How Eli Lilly is managing soaring demand for GLP-1s, according to outgoing CFO Anat Ashkenazi

Biotech
Monday, June 17th, 2024 2:37 pm EDT

Over the past year, Eli Lilly has experienced significant growth due to skyrocketing demand for its weight loss and diabetes treatments, particularly Mounjaro and the recently launched Zepbound. Outgoing Chief Financial Officer Anat Ashkenazi, who will become the new CFO of Alphabet on July 31, has been instrumental in managing the revenue surge and investor optimism. Ashkenazi, who has been with Eli Lilly since 2021 after nearly two decades with the company, emphasizes the importance of deep industry understanding to navigate and bring value to the business.

Despite the success, Eli Lilly and its rival Novo Nordisk have faced challenges in meeting the unprecedented demand, resulting in nationwide shortages of their treatments. These treatments are part of a class of drugs called GLP-1 agonists, which mimic gut hormones to suppress appetite and regulate blood sugar. The market for these drugs is expected to reach $100 billion by the end of the decade. To address the supply issues, Eli Lilly has been investing heavily in scaling up manufacturing, reinvesting the revenue and cash flow from product sales into expanding production facilities.

Eli Lilly has made notable progress in enhancing its manufacturing capabilities, although it does not expect to fully meet demand until possibly 2025. The company has several manufacturing sites under construction or ramping up, including locations in North Carolina, Indiana, Ireland, and Germany. Recently, Eli Lilly announced a $5.3 billion investment in its Lebanon, Indiana plant, adding to its extensive manufacturing footprint across the U.S. and Europe. Since 2020, Eli Lilly has spent over $18 billion on building, expanding, and purchasing manufacturing plants.

Another significant barrier Eli Lilly is tackling is the limited insurance coverage for weight loss drugs in the U.S. While some employers and health plans are hesitant to cover GLP-1s due to their high costs, coverage is gradually improving. As of April 1, about 67% of U.S. commercial insurers cover Zepbound. Ashkenazi emphasizes the need for accessible treatments, noting that effective and safe drugs must also be affordable to patients.

Eli Lilly is also advocating for increased coverage for weight loss drugs under Medicare. Currently, Medicare Part D plans can cover obesity treatments if they have additional health benefits beyond weight loss. Eli Lilly is conducting studies on tirzepatide, the active ingredient in Zepbound and Mounjaro, for its effectiveness in treating conditions like obesity-related fatty liver disease, obstructive sleep apnea, chronic kidney disease, and heart failure. The company aims to change the perception of obesity from a lifestyle choice to a chronic disease, ensuring that it is treated and covered by insurance accordingly.

Overall, Ashkenazi’s tenure at Eli Lilly has been marked by strategic investments to meet high demand, efforts to improve insurance coverage, and a commitment to changing societal views on obesity. These initiatives are poised to sustain Eli Lilly’s growth and enhance patient access to vital treatments.

For the full original article on CNBC, please click here: https://www.cnbc.com/2024/06/17/eli-lilly-cfo-anat-ashkenazi-on-managing-soaring-demand-for-glp-1s.html