Key Points
- CVS Caremark will begin covering Eli Lilly’s weight loss medications.
- This decision could potentially increase Eli Lilly’s sales.
- Eli Lilly continues to look promising even now.
Eli Lilly (NYSE: LLY) has been a leader in the weight management sector, but it faced challenges, particularly with inconsistent insurance coverage for its anti-obesity drug, Zepbound. Improving this coverage could significantly enhance sales for the already popular medication. Recently, good news from CVS Health (NYSE: CVS) has brought new hope.
CVS Health’s New Coverage Decision
On May 28, CVS Caremark, part of CVS Health, announced that it will start covering Zepbound from October 1. This is a crucial update since CVS had previously taken this medication off its coverage list. Additionally, CVS will start covering Eli Lilly’s new GLP-1 pill, Foundayo, beginning June 1.
These changes are expected to help Eli Lilly compete more effectively with its main rival, Novo Nordisk, which already has its weight loss medications covered by CVS Caremark. With the news, three of the largest pharmacy benefit managers (PBMs) in the U.S. will now cover both Zepbound and Foundayo. Access to these treatments at affordable prices will be easier for more patients, allowing Eli Lilly to tackle competition from telemedicine companies offering lower-cost alternatives to Zepbound.
Is Eli Lilly Stock Worth Buying?
Can Eli Lilly sustain its momentum in the weight loss market over the next few years despite growing competition? Yes, it seems likely. The company’s advancements in coverage and the early success of Foundayo—approved only in April—show that the anti-obesity market still has plenty of room for growth. A significant portion of Foundayo’s users had never used GLP-1 medications before, perhaps due to their dislike for injections.
Eli Lilly has a diverse product range that meets the needs of many potential customers who currently are not using these treatments. Meanwhile, Eli Lilly is outperforming its peers, as its revenues and earnings grow at a faster rate. In the first quarter, the company reported a 56% year-over-year increase in sales, reaching $19.8 billion, while adjusted earnings per share surged to $8.55, marking a 156% jump from the previous year.
Additionally, Eli Lilly boasts a strong lineup of future products beyond just diabetes and weight loss drugs. In the next five years, the company plans to launch several new medications, which should help boost sales further. While some investors believe that Eli Lilly’s stock is quite pricey—trading at 29.3 times its expected earnings compared to an average of 16.9 times for healthcare stocks—the company’s impressive performance justifies this premium.
Should You Consider Buying Eli Lilly Stock Now?
Before deciding to invest in Eli Lilly, here are some considerations:
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