Eli Lilly’s shares fell by roughly 10% on Thursday after the company downplayed CVS Health’s decision to drop its obesity drug Zepbound from some lists of medicines it covers for reimbursement. Despite this, Lilly CEO Dave Ricks said most customers affected would be smaller employers, which typically do not cover obesity drugs.
CVS’s pharmacy benefit management unit will no longer reimburse for Zepbound starting July 1 but will continue to cover Novo Nordisk’s GLP-1 weight-loss drug Wegovy after negotiating a lower price. This move has raised concerns among investors that it could blunt Lilly’s sales momentum for Zepbound, which has seen its prescription growth surge ahead of Wegovy in recent months.
However, Daniel Barasa, a portfolio manager at Gabelli Funds, said the stock reaction to CVS’s news is overblown, given larger self-insured employers tend to design their own customized lists of drugs for reimbursement. Lilly also reported stronger-than-expected quarterly results, with sales of its diabetes drug Mounjaro exceeding analyst estimates.
Lilly’s market value has surpassed $800 billion, making it the world’s most valuable healthcare company. The company competes with Novo in a growing obesity drug market estimated to reach over $150 billion by 2029. Lilly also posted higher-than-expected quarterly profits, despite lower prices for Zepbound trimming revenue in the quarter.
The U.S. drugmaker noted that demand remained strong for Zepbound, and sales of the drug came in at $2.31 billion for the first quarter. Lilly has been adapting to competition from Novo by expanding its distribution channels and cutting prices for vials of Zepbound.
Source: https://www.reuters.com/business/healthcare-pharmaceuticals/eli-lilly-beats-q1-profit-estimates-strength-diabetes-drug-2025-05-01