We recently compiled a list of the 10 Best Cancer Stocks To Buy Now. In this article, we are going to take a look at where Eli Lilly and Company (NYSE:LLY) stands against the other cancer stocks.
Global Oncology Market Overview and Drug Shortages
In 2022, the global oncology market was valued at approximately $203.42 billion and is expected to reach over $470.61 billion by 2032, growing at a compound annual growth rate (CAGR) of 8.8% from 2023 to 2032. The market for cancer drugs alone was estimated at $147 billion in 2022 and is forecasted to exceed $300 billion by 2032. In 2020, approximately 19.3 million new cancer cases and about 10 million cancer-related deaths were recorded worldwide. By 2040, new cancer cases are expected to increase by 47%. The U.S. oncology market is a significant segment of the global market. Cancer medicine spending in the U.S. was a large part of the $223 billion spent globally on cancer medicines in 2023.
The picture of oncology is gradually changing, and companies are progressively working on the further discovery of the variants aimed at developing new treatments that can increase the chances of recovery for a wider population of patients. Thus, it is possible to note that the availability and consumption of these new cancer medications differ greatly around the globe. An analysis of clinical trials for oncology conducted in 2022 shows that clinical trial activity is steadily on the rise, 22% higher than in the baseline year of 2018, as reflected by IQVIA. In the last one-year period, a global one percent increment in cancer patients has been observed, and across five years, an overall five percent increase in patients undergoing cancer treatment is quite evident. Future predictions show that cancer medications will cost $375 billion by 2027, while the total global expenditure in the year 2022 will be $196 billion. Currently, the oncology pipeline is growing exceptionally fast with over 2,000 products being in the pipeline. Of these products, 71% are being created by high-growth biopharmaceutical firms of moderate size only. These companies have further scaled up their funding for the advancement of cancer treatment solutions from 51% in 2017. Globally, 237 new active substances for cancer have been launched in the market over the last 20 years and about 115 over the last five years. NAS has flown 78 times in the last five years, and 189 times overall within the last twenty years in the United States.
Thus, the US FDA is thinking of allowing the temporary import of chemotherapy drugs from manufacturers that do not have clearance in the United States due to a shortage of over a dozen cancer medications. This step has been deemed necessary to lessen the burden of paradoxical inflation on the hospitals especially regarding crucial drugs such as cisplatin and carboplatin that are vital in combating cancer. Thus, WHO has identified these drugs as essential in primary health care. Because of such problems, hospitals have had to adjust the usage by lowering the delivered doses and serving the most needy patients. Dr. Abdul Rafeh Naqash of the Stephenson Cancer Center at the University of Oklahoma also affirmed it.
“The lawmakers in the country need to understand that this is a big problem at this point, where unless something changes in the next few weeks, this can lead to a big national emergency from a patient and health care standpoint.”
The shortages of cisplatin and carboplatin stem from a temporary production halt at an Intas Pharmaceuticals facility in India. Dr. Karen Knudsen, CEO of the American Cancer Society, highlighted that these shortages reflect ongoing economic issues in the generic drug market. She also mentioned that the demand for these drugs is expected to rise in the coming years due to an aging population, as older individuals have a higher risk of cancer.
Our Methodology
Our methodology for identifying the best cancer stocks by sifting through ETFs and online rankings. We compiled an initial list of companies with a market capitalization exceeding $1 billion. From that, we selected the 10 stocks that were the most widely held by hedge funds, as of Q2 2024. The stocks are sorted in ascending order of the number of hedge funds that have positions in them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An array of pharmaceutical pills with the company’s logo on the bottle.
Eli Lilly and Company (NYSE:LLY)
Hedge Fund Holdings: 100
Eli Lilly and Company (NYSE:LLY) has become a strong player in the oncology market with a diverse portfolio of cancer treatments, combining traditional drugs with advanced biotechnology. Eli Lilly’s $8 billion acquisition of Loxo Oncology in 2019 significantly enhanced its cancer portfolio with promising candidates like LOXO-292, a first-in-class RET inhibitor for certain lung and thyroid cancers, and LOXO-305, an oral BTK inhibitor targeting B-cell leukemias and lymphomas. These additions are poised to boost Lilly’s future revenue and market share in oncology.
Eli Lilly and Company (NYSE:LLY)’s growing oncology portfolio, bolstered by the $1.4 billion acquisition of Point Biopharma, strengthens its position in radioligand therapies for targeted cancer treatments. Additionally, the success of Lilly’s diabetes drug Mounjaro (tirzepatide) in treating obesity could lead to expanded uses and significant revenue growth.
In Q2 2024, Eli Lilly and Company (NYSE:LLY) reported strong financial results with $9.5 billion in revenue, a 28% year-over-year increase, and a 96% rise in EPS to $2.11. This growth was fueled by Mounjaro and Zepbound, which generated $2.9 billion in sales. Lilly’s gross margin improved to 78%, and operating cash flow reached $2.3 billion. With the global GLP-1 agonist market projected to hit $50 billion, Lilly’s products are well-positioned to capture a significant share. Additionally, Lilly’s oncology pipeline and the FDA approval of donanemab for Alzheimer’s offer future growth opportunities.
In Q2 2024, there were 100 hedge fund holders in the company with Fisher Asset Management being the largest fund with 4,888,710 worth $4,426,141,743. The stock holds a Strong Buy rating based on 19 Wall Street analysts. The average price target is $1,042.24, with a high of $1,150.00 and a low of $856.00, representing a 10.08% increase from the last price of $946.80.
Overall LLY ranks 3rd on our list of the best cancer stocks to buy. While we acknowledge the potential of LLY as an investment, our conviction lies in the belief that 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 more promising than LLY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.