Eli Lilly Faces Challenges Amid Record Stock Drop

Eli Lilly's stock plummeted over 12% after Q1 earnings revealed a slight EPS miss due to one-time charges. A new partnership between CVS and rival Novo Nordisk adds competitive pressure, but Lilly still leads the weight-loss drug market.

Date: 08-05-2025

AI Rating: 6

Earnings Overview: Eli Lilly reported a significant 45% increase in revenues, aligning with expectations. However, the adjusted earnings per share (EPS) fell short by $0.12, landing at $3.34, primarily due to a one-time IPR&D charge from the Scorpion Therapeutics acquisition. This should not drastically affect the company's profitability outlook, especially as profitability metrics like performance margin actually improved during the quarter.

Lilly reaffirmed its revenue guidance for the year, hinting at robust operational health despite fluctuations in earnings. This is relevant for investors looking for stability amidst market volatility.

Competitive Landscape: The collaboration between CVS Health and Novo Nordisk poses an immediate threat to Lilly’s market position in weight-loss medications. Effective June 1, CVS will exclusively offer Novo Nordisk’s Wegovy, sidelining Lilly’s Zepbound in CVS's standard formulary. Given CVS's substantial footprint in the pharmacy benefit management sector, this development intensifies competitive pressures significantly.

Despite these challenges, it is worth noting that 67% of surveyed larger employers offer coverage for weight loss drugs, while smaller companies—less likely to cover such treatments—represent a smaller risk to market dynamics. Furthermore, Lilly’s Zepbound remains the superior product in efficacy compared to Wegovy, which could sustain its market share amidst turmoil.

Lilly continues to penetrate the GLP-1 niche, capturing a 53% market share and potentially opening new avenues with its next-generation oral GLP-1, orforglipron. Investors should consider the longer-term prospects alongside immediate setbacks.

Stocks: LLY CVS NVO