Eli Lilly’s Growth Trajectory Bolstered by Landmark Government Agreement

A pivotal agreement with the U.S. government has positioned Eli Lilly for significant expansion. The deal ensures that Medicare will cover the costs of the company's weight-loss medications, potentially granting access for approximately 40 million Americans. This development comes as the pharmaceutical giant aggressively scales its production capabilities amid intensifying competition in the multi-billion dollar market for injectable weight-loss treatments.

The company's recent quarterly results highlight its powerful momentum. For Q3 2025, revenue surged 54% to $17.6 billion. This growth is primarily driven by the GLP-1 drugs Mounjaro and Zepbound, which collectively surpassed the $10 billion mark for the first time, accounting for more than half of the firm's total revenue.

Eli Lilly's operating margin expanded to a notable 48.3%. Earnings per share significantly exceeded expectations, coming in at $7.02 against forecasts of $6.42. Furthermore, the board approved an increase in the quarterly dividend to $1.73 per share.

Market sentiment remains strongly positive. An average rating of "Strong Buy" from 42 analysts accompanies a median price target of $1,145. Citigroup analysts are the most bullish, seeing potential for the stock to reach $1,500. The company's robust market position, high profitability, and promising drug pipeline are cited as key factors supporting its continued dominance in the metabolic medicine sector.

Should investors sell immediately? Or is it worth buying Eli Lilly?

Strategic Moves in a Competitive Landscape

The competitive environment is evolving rapidly. In December, Novo Nordisk secured FDA approval for an oral version of its blockbuster drug Wegovy, a major milestone. Eli Lilly is countering with its own candidate, Orforglipron, a tablet designed for weight maintenance. Regulatory submissions are complete, with a decision from authorities anticipated in the first quarter of 2026.

Industry observers note that a shift from injectables to pills could lower the barrier to entry for patients, thereby expanding the total addressable market. To meet the anticipated surge in demand, Eli Lilly is channeling billions of dollars into constructing new manufacturing facilities worldwide.

Potential Vulnerabilities and Challenges

Despite the strong outlook, certain risks warrant attention. The company's heavy reliance on GLP-1 medications, which now constitute half of all revenue, represents a concentration risk. Additionally, Eli Lilly faces ongoing legal challenges, including a RICO lawsuit related to its diabetes medication, Actos.

The combination of the landmark Medicare agreement, stellar financials, and strategic investments in next-generation treatments and capacity paints a picture of a company solidifying its leadership. However, its ability to navigate competitive, regulatory, and legal hurdles will be crucial for sustaining its growth narrative.