Lilly's Strategic Branding Move For Weight Loss Drug Sets Stage For Long Term Success - Analyst

Wednesday, the FDA approved Eli Lilly And Co's LLY Zepbound (tirzepatide) injection, the first and only obesity treatment. 

Zepbound is expected to be available in the U.S. by the end of the year in six doses at a list price of $1,059.87, which is approximately 20% lower than Novo Nordisk A/S's NVO semaglutide 2.4 mg injection for weight loss (Wegovy and Ozempic). 

BMO Capital writes the obesity opportunity has unprecedented potential in the U.S. markets and beyond and is expected to reach $70 billion /$100 billion (U.S./worldwide) revenues by 2035. 

Until additional approvals reach the market as injectables or oral options, most of the market share is there for Zepbound, given superior efficacy and tolerability vs. Wegovy. 

Lilly's dual branding of tirzepatide as Mounjaro for Type 2 Diabetes (T2D) and Zepbound for weight management is a strategic move for long-term competitiveness. This approach offers flexibility in payer discussions and allows for unique marketing strategies and pricing dynamics. 

Beyond compound patents, incorporating drug-device patents becomes crucial for effective lifecycle management, adding complexity to the competitive landscape and potential hurdles for generic market entry. 

By adeptly leveraging both types of patents, Lilly strategically maneuvers through the intricacies of the pharmaceutical market, ensuring a well-rounded approach to maintaining its competitive advantage.

Truist writes that Zepbound's list price should support commercial potential. 

The analyst remains bullish on Zepbound/Mounjaro and remains differentiated versus the Street. Models peak global Zep/Mounj sales of $44 billion versus consensus of $22 billion.

Truist says Zepbound is differentiated on data and safety profile that should allow it to take significant market share in the obesity market, which could be up to 40% of the U.S. population.

Price Action: LLY shares are down 3.89% at $594.88 on the last check Thursday.