Eli Lilly is strategically navigating the obesity drugs market by exploring various methods to balance demand and supply. Following a recent meeting with the brokerage Truist Securities, new chief financial officer Lucas Montarce shared insights about the company's strategy and future vision both in the short and long term.
Montarce, who rose to the CFO position in September, emphasized that substantial investment is crucial for Eli Lilly to drive growth past 2030. In discussions, the executive highlighted the company's plans to augment the production capacity of obesity drugs, acknowledging that there will always be some tension between the forecasts of supply and demand.
He advised investors that they should not anticipate drastic changes in capacity and expansion since supply limitations complicate short-term demand predictions. Truist Securities commented on the strategic decisions of the company, expressing confidence in Eli Lilly's approach to the obesity segment, asserting they are executing well on their developmental initiatives.
Montarce also stressed the necessity of ongoing investments in innovation as well as research and development to sustain potential growth. He noted that while gross margins for most established pharmaceutical businesses hover between 75% and 80%, major pharmaceutical entities committed to innovation typically experience margins lower than 40%. On a recent Wednesday, Eli Lilly revealed plans to invest $4.5 billion towards the establishment of a new manufacturing and development center in Indiana.
This facility aims to facilitate treatments from preliminary research phases right through to clinical trials, with an anticipated opening in late 2027. In a move to broaden accessibility and satisfy elevated demand, the company recently introduced a more affordable variant of its weight-loss medication, Zepbound, in late August.
Additionally, the firm is actively assessing its experimental obesity treatment, orforglipron, considering this as a crucial strategy to manage competitive pressures within the market, as highlighted by Truist. Montarce emphasized that Eli Lilly is committed to furthering developments within its oncology and immunology sectors.
Looking towards the future, he believes the company is firmly positioned in the right therapeutic areas, with expected growth in its franchises stemming from both internal and external innovations..