Eli Lilly: Increasing GLP-1 Market Share Assumptions, Leading to a Fair Value Estimate Increase

We are raising our Eli Lilly fair value estimate to $450 from $368 after updating our long-term GLP-1 model to include wider use of and greater adherence to these cardiometabolic drugs. We have increased our assumptions for overall biopharma GLP-1 sales in 2031 to nearly $170 billion across diabetes ($50 billion), obesity ($85 billion), and overweight ($35 billion). This includes nearly $140 billion in sales from big biopharma firms Novo Nordisk ($65 billion), Eli Lilly ($65 billion), Pfizer ($4 billion), and Amgen ($3 billion), which is higher than our prior estimate of just over $100 billion. Overall, we assume a greater proportion of patients will receive (and stay compliant with) treatment, including overweight (lower BMI) patients, albeit with more competition and at a lower price. We now think more than 25% of obese Americans and 15% of overweight Americans will receive treatment in 10 years, with the vast majority receiving branded GLP-1 therapies. We think U.S. prices could fall substantially as volumes increase (in line with payer contracts) and as new entrants launch (beginning in 2026-27), with average net prices falling from roughly $8,000 annually to $3,000 in 10 years.