Eli Lilly (LLY) has enjoyed a successful run the past several quarters as the company’s blockbuster GLP-1 weight-loss drug Wegovy gains steam in the obesity space.
But Wall Street wiped out more than $90 billion in the company’s market cap during trading Thursday after competitor Novo Nordisk (NVO) locked in a deal to have its GLP-1 listed on CVS’s (CVS) formulary as the preferred weight-loss drug for patients.
Wegovy was first to market but has been losing ground to Eli Lilly’s Zepbound in recent months, according to the latest prescription data.
This month, Novo Nordisk has been busy securing deals to provide more access and visibility for Wegovy. It has announced deals with telehealth companies like Hims & Hers (HIMS), specialty pharmacy deals like the one with Humana’s (HUM) CenterWell, as well as Thursday’s CVS deal.
Read more about Eli Lilly’s stock moves and today’s market action.
But Eli Lilly CEO David Ricks waved off the deal Thursday, telling Yahoo Finance in an interview that the company is focused more on upcoming obesity drugs in its pipeline and sees exclusive deals as an older way of doing business.
“We’re not interested in exclusive deals. We think innovation and choice is very important. And we’re well into the product replacement cycle, and there’s more coming,” Ricks said, referring to the highly anticipated oral form of Eli Lilly’s GLP-1 orforglipron, which is expected to hit the markets mid-next year.
“It’s in some ways a little disappointing to see this. It feels a little bit like last decade, these sort of lock-up deals,” Ricks added.
Ricks said he is confident in Zepbound’s product profile and the consumer preference reflected in the weekly prescription data.
“We’ll see if it performs. I mean, they’re going to have to switch people off the market-leading product onto an inferior product. And that’s hard to do,” Ricks said of the CVS deal.
He also noted that the company’s direct-to-consumer platform, which ties in telehealth providers to help give patients a chance to buy Zepbound directly from Eli Lilly, was doing better than expected — but declined to provide numbers.
“We built this not really for this purpose, we built this more as a backstop, based on the overall condition of retail pharmacy,” Ricks said, referring to store closures across the country in the past few years.
But Ricks isn’t focused on that. He said he has to stay focused on the company’s future rather than single-day stock moves.
“I’m focused on adding value. So, in five years, this company is worth a lot more than it is today,” Ricks said.
Eli Lilly has been on investors’ watch list as its GLP-1 business boomed to potentially make it the first trillion-dollar healthcare company by market cap. UnitedHealth Group (UNH) had previously been the leading contender, but multiple headwinds in the past couple of years have pummeled the insurance giant’s stock.
BofA Securities analyst Tim Anderson told Yahoo Finance that the market had overreacted to the news.
“I think its going to become more and more known that this is a lot of hype. And what Novo has been already saying on the sidelines is that they weren’t the ones that pushed for an exclusive deal,” Anderson said.
That’s particularly of note considering the prescription data.
“I do think Novo…(is) trying to prove to their shareholders that they’re going to see inflection of their franchise and return to growth later in the year,” Anderson said.
Red Brook Advisors managing partner Syed Husain similarly told Yahoo Finance that the market reaction to the CVS deal — a more than 10% decline in Eli Lilly’s stock — was “a bit of an overreaction.”
“I think we need to take a step back and really see what the broader impact is on everything going on for this company,” Husain said.
Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. That includes GLP-1s, of course. Follow Anjalee as AnjKhem on social media platforms X, LinkedIn, and Bluesky @AnjKhem.
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