Eli Lilly: Increasing Uncertainty Rating to High Based on High Variability With New Drug Launches

We are increasing Eli Lilly’s Uncertainty Rating to High from Medium based on increasingly variable outcomes for several key drug launches. Diabetes and weight loss drug Mounjaro is likely to develop into a major new drug, but the cone of uncertainty for the drug is higher, since several variables are affecting the sales potential for the weight loss indication, including level of insurance coverage and pricing. Alzheimer’s drug donanemab holds the potential to become another major new drug, but its outlook also faces a wide range of outcomes, since the market potential could be very large, but the visibility on market uptake is less clear. With Mounjaro and donanemab representing close to half of projected sales by the end of the next 10 years, we believe a High Uncertainty Rating is appropriate. This is more elevated than most big biopharma firms, which tend to have Medium Uncertainty Ratings.