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Eli Lilly's Weight-Loss Pill Progress Drives Stock Surge Amid Regulatory Gains

Isaac LaneThursday, Apr 17, 2025 9:02 am ET

7min read

Eli Lilly (LLY) has emerged as a dominant force in the booming obesity and diabetes markets, fueled by breakthroughs in its weight-loss pipeline and strategic regulatory wins. Recent clinical trial data and FDA approvals have propelled the company’s stock higher, even as it navigates pricing pressures and competitive threats. Here’s why investors are betting on Lilly’s future—and what risks still loom.

Clinical Progress: The Rise of Oreflgipron

At the heart of Lilly’s momentum is orforglipron, an oral GLP-1 receptor agonist currently in late-stage trials for type 2 diabetes and obesity. Phase III results from the ACHIEVE-1 trial, released in late 2024, showed the drug reduced HbA1c (a measure of blood sugar control) by 1.3–1.6% in diabetic patients, with 65% of those on the highest dose achieving HbA1c ≤6.5%—a key target. Even more compelling, participants lost an average of 16.0 lbs (7.9%) of body weight at the highest dose. For obesity-focused trials in the ATTAIN program, analysts project weight loss of 13–15%, positioning orforglipron competitively against injectables like Novo Nordisk’s Wegovy.

The drug’s convenience—a once-daily pill—eliminates the need for weekly injections, a major barrier for many patients. If approved, orforglipron could capture a significant slice of the $150 billion GLP-1 market, with analysts estimating oral formulations alone could reach $50 billion annually by the 2030s.

Regulatory Wins: Expanding Zepbound’s Reach

Lilly’s Zepbound, already a blockbuster, received a critical FDA nod in late 2024: approval for moderate-to-severe obstructive sleep apnea in adults with obesity. This expanded indication addresses Medicare’s requirement for weight-loss drugs to treat a secondary medical condition to qualify for coverage under Part D. The move could unlock broader patient access and revenue, as sleep apnea affects an estimated 22 million U.S. adults.

Additionally, the FDA resolved a key supply constraint in December 2024 by removing tirzepatide (Zepbound’s active ingredient) from its drug shortage list. This cleared the way for full-scale production, ending the compounding of generic alternatives that had eroded sales.

Stock Performance and Financial Outlook

Lilly’s stock surged 11% in early 2025 after positive orforglipron data but faced volatility, dipping 5% in January after Novo’s rival drug, CagriSema, underperformed. Despite this, shares were up 9.9% year-to-date as of early 2025, outperforming the healthcare sector’s 2.2% decline.

The company projects $58.0–61.0 billion in 2025 revenue, a 32% jump from 2024, driven by:
- Expanded Zepbound sales, including new international markets and self-pay programs offering reduced prices (e.g., $499/month for 7.5mg/10mg doses).
- Label expansions, including the sleep apnea indication.
- Pipeline approvals, such as imlunestrant (breast cancer) and retatrutide (a triple-acting incretin).

Competitive Landscape: Defending Dominance

While Lilly and Novo Nordisk dominate injectable GLP-1s, oral entrants like Amgen’s PF-07976016 and Viking Therapeutics’ VK2735 pose threats. However, Lilly’s $50 billion manufacturing investment since 2020 ensures it can scale production, and its Phase III lead (3+ years ahead of peers) solidifies its position as the market’s frontrunner.

Risks and Challenges

Pricing Pressures: U.S. net prices for Lilly’s drugs are expected to decline mid-to-high single digits in 2025 due to Medicare Part D reforms and rebates.
Generic Competition: Trulicity’s sales are waning as generics enter the market, and Zepbound faces pressure from biosimilars post-2028.
Clinical Hurdles: While orforglipron’s safety profile is promising, gastrointestinal side effects (e.g., diarrhea) could limit uptake if discontinuation rates rise.

Conclusion: A Transformative Pipeline, but Risks Remain

Eli Lilly’s stock is on a trajectory fueled by orforglipron’s potential, Zepbound’s expanded utility, and a robust pipeline. The company’s 2025 revenue guidance of $61 billion—up from $46 billion in 2024—reflects confidence in its dominance. However, investors must weigh this against risks like pricing erosion and emerging competition.

With $550 million already allocated for orforglipron’s pre-launch manufacturing and cardiovascular outcome data for tirzepatide expected in 2025, Lilly is positioned to solidify its leadership. Should Phase III data for orforglipron meet expectations by Q2 2025, the drug could become the first oral GLP-1 to market, cementing its legacy in metabolic health. For now, the scales tip in favor of hold to accumulate, provided investors can stomach near-term volatility.

In a market projected to grow to $100 billion by 2030, Lilly’s blend of innovation and execution makes it a key player to watch.

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