Eli Lilly

Is $PFE (+1,18 %) a turnaround candidate?

After the hype surrounding the corona vaccines, Pfizer is in crisis: the share price has collapsed, sales are weakening and new blockbusters are a long time coming. But what is the real situation? Is there any hope of a turnaround - or will the shares remain a construction site?

A look at the current situation

Pfizer is in a difficult situation. After peaking during the pandemic, the share price has stabilized at around 25 euros, a far cry

far from the peak values of over 40 euros. Sales in the third quarter of 2024 amounted to USD 17.7 billion - an increase of 31% compared to the previous year. However, excluding the COVID-19 products Paxlovid and Comirnaty, growth remains moderate at 14%. Pfizer is struggling to stabilize its sales in other areas, while older drugs such as Ibrance (-13%) or Xeljanz (-36%) are increasingly losing market share.

The dividend yield of around 6.5 % appears attractive at first glance, but is it sustainable? Pfizer paid out USD 7.1 billion in dividends in the first nine months of the year, while spending on research and development amounted to USD 7.8 billion. The dividend is currently still covered, but is heavily dependent on future growth impetus.

Where is the money currently coming from?

Pfizer continues to generate a large part of its revenue from products that played a key role during the pandemic. The most important sources of revenue in the third quarter of 2024 were

• 1. Paxlovid2.7 billion USD (+ 2.5 billion USD compared to the previous year).
• 2. Comirnaty (COVID-19 vaccine)1.4 billion USD (+9 %).
• 3. Eliquis (anticoagulant): USD 1.6 billion (+9 %).
• 4. Prevnar (pneumococcal vaccine): USD 1.8 billion.
• 5. Vyndaqel (treatment of transthyretin amyloidosis): USD 1.4 billion (+63 %).
• 6. Ibrance (breast cancer treatment): USD 1.1 billion (-13 %).
• 7. Xtandi (prostate cancer): USD 561 million (+28 %).
• 8. Padcev (new cancer therapy): USD 409 million.
• 9. Nurtec ODT/Vydura (migraine): USD 337 million (+45%).
• 10. Abrysvo (RSV vaccine): USD 356 million.

Comparing these figures with the previous year, it is clear that COVID-19 products continue to play a significant role, while other areas need to grow more strongly to fill the gap.

The pipeline: Hope in 108 acts?

With 108 projects in the pipeline, Pfizer has a promising basis, at least on paper. This is broken down as follows:

• Phase 1: 46 projects.
• Phase 2: 28 projects.
• Phase 3: 30 projects.
• Phase 4 (registration): 4 projects.

Products in registration

ADCETRIS (brentuximab vedotin): A therapy for diffuse large B-cell lymphoma (DLBCL). The global market for DLBCL therapies is estimated to be worth around USD 5 billion by 2027.

COVID-19 vaccine (in collaboration with $BNTX (+6,37 %)
): Extension of approval for children aged 5 to 11 years in the USA. The market for COVID-19 vaccines remains significant, particularly with a focus on younger age groups.

COVID-19 vaccine (in collaboration with
$BNTX (+6,37 %)
): Extension of approval for children aged 6 months to 4 years in the USA. Vaccination of this age group is crucial to contain the pandemic.

NGENLA (Somatrogon): Treatment for growth hormone deficiency in adults (in the EU as an orphan drug classified). The market for growth hormone therapies is estimated to be worth around USD 4 billion by 2025.

Although these products offer significant sales potential, it is unlikely that they alone will be sufficient for a complete turnaround of Pfizer. A sustained recovery requires a continuous pipeline of innovative products, successful launches and effective market strategies. However, the products and acquisitions can make an important contribution to the stabilization and future growth of the company.

Blockbuster of the future?

