Forget Zepbound: Eli Lilly Has Its Next Billion-Dollar Weight Loss Drug

Eli Lilly (NYSE: LLY) has been growing its sales at a good clip over the past year. This is partly thanks to Zepbound, a weight loss medicine that's already generating more than $1 billion in quarterly sales, although it was approved only in late 2023.

Zepbound's prospects still look bright, but some recent developments point to another weight loss drug that could become yet another powerful growth driver for Lilly. Let's look deeper into the pharmaceutical giant's latest clinical win and what it could mean for investors.

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Eli Lilly breaks new ground -- again

The active ingredient in Zepbound is tirzepatide, the first dual GLP-1/GIP agonist to earn approval from the U.S. Food and Drug Administration. Like its biggest rival on the market, Wegovy, Zepbound is administered via subcutaneous injection once a week.

However, some patients don't like to poke needles into their skin and would prefer an oral pill instead, even if they have to take it daily. That's why many drugmakers have been looking to develop an effective oral weight loss option, and Eli Lilly might have just done it.

In a phase 3 study, orforglipron, a once-daily weight management candidate, delivered excellent results in patients with type 2 diabetes. The highest dose of the therapy led to a mean weight loss of 7.9% in the trial, along with a 1.5% decrease in A1C levels over 40 weeks. As Lilly pointed out, orforglipron's performance was consistent with that of injectable GLP-1 medicines.

There are many reasons to buy

Since orforglipron is an oral pill, it will be easier (and cheaper) to manufacture in large quantities and launch in markets worldwide. That would be a meaningful advantage even if companies weren't dealing with tariff-related expenses that could increase their manufacturing costs. And since orforglipron's efficacy is consistent with that of existing injected medicines, it should capture a decent share of the market. So we can expect orforglipron to become an important part of Eli Lilly's lineup.

However, there are plenty of other reasons to invest in the stock. Lilly has outperformed the market in recent years due to its progress in diabetes and weight loss, while some of its older products continue to perform exceptionally well.

Consider Verzenio, a cancer drug. Last year, its sales soared by 37% year over year to $5.3 billion. Taltz, Lilly's immunosuppressant, reported revenue of $3.3 billion last year, 18% higher than the year-ago period. Eli Lilly isn't just a diabetes or a weight loss company. These products -- and some of the newer approvals the company has earned -- show that.

One of its more impressive achievements is the launch of Kisunla, a therapy for Alzheimer's disease (AD) -- an area that earned the nickname of a "graveyard" for investigational medicines, considering the large number of clinical failures. However, Lilly succeeded where the overwhelming majority of drugmakers failed, and Kisunla should be an important growth driver for a while.

Beyond any single medicine, though, Eli Lilly's greatest strength is proving to be its innovative abilities. Whether it's in diabetes, weight loss, Alzheimer's disease, immunology, or oncology, the pharmaceutical leader has had significant clinical and regulatory wins in recent years, adding several blockbusters -- or future blockbusters -- to its lineup. That's why revenue and earnings have recently grown rapidly, and it should maintain that pace:

LLY Revenue (Annual) data by YCharts.

Additionally, Lilly is an excellent dividend-paying stock. Its forward yield of 0.7% doesn't look particularly attractive -- the average for the S&P 500 is 1.3%. However, the company has increased its dividend by 200% in the past decade. And with a conservative payout ratio of 44%, it has room to increase its dividend even further.

Eli Lilly's shares jumped on the orforglipron news, and are now in the green for the year. But there's plenty of upside left for the stock, for those willing to hold onto its shares through volatility.

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Prosper Junior Bakiny has positions in Eli Lilly. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.