Eli Lilly Reports Strong Second Quarter Results
Eli Lilly and Company has recently announced impressive second-quarter results, largely thanks to significant sales in weight loss and diabetes medications. These results surpassed both revenue and earnings estimates, leading the drugmaker to revise its fiscal year projections upward.
Interestingly, despite this robust performance, Eli Lilly’s stocks experienced a 14% drop after disappointing data relating to its weight loss pill. This decline somewhat overshadowed the company’s strong second-quarter achievements. For investors considering a buy-in, there are several ETFs with substantial exposure to major pharmaceutical firms. Some notable mentions include Ishares US Pharmaceuticals ETF, Vaneck Vectors Pharmaceutical ETF, Horizon Kinetics Medical ETF, Round Hill GLP-1 & Weight Loss ETF, and Harbor Healthcare ETF.
The company reported an earnings per share of $6.31, which notably exceeded the Zacks Consensus estimate of $5.61. This marked a 61% increase compared to the same period the previous year. Additionally, revenue jumped by 38% to $15.56 billion, surpassing expectations of $14.75 billion. Sales growth year-over-year can be attributed primarily to rising demand for Zepbound and Mounjaro.
Sales for the diabetes medication Mounjaro rose by 68% to reach $5.2 billion, while revenues from breast cancer drug Verzenio increased by 12% to $1.5 billion. The weight loss drug Zepbound saw a remarkable 172% rise, with sales around $1.24 billion.
Eli Lilly has raised its overall financial expectations for the year, adjusting its revenue guidance from between $56-61 billion to $62 billion. Similarly, the earnings per share estimate was updated from $20.78 to a range of $21.75-23.00.
In terms of their experimental weight loss pill, Orforglipron, later-stage data revealed that patients taking the highest dose lost around 12% of their body weight, approximately 27.3 pounds, over 72 weeks. By comparison, participants using Novo Nordisk’s Wegovy lost about 15% in late-stage trials over a similar timeline.
The common side effects noted were nausea, vomiting, and diarrhea, occurring at rates similar to existing GLP-1 drugs. However, Eli Lilly emphasized no liver toxicity was observed, which is a common concern with other oral weight loss candidates.
Analysts at Bloomberg Intelligence have suggested that by 2030, this may raise questions about Wall Street’s $12 billion sales forecast. Eli Lilly aims for regulatory approval of Orforglipron by 2025 and anticipates a global launch in 2026.
Ishares US Pharmaceuticals ETF (IHE)
The Ishares US Pharmaceuticals ETF tracks 36 companies involved in the production of prescription or over-the-counter medications, following the Dow Jones US Select Pharmaceuticals Index. Eli Lilly holds the second-largest share at 20.9%. This ETF has $555.5 million in assets under management (AUM) and charges 38 basis points in fees. It sees a low trading volume of about 35,000 shares per day and carries a Zacks ETF rank of #3, indicating a hold with a high-risk outlook.
Vaneck Vectors Pharmaceutical ETF (PPH)
The Vaneck Vectors Pharmaceutical ETF follows the MVIS Pharmaceutical 25 index, focusing on companies tied to pharmaceuticals, including those in research and development. Eli Lilly holds the top position in this ETF, comprising 16.3% of its assets. The fund has $498.7 million in assets and trades around 465,000 shares daily, charging 36 basis points in annual fees and also holding a Zacks ETF rank of #3 with a medium-risk outlook.
Horizon Kinetics Medical ETF (MEDX)
This actively managed ETF targets patented first-line drugs and biotechnology, focusing on products with potential high margins and significant market barriers. Eli Lilly is the largest holding at 13.3% of its portfolio. The Horizon Kinetics Medical ETF has assets totaling $16.7 million and charges annual fees of 85 basis points while trading an average of 3,000 shares daily.
Round Hill GLP-1 & Weight Loss ETF (Ozem)
The Round Hill GLP-1 & Weight Loss ETF is recognized as the world’s first dedicated to GLP-1 drugs. It holds 23 key positions, with Eli Lilly being the largest at 14.29%. The fund has accumulated $31.6 million in assets, charges 59 basis points annually, and sees an average daily trading volume of about 20,000 shares.
Harbor Healthcare ETF (MEDI)
Managed by Westfield Capital, the Harbor Healthcare ETF invests in companies primarily engaged in healthcare-related research, development, or production. Eli Lilly holds a meaningful position here as well, capturing 14.5% of the fund. The ETF has an asset base of $16.6 million and trades about 2,000 shares daily, with an annual fee of 80 basis points.
