Although Eli Lilly’s (LLY) stock price has pulled back from its recent high, its core growth logic has not changed. Tirzepatide continues to gain volume, federal Medicare coverage opens up new markets, oral GLP-1 products are penetrating rapidly, and abundant operating cash flow and a diversified pipeline layout all provide support for long-term growth. Short-term concerns about pricing and profit margins are not enough to shake its leading position and growth prospects in the metabolic disease field.
Eli Lilly’s stock price is currently still about 7% below the recent high set in mid-August, even though its flagship metabolic drugs drove 48% revenue growth in the second quarter. Some investors worry that the company’s willingness to sell these drugs at competitive prices will erode profit margins. But this concern is likely exaggerated, and with the stock slightly below its previous level, the shares are clearly worth buying.
Tirzepatide, sold under the brand name Mounjaro for type 2 diabetes and under the brand name Zepbound for obesity, contributed $14.9 billion to Eli Lilly’s $23 billion in second-quarter revenue, up 73% year over year. One concerning point is that Eli Lilly’s global sales volume grew 60% year over year, while actual prices fell 13%. Some use this to argue that if the company continues to cut prices in exchange for more volume, it will ultimately hurt earnings. But management recently raised its 2026 revenue forecast to $85 billion to $87 billion, and there are no signs of earnings pressure.
More importantly, Eli Lilly’s next batch of metabolic drugs could expand its lead over competitor Novo Nordisk. The candidate drug retatrutide uses a weekly injection formulation and targets three different receptors for weight loss. In a phase 3 trial in adults with obesity or overweight, the highest tested dose achieved an average weight loss of 28.3% after 80 weeks of treatment. Management said Eli Lilly will apply for approval in the first quarter of 2027. Another candidate drug, eloralintide, achieved a maximum weight loss of 20.1% in a 48-week phase 2 trial, and Eli Lilly is also testing how it performs in combination with drugs such as tirzepatide. Therefore, even if the company accepts price cuts for its cash cow products, it still has potentially high-revenue new drugs in its pipeline.
Eli Lilly achieved leadership in the GLP-1 market in 2025. Novo Nordisk was the first to bring GLP-1 drugs to market and led the field, but by the end of 2024, Eli Lilly gradually caught up and overtook it early last year. As of the most recent quarterly earnings report, Eli Lilly held a 60% share of the U.S. market, while Novo Nordisk had 38%. These drugs are popular because, in clinical trials and in the real world, they help people struggling with weight lose weight safely and relatively quickly. Injectable GLP-1 drugs are self-administered weekly, while recently approved oral products are taken daily.
Federal Medicare recently began covering GLP-1 drugs. Eli Lilly Chief Executive Officer Dave Ricks said that since Medicare coverage began, 700,000 new elderly patients have started using these drugs, and Eli Lilly has captured 70% of those prescriptions. Separately, according to Reuters, Eli Lilly said 30% of new oral GLP-1 patients in the U.S. market chose Foundayo. These two developments are transformative for Eli Lilly because the weight-loss drug market has reached a key turning point: the arrival of Medicare coverage and the launch of oral weight-loss drugs. Although Novo Nordisk’s oral Wegovy receives more prescriptions than Foundayo, it should be noted that it came to market several months earlier than Eli Lilly’s product, so Eli Lilly’s current data are very encouraging.
In the first half of 2026, Eli Lilly generated $16 billion in operating cash flow. This cash, plus new borrowing, funded pipeline diversification. In the first half of this year alone, Eli Lilly spent more than $13 billion on acquisitions and purchases of investigational drug programs, including the acquisition of a sleep disorder company, and completed three infectious disease acquisitions in July. As of the end of June, its long-term debt was $47.8 billion, and its cash was $9 billion. Therefore, even if the stock price falls further in the near term, the company has abundant growth avenues over the long term, many of them beyond the scope of its currently commercialized drugs. As long as the stock price remains depressed, Eli Lilly shares are worth buying.
