Eli Lilly’s latest earnings and trial results offered plenty to celebrate. Its orforglipron pill helped participants shed an average of 12.4 per cent of body weight, while preliminary data hinted at broader health benefits.
Revenues soared, guidance was raised, and the outlook looked strong.
Yet investors severely punished America’s most valuable pharma stock. Shares sank 14 per cent, the steepest one-day drop in 25 years.
The culprit? Side effects, notably nausea and vomiting, and weight loss outcomes that were slightly below the lofty expectations built into Lilly’s valuation. In other words, perfection was priced in; anything less provoked panic.
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It illustrates the ferocity of the race in obesity drugs. Shares in Denmark’s Novo Nordisk, the pioneer with its injectable Ozempic, have lost two-thirds of their value as rivals nibble at its market.
Weight-loss pills are the next frontier: easier to manufacture, distribute and more convenient for patients. But investors’ appetite for blockbuster breakthroughs leaves little tolerance for anything short of spectacular.
[ Eli Lilly obesity pill disappoints in trial, sending shares down 14%Opens in new window ]
Lilly is still worth over $500 billion, but its market capitalisation has shed almost a third in the past year. With competition intensifying, it’s another reminder that valuations in weight-loss drugs may be losing weight of their own.
