Eli Lilly Stock Closes Above $1 Trillion After Climbing $400 Billion in 3 Months

Eli Lilly is riding high this year. Its headquarters in Indianapolis. (AJ Mast/Bloomberg)

Key Points

• Eli Lilly ended Friday with a market capitalization exceeding $1 trillion, becoming the sole drug company to reach this milestone.
• The company’s market capitalization has increased by over $400 billion since early August. Its stock is up more than 35% this year.
• Lilly’s products held 57.9% of the U.S. market for incretin analogues in the third quarter, surpassing rival Novo Nordisk.

And now there are 10 trillion-dollar companies as Eli Lilly joined the thirteen-digit club Friday. After hitting that mark earlier in the day, the pharmaceutical company also closed with a market capitalization of more than $1 trillion for the first time.

Eli Lilly stock, which sells the white-hot obesity blockbuster Zepbound, closed at $1,059.70, up 1.6% for the day. That puts its valuation at $1.002 trillion. The stock traded as high as $1,066.65 shortly before 2 p.m. before falling back slightly.

It’s the only drug company ever to have a $1 trillion capitalization value; the other U.S. companies now worth more than $1 trillion are tech giants and the conglomerate Berkshire Hathaway.

Lilly’s $1 trillion day comes after a remarkable run-up that has added more than $400 billion in market capitalization to the company since early August. The stock is up more than 35% so far this year.

What’s most astonishing about Lilly’s recent performance is that it isn’t the result of any one trial outcome, or positive earnings report.

Instead, it seems to be some combination of an easing of political pressures, a steady growth of its weight-loss market share at the expense of rival Novo Nordisk, and a broader rotation into health stocks as investors get squeamish about the tech sector.

Lilly has long been a Wall Street darling, commanding a far higher earnings multiple than its Big Pharma peers. But the stock has rocketed up since the start of 2023, amid excitement about Zepbound, a potent weight-loss medicine. Lilly shares have returned nearly 200% since the start of 2023.

Though Novo’s competing weight loss drug Wegovy launched years before Zepbound, Lilly has seized the momentum in the market. The company says that in the third quarter of this year, its products held 57.9% of the U.S. market for incretin analogues, the category of drugs that includes Zepbound and Novo’s Wegovy.

What’s more, Lilly’s pipeline looks solid. The company is preparing to launch orforglipron, a weight-loss pill that is highly anticipated, despite some mixed trial data. There’s also a weight-loss drug called retatrutide under development, which could work better than Zepbound, and another drug called eloralintide, also promising, which works differently than the other medicines.

The complex dynamics of the weight-loss market tripped up investors last year, when both Lilly and Novo shares fell sharply in the face of a continuing threat from compounding pharmacies, which were selling legal knockoffs of the two companies’ weight-loss shots. This year, the complexity has come from the Trump administration, which cut a deal with the companies that will allow them access to the Medicare market for their weight-loss shots in return for lower pricing for patients who pay cash for the medicines. So far, investors seem to think Lilly did well in the negotiations.

Health stocks have been outperforming the market since the start of October, though Lilly has been doing even better. Lilly shares are up 37% over that period, while the Health Care Select Sector SPDR Fund is up 10.5%, and the S&P 500 Pharmaceuticals industry group is up 19%. The broader S&P 500 is down 2.3%.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com and Anita Hamilton at anita.hamilton@barrons.com