Eli Lilly's Telehealth Play: How Lower Prices and Direct Access Are Cementing GLP-1 Dominance

The GLP-1 drug market is undergoing a seismic shift, and Eli Lilly (LLY) is at the epicenter. Through strategic telehealth partnerships and aggressive pricing tactics, the pharma giant is not only countering the threat of cheaper compounded drugs but also locking in brand loyalty. For investors, this is a playbook for long-term dominance—but it's also a warning for competitors clinging to compounded alternatives.

The Telehealth Playbook: Expanding Access, Undercutting Competitors

Eli Lilly's partnership with telehealth platforms like Ro, Teladoc, and LifeMD isn't just about convenience—it's a calculated move to flood the market with affordable access to its star drug, Zepbound (tirzepatide). By offering Zepbound vials at $349–$699/month—prices that rival or undercut compounded generics—Lilly is starving demand for unregulated alternatives.

Consider the math: Compounded GLP-1 drugs, which once sold for as low as $200/month, were a lifeline for patients priced out of branded therapies. But with the FDA declaring the end of branded drug shortages in early 2025, compounded versions faced a regulatory brick wall. Eli Lilly's telehealth partnerships have capitalized on this shift, leveraging direct-to-patient distribution to ensure its drugs are the first choice.

LLY's stock has outperformed NVO by 18% year-to-date, reflecting market confidence in its telehealth strategy.

Pricing Power & Brand Loyalty: A Double-Edged Sword for Competitors

Lilly's Zepbound Self Pay Journey Program is a masterclass in customer retention. By tying lower prices to consistent refills (e.g., maintaining $499/month for 7.5mg/10mg doses only if refilled within 45 days), the company creates a “locked-in” customer base. Patients switching to Lilly's direct model face penalties if they delay, incentivizing long-term adherence.

Meanwhile, competitors like Novo Nordisk (NVO) are scrambling. While Wegovy (semaglutide) matches Zepbound's price, Lilly's broader telehealth network and $28.2B sales forecast by 2031 suggest it's pulling ahead. Compounded drug providers, once a thorn in Lilly's side, now face existential risks. The FDA's crackdown on 503B outsourcing facilities—mandating an end to bulk compounded GLP-1 production by May 2025—has left many pharmacies scrambling to pivot to FDA-approved alternatives.

Zepbound's projected $28.2B in 2031 sales vs. Wegovy's $26B underscore Lilly's edge in both pricing and partnerships.

Regulatory Risks: The Compounded Drug Dead End

The writing is on the wall for compounded GLP-1 providers. The Outsourcing Facilities Association's (OFA) lawsuit against the FDA has been largely symbolic, with courts upholding the agency's stance that compounded drugs are no longer “necessary” due to stable branded supply. For telehealth platforms like Hims & Hers, which once relied on compounded drugs for $725M in annual revenue, this means slashing offerings or pivoting to generics like liraglutide.

The collateral damage? Smaller pharmacies and compounding networks lack Lilly's scale to negotiate PBM deals or secure direct telehealth partnerships. Investors in companies like Pharmacyclics (now part of AbbVie) or niche compounding firms should brace for margin pressures as regulators tighten the screws.

The Investment Angle: Buy LLY, Short Compounded Plays

For Eli Lilly: This is a buy-and-hold opportunity. Historical performance supports this strategy: a backtest of buying LLY five days before quarterly earnings announcements and holding for 30 days from 2020 to 2025 showed a 97.59% total return, a compound annual growth rate (CAGR) of 13.62%, and a Sharpe ratio of 0.54, though it also experienced a maximum drawdown of -35.33%. This underscores the potential rewards of timing purchases around earnings but highlights the need for risk management.

Lilly's telehealth strategy isn't just about today's sales—it's about owning the future of GLP-1 access. With its orforglipron oral GLP-1 (expected for FDA review by late 2025), Lilly is preparing to dominate beyond injections. The stock's 2025 P/E ratio of 14.5x is a steal given its growth trajectory.

For Compounded Drug Reliants: Avoid. Firms like Hims & Hers (HIMS) and smaller compounding pharmacies face a shrinking market. Even if they adapt, their margins will be crushed by Lilly's pricing and PBM deals.

Risks on the Horizon

No strategy is without risks. Lilly's reliance on telehealth could backfire if insurers push back—CVS Caremark's exclusion of Zepbound from some formularies is a red flag. Additionally, the FDA's scrutiny of “personalized” compounded formulations (e.g., adding B12 to GLP-1) could lead to lawsuits. Investors should monitor LLY's Q2 2025 earnings for signs of telehealth-driven sales growth.

Final Verdict

Eli Lilly's telehealth play is a textbook example of how pricing discipline and distribution control can redefine a market. For now, compounded drugs are a fading footnote—and LLY's stock is the beneficiary. Investors who bet against this trend may find themselves on the wrong side of a tidal wave of demand for Lilly's brand.

Zepbound prescriptions surged 212% year-over-year, outpacing Wegovy's 158% growth—a clear sign of Lilly's market pull.

Investment Takeaway: Add LLY to your portfolio for growth exposure. Avoid companies relying on compounded GLP-1 sales—they're fighting a losing regulatory battle.

Data as of June 2025. Past performance does not guarantee future results.