Progress in the areas of oncology, vaccines and innovative drugs such as weight loss products are particularly important. Pfizer is investing heavily in research and development, with a budget of USD 11 to 12 billion for 2024. Some of the most promising projects are

Danugliprone (Phase 2): A GLP-1 agonist for weight loss. But Pfizer is struggling with problems here: The original twice-daily formulation was discontinued due to severe side effects - nausea and vomiting - nausea and vomiting. The sufferer may think with a twinkle in his eye, 'actually works great'. But there must be gentler ways to lose weight. Pfizer is now concentrating on a once-daily dose. Results have not yet been communicated, but should come in 2024. The market for weight loss drugs is huge and could grow to over USD 50 billion by 2030, but the competition is fierce. $NOVO B (-2,54 %) (Wegovy, Ozempic) $LLY (-0,01 %) (Orforglipron) are already leading the way here.

mRNA combivaccines (COVID-19 and influenza - phase 3)This vaccine is in phase 3 and, if successfully approved, could become a sales driver as the market for combined vaccines is estimated at over USD 10 billion.

Oncology therapies (phase 3): Pfizer is working on several cancer therapies, including Talzenna (prostate cancer) and Braftovi/Mektovi (lung cancer). Both are in phase 3 and could generate initial sales from 2025.

Abrysvo (RSV vaccine - Approved)This vaccine is already approved and addresses a market that is expected to grow to over 8 billion USD by 2027.

The challenges: Competition and problems

Despite its promising pipeline, Pfizer faces a number of obstacles. Especially in the area of weight loss drugs, the competition from Novo Nordisk and Eli Lilly is immense. With Semaglutide (Ozempic/Wegovy) and Orforglipron, both companies already have established products or candidates that have performed excellently in clinical trials. Pfizer must make rapid progress here to avoid falling further behind.

Another problem is the dependence on COVID-19 products. While Paxlovid and Comirnaty continue to generate sales in the short term, demand is declining sharply as the pandemic increasingly fades into the background. Without new blockbusters, it will be difficult to compensate for these revenues.

Conclusion: Is Pfizer a turnaround candidate?

The answer is: Yes, but with conditions. With innovative products such as Danuglipron and new cancer therapies, the pipeline certainly offers potential, but Pfizer is under immense pressure. The competition is strong and time is running out - especially in the field of weight loss drugs. The dividend is also only secure in the long term if new products are successfully launched on the market.

Pfizer has the resources to achieve a turnaround, but investors need patience. If the company achieves initial success with its new drugs in 2025 or 2026, the share price could recover. Until then, however, it remains a shaky candidate - with a lot of risk, but also a lot of potential.

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Hello everyone,

The current weakness of $LLY (-0,01 %) and $NOVO B (-2,54 %) seems to me to be exaggerated and unsustainable. What do you think, entry?

Eli Lilly
$LLY (-0,01 %) today announced the opening of an innovation center in Singapore 🇸🇬 worth 31 million dollars.

The center will use artificial intelligence and focus on topics such as sleep quality - Bloomberg.

New buy in $NOVO B (-2,54 %) and $1SXP (-0,53 %) a little $D05 (+0,79 %) out and an ETF liquidated. Novo clearly lagged behind this year$LLY (-0,01 %) Y , partly because it was doing quite well before, but also for other reasons. In addition to my article on diabetes, in which I shed light on the company's capital structure, which I find extremely interesting, I am hoping for further confirmation through new strategic positioning outside the insulin and obesity business. I am of the opinion that the company is excellently positioned to divert the cash flows from the Ozempic business into innovative products and various projects. It would be desirable for the management to further strengthen this course. The team looks extremely promising and the company could potentially develop into a strong pharmaceutical investment.

I assume that if $LLY (-0,01 %) and $NOVO B (-2,54 %) do not follow suit $VKTX (+1,66 %) will become the new market leader.

It could even be that Viking will be the only provider of an effective and well-tolerated weight loss pill for a long time.

Viking is very likely to bring the next two really big blockbuster drugs onto the market. Since the market has been waiting for such blockbusters for a long time, the valuation will be correspondingly high.

Should the share price fall again, take a look at all the GLP-1 pipelines and Viking.

