Why Eli Lilly and DexCom Are Built to Dominate the Next Decade

The healthcare sector is no stranger to disruption, but few companies have positioned themselves as decisively as Eli Lilly (LLY) and DexCom (DXCM) in their respective high-growth therapeutic areas. Both firms are leveraging leadership in GLP-1 agonists and continuous glucose monitoring (CGM) to drive long-term value, despite near-term headwinds such as pricing pressures and supply chain challenges. For patient investors, these stocks represent compelling multiyear opportunities rooted in irreplaceable pipelines, defensive manufacturing scale-ups, and strategic market access expansions.

Eli Lilly: GLP-1 Dominance and a Pipeline Built for Decades

Eli Lilly's first-quarter 2025 results underscore its pole position in the rapidly expanding GLP-1 agonist market. Mounjaro (for type 2 diabetes) and Zepbound (for obesity) delivered $6.15 billion in combined revenue, a 119% year-over-year surge. Zepbound's $2.31 billion U.S. sales alone reflect its explosive adoption, even as it faces formulary headwinds like CVS Caremark's preference for Novo Nordisk's Wegovy.

But Lilly's pipeline is its true crown jewel. The Phase 3 success of orforglipron—a first-in-class oral GLP-1 agonist—signals a potential breakthrough. Analysts project orforglipron could reach $11.8 billion in annual sales by 2030, addressing both diabetes and obesity with a pill instead of injections. Meanwhile, lepodisiran (for genetic heart disease) and baricitinib (alopecia areata) highlight Lilly's diversification beyond GLP-1, reducing reliance on any single therapy.

Despite short-term EPS pressure from R&D investments and the Scorpion Therapeutics acquisition, Lilly's $60 billion revenue guidance for 2025 remains intact. Its $50 billion+ U.S. manufacturing investment since 2020 ensures it can scale production to meet global demand, a critical defensive moat against supply chain risks.

DexCom: The CGM Leader With Global Ambition

DexCom's Q1 results reveal a company capitalizing on its near-monopoly in premium CGM technology. U.S. revenue grew 15% to $750.5 million, driven by strong adoption among type 1 and type 2 diabetes patients. The FDA clearance of the G7 15-Day System—extending sensor life by 50%—is a game-changer, offering users unmatched convenience and reducing switching costs.

DexCom's strategic moves further solidify its lead:
1. PBM Coverage: Two of the three largest PBMs now cover Dexcom for all diabetes patients, expanding its addressable market.
2. Retail Expansion: The launch of the Stelo product on Amazon broadens accessibility, targeting younger, tech-savvy users.
3. Global Reach: International revenue, while smaller, grew 7% year-over-year, with room to surge as emerging markets adopt CGM.

However, supply chain costs temporarily dented gross margins, a trade-off for scaling production. DexCom's $2.7 billion cash pile and $750 million share repurchase plan reflect confidence in its ability to navigate these challenges.

Why Both Stocks Are Long-Term Winners

1. Irreplaceable Therapeutic Platforms:
2. Lilly's GLP-1 franchise addresses $100 billion+ markets (diabetes, obesity, cardiovascular risk reduction).

3. DexCom's CGM technology is becoming the standard of care for insulin-requiring diabetes, with adoption rates still below 20% in the U.S.

4. Pipeline Depth:

5. Lilly's retatrutide (a once-monthly GLP-1 analog) and orforglipron create a multi-decade runway.

6. DexCom's G7 15-Day and planned international rollouts will drive growth until next-gen products like implantable sensors emerge.

7. Defensive Manufacturing & Pricing Power:

8. Lilly's U.S. manufacturing investments insulate it from geopolitical risks.

9. DexCom's premium pricing (vs. competitors like Abbott's Freestyle Libre) is justified by its accuracy and app ecosystem.

10. Valuation Support:

11. LLY trades at 19x 2025E EPS, reasonable given its 20%+ annual revenue growth trajectory.
12. DXCM's 15x forward EV/EBITDA reflects its CGM leadership and scalability.

Investment Thesis: Buy the Dips, Hold for the Decade

Both stocks face near-term hurdles:
- Lilly must prove Zepbound's formulary setbacks are manageable, and orforglipron's data can outperform rivals.
- DexCom needs to stabilize margins while scaling G7 15-Day production.

But long-term catalysts outweigh these risks:
- GLP-1 drugs are penetrating new indications (e.g., Alzheimer's, non-alcoholic steatohepatitis).
- CGM adoption is a secular trend as diabetes prevalence rises and healthcare systems prioritize prevention.

Investment advice:
- Eli Lilly: Accumulate on dips below $280 (current price: ~$295). The stock's dividend yield of 1.5% provides a cushion.
- DexCom: Wait for post-G7 15-Day adoption clarity; $140–$150 is a compelling entry (current price: ~$160).

Both companies are compounders with durable moats—ideal for investors with a 5+ year horizon. The near-term noise is a buying opportunity for those focused on the next decade's growth.

Disclosure: This analysis is for informational purposes only and not personalized financial advice. Always conduct independent research or consult a financial advisor before making investment decisions.