Eli Lilly stock rises on Medicare weight-loss drug coverage potential

Investing.com - Eli Lilly (NYSE:LLY) stock rose Monday following reports that Medicare may soon cover weight-loss medications, potentially expanding the market for the company’s GLP-1 drugs. The pharmaceutical giant, with a market capitalization of $680 billion and impressive revenue growth of 36% over the last twelve months, continues to strengthen its position in the weight-loss medication market.

Bernstein SocGen Group reiterated an Outperform rating on Eli Lilly with a $1,100.00 price target, citing the Center for Medicare and Medicaid Innovation’s planned demonstration project to experiment with covering weight-loss drugs through Medicare and Medicaid. According to InvestingPro data, analyst targets range from $650 to $1,190, with 8 analysts recently revising their earnings estimates upward for the upcoming period.

The development represents a significant step toward removing the explicit exclusion of weight-loss medications in government healthcare programs, which cover approximately 36% of the U.S. population.

Bernstein analysts noted that Eli Lilly’s upcoming Orforglipron launch presents an ideal opportunity for collaboration with the administration to expand access to patients over 65 years old, as the small-molecule drug is expected to have no supply constraints at launch, U.S.-based manufacturing, and more flexibility on pricing and distribution.

While some GLP-1 medications already receive limited coverage under adjacent indications such as type 2 diabetes, sleep apnea, and cardiovascular risk reduction, Bernstein believes Eli Lilly is "in the strongest position to capitalize" on the potential Medicare coverage expansion.

In other recent news, Eli Lilly and Company announced that its diabetes drug Mounjaro demonstrated non-inferior cardiovascular outcomes compared to Trulicity in a study involving patients with type 2 diabetes and cardiovascular disease. The SURPASS-CVOT trial revealed an 8% lower rate of major adverse cardiovascular events and a 16% lower rate of all-cause mortality for patients taking Mounjaro. Additionally, Eli Lilly’s Alzheimer’s drug Kisunla received a positive opinion from the European Medicines Agency’s Committee for Medicinal Products for Human Use, recommending it for early symptomatic Alzheimer’s disease. In another development, Eli Lilly completed its tender offer for Verve Therapeutics, with 55.7% of Verve’s shares tendered. Shareholders will receive $10.50 per share in cash, plus a contingent value right for potential additional compensation. Furthermore, Eli Lilly’s pirtobrutinib met its primary endpoint in a Phase 3 trial, showing promising results compared to Imbruvica in patients with chronic lymphocytic leukemia. BMO Capital also raised its price target for Eli Lilly to $920 from $900, maintaining an Outperform rating, reflecting confidence in the company’s upcoming drug, orforglipron.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.