Eli Lilly Stock Falls Amid Trump's Threat of 250% Tariffs on Pharma Industry

Eli Lilly's stock (LLY) has slumped in early trading after President Trump threatened to impose tariffs on the pharmaceutical industry, potentially reaching 250%. Trump aims to incentivize domestic drug manufacturing, and Eli Lilly has already announced plans to invest $27 billion in four new US manufacturing sites. Analysts remain optimistic, with a consensus Strong Buy rating and an average price target of $1,028.80, implying 34.89% upside.

Eli Lilly's stock (LLY) has seen a significant drop in early trading on Monday, July 2, 2025, following President Trump's threat to impose tariffs on the pharmaceutical industry, potentially reaching 250%. The move is aimed at incentivizing domestic drug manufacturing, a sector that has faced criticism for its high prices and reliance on foreign suppliers. In response, Eli Lilly has announced plans to invest $27 billion in four new US manufacturing sites.

Despite the tariff threat, analysts remain optimistic about Eli Lilly's prospects. A consensus Strong Buy rating and an average price target of $1,028.80, implying a 34.89% upside, indicate that investors see the potential for growth despite the immediate challenges. The company's recent earnings have shown strong revenue growth of 36% over the last twelve months, bolstering confidence in its ability to navigate the market.

Eli Lilly's stock has been volatile in recent months, with several setbacks including weak earnings reports and the removal of its obesity drug Zepbound from preferred drug lists by CVS Health Corp. However, the company is expected to deliver data from late-stage trials of an experimental oral GLP-1 pill called orforglipron in the coming months. Positive results from these trials could significantly boost the company's valuation.

The tariff threat has also raised concerns about the pharmaceutical industry's future, with Rhys Williams, chief strategist at Wayve Capital Management LLC, noting that the sector is currently "unloved." However, the potential expansion of Medicare and Medicaid coverage for weight-loss drugs, including Eli Lilly's GLP-1 medications, presents a significant opportunity for growth.

Eli Lilly's upcoming earnings report, scheduled for Thursday, will be closely watched by investors. Analysts expect a 30% jump in sales compared to the year prior, with Zepbound's growth at nearly 150% and Mounjaro's diabetes shot forecast to deliver a 45% increase. The company is also expected to report a 42% climb in adjusted earnings.

Despite the challenges, Eli Lilly's strong pipeline of drugs and its commitment to domestic manufacturing position it well to capitalize on potential market opportunities. The company's ability to navigate the current regulatory and market landscape will be crucial in determining its future performance.

References:
[1] https://finance.yahoo.com/news/lilly-push-1-trillion-derailed-110001886.html
[2] https://www.newsbreak.com/stocktwits-303303202/4151153197916-eli-lilly-novo-nordisk-shares-rally-as-trump-administration-reportedly-plans-to-experiment-including-weight-loss-drugs-under-medicaid-medicare
[3] https://www.investing.com/news/analyst-ratings/eli-lilly-stock-rises-on-medicare-weightloss-drug-coverage-potential-93CH-4168163