Eli Lilly exec on weight-loss drugs: 'It's not just a flash in the pan'

Eli Lilly (LLY) is riding high on its diabetes and weight-loss treatments Mounjaro and Zepbound — which Wall Street estimates could net the company $13.5 billion in 2024.

"It's not just a flash in the pan," Patrik Jonsson, president of Lilly Diabetes and Obesity and Lilly USA, told Yahoo Finance at the Goldman Sachs annual healthcare event in Miami Beach on Monday. "We can see an opportunity for us to out-innovate ourselves for many years to come."

But with the success comes ongoing criticism about pricing and access. While Lilly and Novo Nordisk (NVO) capitalize on the unprecedented demand for their GLP-1 drugs, they also face increased scrutiny.

Sen. Bernie Sanders, for example, has questioned the nearly $1,000 monthly list price for these injectable drugs when the cost to make them is less than $5 per month.

Lilly brought Zepbound, its weight-loss drug, to the market at a slight discount compared to competitor Novo's Wegovy, but both drugs still have nearly $1,000 list prices. The companies argue that the actual cost to patients is significantly less since insurance coverage brings it down to $25 or less per month.

However, not all insurers are on board, and Medicare has yet to cover the drugs purely for weight loss, leaving many in the 65-and-older population without access. But with the recent approval for Wegovy to help reduce cardiovascular disease, Novo Nordisk could have found a loophole to access the profitable Medicare market.

Jonsson said that while the company is thriving, it is cognizant of those without access.

"If you look at the level of employers who have opted in the commercial space, we're currently at around or estimated to be around 50% employee opt-in. That tells you about the tremendous opportunity and the work that still needs to be done to really treat obesity along the same lines as other chronic diseases," Jonsson said.

The company's stock is up 90% in the past year and has shot up 660% in the past five years — largely due to the rollout of its GLP-1 treatment for diabetes, Mounjaro. Zepbound, which was only approved last year for weight loss, is also seeing a spike in demand and boosting Lilly's stock. The company also boasts a more than $850 billion market cap — putting it on a path to potentially be the first trillion-dollar healthcare company.

"We are always referring to obesity being a disease with more than 200 co-morbidities. I think we just need to lean in there and ... we will look for different opportunities for the different medicines based upon the portfolio," Jonsson said.

The company has already reported positive clinical trial results for its GLP-1s to treat sleep apnea as well as positive results for liver disease.

There are currently hundreds of clinical trials — either sponsored by the company or academia — to determine which other diseases can be addressed with the same drugs. The company is also pursuing an oral form of the drug in order to help ease access concerns.

FILE PHOTO: A combination image shows an injection pen of Zepbound, Eli Lilly's weight loss drug, and boxes of Wegovy, made by Novo Nordisk. REUTERS/Hollie Adams/Brendan McDermid/Combination/File Photo
A combination image shows an injection pen of Zepbound, Eli Lilly's weight loss drug, and boxes of Wegovy, made by Novo Nordisk. (REUTERS/Hollie Adams/Brendan McDermid/Combination/File Photo) (Reuters / Reuters)

When asked about the potential role of AI to help speed up the process — and lower overall costs for the health system — Jonsson said it isn't a clear path.

"I think we are applying AI across the value chain, but I think how we're discovering and developing medicines today is so much faster compared to only a decade ago. And I think that's an important aspect," he said.

That includes being able to identify and "kill" programs and drug candidates that aren't viable with the help of the technology.

"It does [cut costs]. If you get a medicine to market in six years instead of nine, there is a significant cost reduction. So that's true. But the cost of developing medicines is still quite high. So we haven't seen a huge reduction in development cost," Jonsson said.

For now, Lilly and Novo are the only competitors in the new weight-loss drug market and are scrambling to increase manufacturing sites to meet demand. Lilly is unveiling a new manufacturing site in North Carolina this week dedicated to injectables like GLP-1s.

But Lilly is also aware that it has to continue to innovate in order to avoid losing the lead it and Novo have in the market.

"I think we've been working hard, and we have gone through other times as well with patient expiries and struggling with our pipeline. I think it's extremely important for us not to get complacent," Jonsson 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. Follow Anjalee on all social media platforms @AnjKhem.

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