What Happened?
Shares of global pharmaceutical company Eli Lilly (NYSE:LLY) fell 3.5% in the afternoon session after political comments introduced significant uncertainty regarding the future pricing of the company’s weight-loss and diabetes drugs, Zepbound and Mounjaro.
The drop occurred after President Donald Trump suggested that the price for the GLP-1 drug category, which Eli Lilly dominates alongside Novo Nordisk, could soon be "much lower," citing a target price drastically below current list prices. While the administration clarified that formal negotiations under the Inflation Reduction Act (IRA) had not yet concluded for this class of drugs, the stock's reaction suggests some investors were agitated by the rhetoric, which is part of a broader, sustained effort to reduce out-of-pocket expenses for Americans.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Eli Lilly? Access our full analysis report here.
What Is The Market Telling Us
Eli Lilly’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 16 days ago when the stock gained 8.6% after the stock's positive momentum continued as the White House revealed plans to launch a website for consumers to purchase drugs from manufacturers at a discount, providing clarity for the pharmaceutical industry on future pricing policies. The positive sentiment was bolstered by news that competitor Pfizer had already secured a deal to lower some of its U.S. drug prices. Following this, Eli Lilly confirmed it is in "active discussions with the administration to further expand patient access." This development has eased investor concerns about potential government-imposed price controls, which had created uncertainty for the sector. The prospect of reaching favorable agreements is now seen as an opportunity for major drugmakers, leading to a rally across the industry.
Eli Lilly is up 2.3% since the beginning of the year, but at $795.86 per share, it is still trading 14.4% below its 52-week high of $929.72 from March 2025. Investors who bought $1,000 worth of Eli Lilly’s shares 5 years ago would now be looking at an investment worth $5,574.
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