Eli Lilly and the FDA's Surprising Turn: What's Behind It?

In recent years, Eli Lilly has achieved significant success with its weight loss medications, particularly tirzepatide. Sold under the names Mounjaro for type 2 diabetes and Zepbound for weight loss, these drugs now generate annual revenues of over one billion US dollars. However, the immense demand posed challenges for the company, leading to the FDA placing tirzepatide on a shortage list. This listing occurred two years ago and allowed pharmacies to offer their own versions of the medication, a move that boosted pharmacy sales. Recently, however, the FDA lifted this restriction after Eli Lilly made substantial investments to expand production capacity and ensure market supply. Lilly recently significantly improved production efficiency through more cost-effective manufacturing methods, such as single-dose vials. Nonetheless, there was an unexpected twist: the FDA announced it would reconsider its decision and, in the meantime, allow pharmacists to continue producing tirzepatide. Despite this uncertainty, according to a report by NBC News, Eli Lilly’s products, Mounjaro and Zepbound, remain available. The current situation offers Lilly new opportunities but also presents challenges, particularly if the FDA permanently revises its decision and the shortage listing remains. Even in the worst-case scenario, where tirzepatide remains on the shortage list, Lilly has proven capable of generating significant revenue from these medications. Investors can therefore remain confident, as the revenue opportunities are expected to persist for the foreseeable future.