Two drugs make up nearly two-thirds of Eli Lilly‘s (NYSE: LLY) top line, generating around $12.8 billion in revenues in the first quarter of 2026. The two drugs, Mounjaro and Zepbound, are growing strongly as well, with sales up 125% and 80% year over year, respectively, in the first quarter. So why should investors care that Eli Lilly just spent $3.8 billion to buy three vaccine-focused companies?
The market gets myopically focused at times
To make the Mounjaro and Zepbound story even more interesting, those two medications are both GLP-1 weight-loss drugs. This is a hot new category in the pharmaceutical sector where Eli Lilly is currently the category leader. Essentially, the stock increasingly looks like a one-tick pony, and investors are happy about it, noting that the price-to-earnings ratio is a lofty 39x. The average pharmaceutical stock has a P/E of around 24x.
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
The $3.8 billion Eli Lilly is spending to buy Curevo, LimmaTech Biologics AG, and Vaccine Company will quickly build its presence in the infectious disease space. Which, for now, will be inconsequential to its business. In the near term, investors will be watching Mounjaro, Zepbound, and the company’s newly released GLP-1 pill, Foundayo. But the big story that investors may be missing is important.
Eli Lilly knows the drug business well enough to prepare ahead
The company’s GLP-1 portfolio is an important story, but it is one that comes with an end date. That’s just how the pharmaceutical industry works, since drugs have time-limited patent protection. Eli Lilly knows that the windfall it is benefiting from right now won’t last forever. Even if investors aren’t thinking a decade ahead, Eli Lilly is.
This is why building an infectious disease business is so important today. While it looks like a sideline compared to GLP-1 drugs, it is basically Eli Lilly taking advantage of today’s success to build a stronger business over the long term. While there’s no way to know if any of the three vaccine-focused businesses it is buying will turn into big winners, it is 100% certain that today’s GLP-1 success will, at some point, fade. Putting another iron in the fire with this vaccine investment is simply good financial stewardship.
Eli Lilly is expensive and focused on staying an industry leader
While value investors won’t like Eli Lilly, growth-oriented investors will likely be attracted to it. The GLP-1 story is the core reason to buy, including new types of GLP-1 drugs the company has in the works that may be even more effective than its current offerings. However, management’s clear intention to leverage its GLP-1 success to create a more diverse business is probably just as important, if not more so. It is decisions like this that lead to sustained success over the long term in the drug sector.