Eli lilly Q3 2024 $LLY (-0,01 %)

Financial performance

• Sales growth: Eli Lilly recorded impressive revenue growth of 42%, excluding the sale of the olanzapine portfolio. This growth was largely driven by the Mounjaro and Zepbound products, with revenue from new products increasing by over $3 billion.
• Sales in the USA: Sales in the US increased by 46%, with volume growth of 35% driven by the success of Zepbound and Mounjaro.

Balance sheet overview

• Debentures: In August 2024, the company issued bonds totaling $4.96 billion to finance acquisitions and support general corporate purposes.

Details of the income statement

• Gross margin: The gross margin increased to 81.0% in the third quarter of 2024, an increase of 0.6 percentage points.
• Operating result: Operating income was $1.526 billion, with an operating margin of 13.3%.
• Earnings per share: Reported earnings per share for the third quarter of 2024 were $1.07, while non-GAAP earnings per share were $1.18.

Cash flow overview

• Debt and credit facilities: The company extended its 364-day credit facility and increased capacity to $5 billion. In addition, the multi-year credit facility was extended by 3 billion dollars.

Key figures and profitability metrics

• Gross margin - OPEX/sales ratio: The non-GAAP ratio increased to 40.0% in the third quarter of 2024.

Segment information

• Product performance: Mounjaro sales amounted to 3.1 billion dollars globally, of which 2.4 billion dollars were in the USA. Verzenio sales increased by 32 %.

Competitive position

• Market share: The company has established a leading position in new patient admissions in markets such as the UK, Germany and Japan.

Management forecasts and comments

• Sales forecast: Revenue guidance has been updated to a range of $45.4 billion to $46 billion for 2024, with projected growth of 50% in the fourth quarter compared to the fourth quarter of 2023.
• Supply and demand: The company plans to accelerate demand activity as supply constraints ease.

Risks and opportunities

• Regulatory and market risks: The company faces risks from exchange rate movements and changes in tax laws that could affect future business.
• Opportunities: Expansion in production and new product launches are expected to drive growth.

Summary of results

Eli Lilly delivered a strong financial performance in the third quarter of 2024, characterized by significant sales growth from new products such as Mounjaro and Zepbound. The company is expanding its manufacturing capacity and has adjusted its sales guidance to reflect continued growth. Despite the risks associated with regulatory changes and market conditions, the strategic investments in research and development and the launch of new products are promising and position the company well for future growth.

Positive aspects

• Sales growth: Eli Lilly reported an impressive 42% increase in revenue, driven by the strong performance of Mounjaro and Zepbound, with new product revenue increasing by over $3 billion.
• Product approvals and pipeline progress: The company achieved several important milestones in its pipeline, including the approval of Ebglyss in the US for atopic dermatitis and Kisunla for Alzheimer's disease in Japan and the UK.
• Expansion of production: Eli Lilly invested nearly $2 billion to expand its manufacturing facilities in Ireland, contributing to a total commitment of over $20 billion since 2020.
• Strong market performance in the US: Sales in the US increased by 46%, with significant volume growth driven by the successes of Mounjaro and Zepbound.
• Positive results from clinical trials: The company announced positive data from the SURMOUNT-1 Phase III study of tirzepatide, which showed a 94% reduction in the risk of type 2 diabetes.

Negative aspects

• Challenges in the supply chain: The company faced supply constraints that impacted the timing of product launches and required careful management of demand and supply.
• Inventory dynamics: There was a mid-single digit percentage decline in channel inventory for Mounjaro and Zepbound, which impacted third quarter sales.
• Legal and regulatory risks: The company is involved in various legal proceedings, including patent disputes and product liability cases, which could impact financial results.
• Tax and currency risks: Changes in tax laws and fluctuations in foreign currencies pose risks to future business operations and financial performance.
• Operating costs: R&D expenditure increased by 13% due to continued investment in early and late stage portfolios, which could increase pressure on margins if not offset by sales growth.

Hello, Would it make sense to convert the credit balance from $LLY (-0,01 %) to $NOVO B (-2,54 %) to shift ?