P/E for Lilly makes sense.
I foresee Eli Lilly outpacing the market over the next five years. And with its impressive capacity for innovation, it’s likely to remain a strong contender in the stock market well beyond that.
