Novo Nordisk's Lead Fades, Eli Lilly Holds Course For Outsized Gains, Says Analyst

Core Viewpoint - Eli Lilly plans to significantly increase the list price of its weight-loss and type 2 diabetes drug Mounjaro in the UK, reflecting heightened competition in the obesity drug market, particularly with Novo Nordisk [1][2]. Pricing Strategy - Starting in September, the highest monthly dose of Mounjaro will see a price increase from £122 to £330, marking a 170% rise to align with prices in other European markets [1]. - Bank of America Securities reported that Eli Lilly intends to double GLP-1 drug prices in the UK, although the specific customers affected remain unclear [2]. Market Context - Similar price adjustments are anticipated in other European markets, where GLP-1 manufacturers typically lack formal pricing agreements with governments, resulting in out-of-pocket costs for patients [3]. - The pricing strategy aligns with a "most favored nation" (MFN) pricing concept discussed recently, aiming to raise drug prices outside the U.S. while lowering them domestically [3][4]. Company Initiatives - Eli Lilly has initiated pricing strategies, including the "Lilly Direct" direct-to-consumer channel for Zepbound and other medications, which aims to bypass pharmacy benefit managers [5]. - While direct-to-consumer initiatives may enhance access, they are expected to have minimal impact on profit and loss, particularly for obesity drugs [6]. Investor Sentiment - Investors in the obesity sector are increasingly anxious due to the competitive landscape, with Novo Nordisk's lead diminishing and Eli Lilly's stock volatility [7]. - Bank of America maintains a Buy rating for Eli Lilly, projecting a price target of $900, citing strong growth potential at a reasonable valuation [7]. Stock Performance - Eli Lilly's stock was trading higher by 0.85% at $690.27 as of the last check [8].