Eli Lilly Strikes a Landmark Pricing Deal With the U.S. for Its Billion-Dollar Weight Loss Drugs. Here's What This Means for Investors.

Core Insights - Eli Lilly's weight loss drugs generated approximately $10 billion in revenue in the most recent quarter, significantly contributing to the company's overall revenue growth [1][5] - The company has signed a deal with former President Donald Trump to lower the prices of its weight loss drugs, which could impact revenue and access for patients [2][6] Company Overview - Eli Lilly's weight loss drugs, including tirzepatide (Mounjaro and Zepbound), are part of a class of dual GIP/GLP-1 receptor agonists that help control appetite and blood sugar levels, leading to significant weight loss [2] - The demand for these drugs has been so high that they have appeared on the FDA's shortage list [2] Financial Performance - The weight loss portfolio has driven a 54% increase in Eli Lilly's total revenue, leading to a total revenue of $17 billion in the recent quarter [5] - The company has increased its full-year revenue guidance due to the momentum from its weight loss drugs [5] Pricing Agreement - The agreement with Trump will lower the price of Zepbound and the oral weight loss drug candidate, orforglipron, for Medicare and Medicaid patients [7][8] - Medicare patients will pay a maximum of $50 per month for these drugs, down from a list price of about $1,000 [8] - Self-pay patients will pay between $299 and $499 for prescriptions, reflecting a $50 discount [9] Implications of the Deal - The pricing deal is expected to broaden access to Eli Lilly's drugs, potentially increasing the patient base and revenue [10][11] - The agreement includes a National Priority Voucher for orforglipron, which may expedite regulatory review, and provides exemption from import tariffs for three years [10][11] - Despite potential impacts on margins, the overall outlook for Eli Lilly remains positive, with expectations for continued revenue growth [11]