This is the best pharmaceutical stock to invest $1,000 in right now

Elie Lilly (LLY -3.47%) is already a top pharmaceutical stock and there are no signs of it slowing down. With its wildly successful drugs for type 2 diabetes and weight loss still close to beginning their global market penetration, and with a line of follow-up drugs in development right now, shareholders are celebrating could continue for years and years.

This is just one of many arguments why it’s worth investing $1,000 in Eli Lilly today. While an investment of this size won’t make you rich, its value could easily multiply over the next few years. Let’s review some of the factors that contributed to this company’s success and see why it is likely to continue to succeed.

Lilly’s Major Investments in Manufacturing Show It’s Serious About Generating Revenue

One of the main reasons to invest in Eli Lilly stock today is that it is moving very aggressively to capture demand for its recently released drugs, and it is almost impossible to avoid the conclusion that the management predicts massive sales over the coming years.

Take for example its seemingly endless investments in manufacturing. On September 12, Lilly announced that it would allocate an additional $1.8 billion to its budget to build new manufacturing facilities in Ireland. The new spending brings the total that the drugmaker had spent on building its manufacturing capabilities in the United States and the European Union to more than $20 billion over the past four years or so.

Its new facilities and expansion in Ireland are expected to help it meet demand for its highly sought-after drugs, particularly those for weight loss and type 2 diabetes, as well as its recently marketed treatment for diabetes. ‘Alzheimer’s.

Even for a large pharmaceutical company, it may seem a bit early in the commercial life of these drugs to spend billions on increasing production – until you consider the fact that Lilly has sold its drugs so quickly as it eclipsed its own forecasts.

In the second quarter, it had revenue of $11.3 billion, up 36% from a year earlier, and raised its annual revenue forecast for 2024 by $3 billion at the time. of its second quarter report. It now projects minimum annual revenue of $45.4 billion, and expects to be highly profitable throughout this period, with up to $16.60 in earnings per share.

This growth is driven by Zepbound and Mounjaro, which contain the same active ingredient (tirzepatide), but are approved for different indications: obesity and type 2 diabetes, respectively. Until recently, there was a shortage of Zepbound in the United States, and Lilly also began selling single-dose vials of it in late August at a significantly lower list price than its prefilled injector pens. These vials are sold only to patients who pay out of pocket for this expensive medication. This new option should therefore allow even more people to access treatments.

In other words, despite the rapid growth of this drug and the billions spent to boost manufacturing production, there has not yet been an opportunity to see how much revenue tirzepatide can bring in when all eligible consumers on the market can buy it freely.

Meanwhile, Eli Lilly continues its research and development work looking for other indications in which tirzepatide may be effective. The success of these efforts would further expand its potential market and generate even greater sales growth for this blockbuster drug. There aren’t many setups in biopharma stocks that get more bullish than this one.

The stock’s valuation could become a little worrying

No investment is without its drawbacks, and Lilly stock has a few issues that savvy investors should also be aware of. In particular, its valuation, already quite high, could soon rise to the point of becoming inaccessible. Its price-to-earnings (P/E) ratio is currently 113. This doesn’t necessarily imply that the stock will fall, but it could mean that it will have a harder time rising further.

Of course, any drugmaker must also keep an eye on the competition, and in the weight loss space, many companies are currently working to develop their own, potentially more effective drugs.

But for now, it’s fairly certain that Eli Lilly’s profits will continue to grow at a rapid pace, changing shareholders’ calculus for the better. And if its successes continue to pile up and attract market attention, value-minded investors will likely begin to recognize that it’s a no-brainer to buy Eli Lilly stock.