Hello! I am Priya, and thank you so much for being here! :)
I recently watched the '100 day challenge' to build a career in finance by The Valuation School, and immediately jumped into it. This is a series where for the next 15 days I: 1) 'Pick' a sector
2) 'Read' relevant news articles, annual reports, sector analysis reports etc
3) 'Report' what I've read
4) Make 'Notes' and see how they evolve!
To make it more interesting I've decided to pick a sector that has always been intriguing to me - the Pharma sector. I've picked 3 companies for my reference - Eli Lilly, Novo Nordisk, Johnson and Johnson.
A quick disclaimer, none of this should be treated as professional investment advise. Life is all about evolving into the best version of yourself, and I'd like to take you all on this journey of mine. Kindly only read this for gaining some additional insight, and feel free to give me any sort of feedback.
As a writer, I strongly advise you to do your own research as our team cannot assume any liability for your use of this information.
Let's get learning!
01/04/2025
Quick disclaimer: There are a lot of medical and pharmaceutical terms mentioned below. Kindly note that this blog is simply to reinforce my learning and spread knowledge. I do not have a pharmaceutical background, so kindly make some provision for scientific inaccuracies, which may be possible! :)
Welcome to Day 12! :)
As promised, today my day was entirely focussed on Eli Lilly's Q4 earnings call of 2024. I was only able to cover the management's discussion and analysis segment, however I have compiled quite a lot of interesting details!
2024 INSIGHTS!
In 2024 Eli Lilly's revenue saw an uptick of 45%, driven largely by Zepbound and Mounjaro in the US.
WHY UNITED STATES?
As we know both Zepbound and Mounjaro are part of Eli Lilly's GLP-1 portfolio, and the uptick came along due to many reasons.
Firstly, the increase in promotional initiatives undertaken by EL itself, which resulted in more prescriptions being generated in Q4 alone. Eli Lilly also recently launched Lilly Direct, as part of making the drugs directly available to end consumers. As part of this project they have increased their D2C marketing spend, which may have resulted in more adoption of such medicines.
Secondly, other drugs like Verzinio have also had a part to play. Verzinio is Eli Lilly's drug for breast cancer, and in general there was an increase in the number of early detections of the disease. I would attribute this to the larger accessibility of healthcare to women in the US, who were able to take such tests.
This resulted in more demand for the drug, and hence this record growth in revenue. Additionally, the company launched many new drugs this year, in Alzheimer's (Kisunla), Egzema (Ebglyss) and Leukemia (Jayprica) all of which have been performing quite well, as a result of Eli Lilly's strategic alliance with a variety of pharma benefit mergers.
Zepbound has now become the only drug worldwide which has gotten approval for use in obstructive sleep apnea, so you can imagine how this company is building a monopoly in nuanced patient segments.
OTHER GEOGRAPHIES
As mentioned above, a large part of this 45% growth stems from more demand from the US, but that is not to say that the other geographies did not play a part.
Drugs like Mounjaro, Eli's key drug for diabetes underwent major launches across many European countries, which obviously amplified the volume of sales by about 60%.
In countries like Japan, both their incretin and immunology portfolio underwent massive growth trajectories, however in China trends were slightly different.
If you remember our previous article, Eli Lilly has only recently launched in India, and it is still figuring out pricing dynamics. In China too Eli Lilly only launched in Q4 2024, and this was obviously because both China and India are highly populous countries.
Once the penetration of the medicine begins, and people start buying the medicine, there is going to be surging demand for the drug, which the company currently may not have the ability to fulfil. Hence they have launched the drug much later in these countries, and have currently positioned it at a very high price point to constrict demand, in some sense.
INTERESTING INSIGHTS FOR 2025!
As most pharmaceutical companies are, Eli Lilly is having quite a hectic year ahead, with a lot of late stage clinical trials and new molecular discoveries scheduled.
The most exciting discovery they have in pipeline is orforglipron, a GLP-1 agent, which is the only one of its kind in an oral form (the others are injections). The interesting aspect about this drug is that it is being tested not just for diabetes and obesity, but also for potential benefits in reducing hypertension and obstructive sleep apnea.
Sleep apnea is obviously an area where majority of the pharma companies would be desperate to find a cure, however considering EL has already achieved a big first mover advantage with Zepbound in this category, it seems more likely that they could achieve commercial success with this drug.
Retratrutide is another exciting discovery EL has in pipeline because it's a 3-in-1 formulation with GLP-1, GIP and glucagon! Basically each of these moelcules constituted seperate drugs, but combining all of them may result in far more more superior weight loss benefits and might help to fight off a variety of comorbities.
Eli Lilly is also currently developing a drug called Olomorasib for non small cell lung cancer, which when combined with the basic standard of care, results in a very drastic PFS (Progression Free Survival) rate.
Non small cell lung cancer seems to be the hot topic for pretty much every pharma company in the world. Currently Merck's Keytruda is said to be the gold standard in this space, but with radically better options like Ivoneskimab by Akeso + Summit, Rybrevant and Lazcluze by J&J, and now EL with Olomorasib, it seems the small proportion of investment in oncology is being concentrated in this particular segment.
From the face of it, this may appear to be a domain of extensive competition but interestingly, the reality is quite the opposite. So from what I've read the tumours that cause lung cancer have much molecular diversity. Thus many new discoveries would actually help in treating the various forms in which this tumour occurs in patients, and hence there may not be much competition.
This seems to be the strategy used by pharma companies to allocate their limited budget for this sector in a way that can generate the highest chances of success.
One big positive with EL is their current alliances with Isomorphic Labs and other AI companies, creating much potential for them to deliver very nuanced medications and discoveries.
See you in day 13! :)
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