Eli Lilly is vaccinating itself from competition

Eli Lilly may be winning the GLP-1 battle, but it’s turning its attention back to the broader pharmaceutical war.

Today, the pharma giant announced it agreed to acquire three vaccine makers for roughly $4 billion in total:

• Curevo is creating a shingles vaccine with fewer side effects than similar shots on the market. Eli Lilly is buying the company for up to $1.5 billion.
• LimmaTech is working to develop vaccines for bacterial pathogens, including some STIs. Eli Lilly agreed to pay $780 million for the biotech company.
• The Vaccine Company (B- for name creativity) is developing a vaccine to protect against the Epstein-Barr virus. Eli Lilly is paying $1.55 billion for the firm.

Eli Lilly became the first healthcare company to hit a $1 trillion market cap late last year, thanks to the booming success of its cash cow GLP-1 drugs Zepbound and Mounjaro. The company commanded 60% of the US obesity drug market in Q1, beating its main rival Novo Nordisk, which owns 39.4% of the market.

But as we know, the only thing harder than getting to the top is staying there. That’s why Eli Lilly is using its weight loss windfall to go on a shopping spree to build its empire on more than just GLP-1 profits: In addition to today’s acquisitions, it recently agreed to buy several companies developing treatments for cancer, autoimmune diseases, and sleep disorders.

Fun fact: The foray into immunizations will be a kind of homecoming for Eli Lilly, which was the first to distribute the original polio vaccine.

The patent cliff is coming for big pharma

Despite the fierce competition now, giants like Eli Lilly and Novo may look back fondly on these days as they brace themselves for a looming existential threat.

Over the next two years, roughly $180 billion in annual drug revenue across the pharmaceutical industry is going to lose patent protection. That means competitors can launch generic versions of super-popular drugs, seriously cutting into a company’s profits. Today’s acquisitions may help Eli Lilly go a long way to protecting its bottom line as it looks to get its hands on promising new drugs.

Then again, Eli Lilly may be better prepared than competitors to handle the incoming patent cliff, given its biggest growth engine (GLP-1 drugs) are relatively new, and their patents won’t expire for another decade. It may not be a long-term cure, but relying only on GLP-1 drugs is one lucrative band-aid.—LB