Eli Lilly upped its annual estimates on Tuesday as consumer demand for fresh diabetes medicine Mounjaro jumps prior to a decision approving its use as a treatment for losing weight, sending the company's shares up 18% to an all-time high, aided by favorable results from a competing drug.
The shares of the US corporation had risen 24% this year before the results, and the current rise puts it on a course to become the globe's highest-value healthcare company based on market capitalization, surpassing UnitedHealth, the health insurer.
Most of the increase has been fuelled by investors betting on Mounjaro's prospects as a treatment for losing weight and Lilly's experimental Alzheimer's medicine, donanemab.
Mounjaro's sales increased 72.3% in its second quarter to $979.7 million, greatly above analysts' projections of $743 million.
According to Evan Seigerman, an analyst from BMO Capital Markets, the beat reveals that patients taking Mounjaro migrated from Lilly's savings scheme, in which the medicine was offered at a lower price, to commercial insurance programs, which will pay a greater reimbursement rate.
Lilly anticipates a decision in the United States on the application of the medicine in obese patients sometime this year. Doctors are already using Mounjaro as a kind of obesity therapy off-label.
Investors reacted positively when Novo Nordisk said that its obesity medication, Wegovy, lowered the possibility of a severe cardiovascular event such as stroke by 20% in late-stage research. This is much higher compared to the 15% to 17% that analysts and investors had predicted.
According to analysts, the findings on heart benefits could assist in weight-loss treatments, acquire greater health insurance coverage and reach a larger patient population. Previously, these medications were primarily used to help people lose weight, but they are now much more extensively utilized.
Lilly increased its adjusted 2023 earnings prediction by $1.05 per share to $9.70 to $9.90 per share, and increased its revenue range estimates by $2.2 billion on both ends to $33.4 billion and $33.9 billion.
Excluding items, earnings of $2.11 a share in the second quarter surpassed projections of $1.98, according to Refinitiv data.
The sales of $8.31 billion also surpassed projections of $7.58 billion.