Pharmaceutical company Eli Lilly (LLY) is seeing its stock soar on Friday thanks to an announcement from the Food and Drug Administration (FDA). The government agency confirmed the end of a shortage of Eli Lilly’s GLP-1 products, including weight loss and diabetes treatments.
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The FDA’s decision is a boon to LLY stock as it stops sales of knockoff versions of its GLP-1 Zepbound and Mounjaro products by compounding pharmacies. Compounders step in when a shortage is announced to legally create generic versions of patent-protected drugs to help keep up with demand. With today’s announcement, they have 60 days to stop selling their GLP-1 copies as Eli Lilly’s patent rights resume.
How This Affects LLY Stock
LLY investors are celebrating today’s FDA news as it protects Eli Lilly’s sales of its GLP-1 drugs. With that comes an 8.38% increase in share price during pre-market trading. Shareholders will also note that LLY stock is up 30.8% year-to-date.
Today’s news also gives Eli Lilly an advantage over rival weight-loss drugmaker Novo Nordisk (NVO). The FDA hasn’t announced an end to shortages of Ozempic and Wegovy, Novo Nordisk’s GLP-1 drugs for diabetes and weight loss.
However, analysts expect the FDA to end the Novo Nordisk shortage soon. Until then, Eli Lilly’s patents for its weight loss drugs will be protected from compounders while Novo Nordisk’s patent protections will remain on hiatus. That means compounders will still be able to make copies of its drugs.
Is LLY Stock a Buy, Sell, or Hold?
Turning to Wall Street, the analysts’ consensus rating for Eli Lilly is Strong Buy based on 16 Buy and two Hold ratings over the last three months. With that comes an average price target of $1,044.71, a high of $1,250, and a low of $885. This represents a potential 37.91% upside for LLY shares.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
