Eli Lily continues to dominate the weight loss market, willing to crush any competitor that threatens its dominance. One such move was announced today when the company announced a partnership with telehealth platform Ro to sell its weight-loss drug Zepbound.
Eli Lily primarily generates revenue by selling drugs in four different categories, namely Diabetes, Oncology, Immunology, and Neuroscience. While the company generates a big portion of its revenue from the US, it also has a decent presence in Europe, Japan, and emerging markets. It also generates revenue from royalties and licensing deals for drugs it has co-developed with other research institutions.
It rode the weight loss drug market wave expertly after the success of its diabetes drug Mounjaro and weight loss drug Zepbound, which contains tirzepatide. When tirzepatide was on the FDA’s drugs shortage list, compounding pharmacies could develop their own versions of the drug, which added competition for companies like Eli Lily and Novo Nordisk. While the drug has been removed from the shortage list, Eli Lily isn’t backing down.
Eli Lily was already selling tirzepatide through its online service LilyDirect. Its competitor, Hims & Hers, which makes a compounded version of the medicine, was also selling it through its own telehealth platform. Despite having its own telehealth facility, ELi Lily has now decided to partner with Ro, which is similarly a telehealth company providing direct-to-consumer services, including in the weight loss niche. In many ways, it is quite similar to what Hims & Hers does, which is probably intentional on Eli Lily’s part.
The company will integrate its LilyDirect self-pay channel with Ro’s platform, making it easy for Ro’s customers to order Eli Lily’s weight loss drugs. A Ro-affiliated healthcare services provider will prescribe the drugs to patients looking for one. Consequently, more people looking to take the drug will not move to Ro’s platform, potentially taking away HIMS business, a win-win for both Ro and LLY.
As a result of this development, HIMS has been trading down over 5% during trading hours. The stock is up over 200% this year, but the ride on the back of the weight loss market may well be coming to an end as LLY goes for the kill.
LLY ranks 21st on our latest list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 106 hedge fund portfolios held LLY at the end of the second quarter which was 100 in the previous quarter. While we acknowledge the potential of LLY as a leading healthcare investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as LLY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
