Is Eli Lilly a Millionaire Maker?

Shares of Eli Lilly (NYSE: LLY) have surged higher due to the success of its blockbuster GLP-1 medications, Mounjaro and Zepbound. Right now, it seems like these two drugs have the potential to change the face of healthcare, given the impact that being overweight can have on consumer health outcomes. But things are always changing in the healthcare sector.

Will buying Lilly stock today help turn you into a millionaire? A lot will have to go right from here for that to happen. Here's what you need to know.

It's up, up, and away for Eli Lilly

Over the past year, Eli Lilly has seen its shares rise by a huge 43%. By comparison, the S&P 500 index is up 12% and the average drug stock has risen 14%. Over the past three years, the pharmaceutical giant's stock has rallied nearly 200%; over the past five years, its shares have risen by over 600%. This is great news if you bought the stock then, but not so great news if you're considering buying it today.

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After such a significant price advance, Lilly's valuation seems a bit inflated. Its price-to-sales ratio and price-to-book-value ratio are both above their five-year averages. The price-to-earnings (P/E) ratio is slightly below its five-year average, but at 52 the P/E is objectively high. It's also far above the average drug stock P/E of just over 10, using SPDR S&P Pharmaceuticals ETF as an industry proxy.

If you buy Eli Lilly today, you must go in understanding that a lot of good news has already been priced into the shares. Value investors will probably want to stay away, but more aggressive growth investors might still be intrigued. That said, given the valuation, you need to expect the good news to continue rolling in.

Why are investors so enamored with Eli Lilly?

The major story about Lilly involves its GLP-1 medications, Mounjaro (sold for type 2 diabetes) and Zepbound (sold for weight loss). In the third quarter of 2025, sales of Mounjaro rose 94% year over year; Zepbound's sales rose even more, going from roughly $3 billion to over $9 billion. Together, these two drugs now account for more than 50% of Eli Lilly's sales.

The growth is impressive, but it's also increasing Lilly's reliance on just two products. While it's true that the patents on both drugs have years to run, and the company is working on variants that could extend the time until either faces a patent cliff, this isn't the only variable investors need to worry about.

For example, there are other drugmakers looking to bring out weight loss medications. If one of those proves to be more desirable for some reason, Eli Lilly's dominance in the weight loss drug niche could be compromised. Note that Lilly already unseated competitor Novo Nordisk, which was actually first to market with a GLP-1 medication. A similar thing could happen to Eli Lilly itself.

Additionally, other changes are taking shape in the drug market. For example, Lilly recently inked a deal with the U.S. government to offer its weight loss medications (including one not yet approved) at lower prices. That potentially opens the market up to more customers, but it also suggests that each drug could be less profitable on a per-dose basis. It isn't entirely clear what this change will do to the income statement over the long term.

Priced for near perfection

There is a lot of good news right now for Eli Lilly, but investors are already aware of it. The stock is trading near its 52-week highs. After such a significant price increase in recent years, investors who buy today, thinking that the stock is a millionaire maker, need to tread with caution. If anything goes wrong with Lilly's leadership in weight loss drugs, which has pushed its shares higher, the stock could fall hard and fast.

While Eli Lilly isn't a bad company, it is an expensive stock that most investors will likely want to treat with caution.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.