Quiver Quantitative - Eli Lilly and Co (NYSE:LLY) has received FDA approval for its new weight loss drug, Zepbound, marking its official foray into the competitive market against Novo Nordisk (CSE:NOVOb)'s (NVO) Wegovy. Zepbound, previously accessible as Mounjaro for type 2 diabetes, is anticipated to be a significant player in the weight loss sector. With obesity linked to some of the leading causes of death, such as heart disease and stroke, the FDA’s approval of Zepbound offers a new therapeutic avenue for managing these conditions. The drug will hit the market by year-end with a list price of $1,059.87 per month, positioning it competitively against Wegovy's higher price point.
The treatment's affordability, however, hinges on the net prices after discounts, which are typically negotiated by pharmacy benefit managers. For perspective, Wegovy's net price ranges from $700 to $900 monthly. Zepbound will be available for adults with a body mass index (BMI) of 30 or higher or a BMI of 27 with concurrent weight-related health issues, such as heart disease. Analysts believe that Zepbound's label sets it up to potentially become one of the best-selling drugs in history.
To improve access, Eli Lilly is introducing a savings card program that could reduce Zepbound's cost to as low as $25 for insured patients and $550 for those without coverage. Despite these measures, concerns persist about the drug's affordability, with some healthcare professionals pointing out the potential for exacerbating health inequities due to the high cost.
Shares of Eli Lilly have already risen by 67% in 2023, driven by the anticipated approval of Zepbound for weight loss, making it the most valuable healthcare company on the S&P 500 index (SPY (NYSE:SPY)). The enthusiasm surrounding the drug is reflected in Eli Lilly's share price, which climbed an additional 2% following the FDA's decision. With the industry anticipating the market for weight loss treatments could achieve annual sales of up to $100 billion within a decade, Eli Lilly's Zepbound is poised to be a significant contributor to this growth.
This article was originally published on Quiver Quantitative