LLY: Upcoming Drug Launches And Global Expansion Will Shape Future Outlook

Key Takeaways

• Rapid growth in obesity and diabetes treatments, alongside global manufacturing expansion, is driving robust revenue and market reach.
  
• Innovation in neurodegenerative and specialty drugs, combined with digital platforms, ensures strong future opportunities and sustained margin improvement.
  
• Reliance on a narrow drug portfolio and exposure to regulatory, pricing, and reimbursement pressures threaten margin stability, revenue growth, and long-term market potential.

Catalysts

Eli Lilly and Company discovers, develops, and markets human pharmaceuticals in the United States, Europe, China, Japan, and internationally.

• Strong volume and revenue growth in obesity and diabetes treatments (notably Mounjaro and Zepbound) is supported by the global rise in chronic diseases and expanding access in emerging markets, with management highlighting both robust international launches and substantial production capacity increases; this is likely to drive continued revenue and earnings growth.
  
• Advancements in research and development, particularly in neurodegenerative diseases (e.g., Alzheimer's with Kisunla and donanemab), and a deep clinical pipeline with multiple late-stage readouts, position Eli Lilly to capture future multi-billion dollar market opportunities and support long-term revenue and margin expansion.
  
• The company is leveraging digital health and direct-to-consumer channels (e.g., LillyDirect), enhancing access and pricing flexibility, which should further broaden market reach and support top-line growth while strengthening Lilly's position as healthcare systems evolve.
  
• Global manufacturing expansion and investment in new facilities are ramping up production to meet increasing demand for incretin and specialty therapies, supporting sustained gross margin improvement and enabling revenue growth to outpace cost inflation.
  
• Ongoing innovation in high-value specialty drugs (including next-gen oral and injectable GLP-1, new indications, and precision therapies) and prudent capital allocation (evidenced by raised EPS guidance, high free cash flow, and ongoing buybacks/dividends) underpin expectations of long-term earnings and margin growth.

Eli Lilly Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Eli Lilly's revenue will grow by 18.7% annually over the next 3 years.
• Analysts assume that profit margins will increase from 25.9% today to 38.4% in 3 years time.
• Analysts expect earnings to reach $34.2 billion (and earnings per share of $37.98) by about September 2028, up from $13.8 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $28.0 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 28.3x on those 2028 earnings, down from 48.8x today. This future PE is greater than the current PE for the US Pharmaceuticals industry at 19.0x.
• Analysts expect the number of shares outstanding to decline by 0.18% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.

Eli Lilly Future Earnings Per Share Growth

Risks

• Increasing regulatory and policy-driven pricing pressure in the U.S. and Europe, such as potential drug price controls, negotiation mandates, and calls for net price parity between regions, could erode Lilly's pricing power and gross/net margins over time.
  
• Heavy reliance on key blockbuster drugs (Mounjaro, Zepbound, Trulicity, and upcoming orforglipron) exposes Lilly to risks from patent expirations, biosimilar/generic competition, and formulary exclusions (e.g., CVS's decision to exclude Zepbound), threatening future revenue growth and stability.
  
• Expanding R&D pipeline investments drive earnings potential but also entail risks of high clinical trial costs, the possibility of late-stage failures, and overconcentration in a few therapeutic areas (notably cardiometabolic and obesity), potentially leading to revenue volatility or under-diversification.
  
• Rising competitive threats, including generic or compounded versions of GLP-1s (e.g., Canadian generic semaglutide and off-market compounders in the U.S.), risk driving down market share, volumes, and pricing in cash-pay and insurance channels, impacting both revenues and net margins.
  
• Employer and payer resistance to broader anti-obesity drug reimbursement, flat or slow-growing employer coverage opt-ins, and uncertain Medicare/Medicaid policy evolution could cap the total addressable market and limit long-term U.S. revenue and earnings growth, despite robust product demand.

Valuation

• The analysts have a consensus price target of $891.615 for Eli Lilly based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $1190.0, and the most bearish reporting a price target of just $650.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $89.1 billion, earnings will come to $34.2 billion, and it would be trading on a PE ratio of 28.3x, assuming you use a discount rate of 6.8%.
• Given the current share price of $750.61, the analyst price target of $891.62 is 15.8% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.