This Drug Stock Has Crushed the S&P 500 Over the Last Decade

2 hours ago 2

Reuben Gregg Brewer, The Motley Fool

Sat, April 18, 2026 astatine 4:35 PM CDT 4 min read

Sales of Eli Lilly's (NYSE: LLY) Mounjaro and Zepbound person been thing abbreviated of amazing. The 2 GLP-1 drugs saw income increases of 99% and 175%, respectively, successful 2025. The institution is astatine the forefront of this still-developing cause niche. No wonderment Eli Lilly's banal is up much than 1,100% implicit the past decade, handily beating the S&P 500 index's (SNPINDEX: ^GSPC) beforehand of "just" 230%. Don't unreserved retired and bargain Eli Lilly; determination are immoderate risks you request to see first.

The S&P 500 scale is trading adjacent all-time highs, and its mean price-to-earnings ratio is astir 26x. The mean cause banal has a P/E of 23x. Eli Lilly's P/E ratio is 39x. To beryllium fair, a caller drawdown has pushed the pharmaceutical giant's P/E beneath its 56x five-year average, truthful it is cheaper than it has been. But it inactive remains costly connected an implicit ground and comparative to different cause companies.

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Even aft a sell-off successful Eli Lilly's stock, investors inactive look to person precise precocious expectations for the future. There are immoderate problems to see connected that front. For example, drugs person a constricted clip play of patent protection. Once the patents connected Mounjaro and Zepbound expire, generics are apt to emerge, dramatically reducing Eli Lilly's revenues from these 2 GLP-1 drugs. So adjacent successful the best-case scenario, Eli Lilly's existent dominance successful the weight-loss class volition end.

Even beyond Eli Lilly's 2 GLP-1 drugs, determination are imaginable problems. The pharmaceutical assemblage is highly competitive. For example, Novo Nordisk (NYSE: NVO) bushed Eli Lilly to marketplace with a GLP-1 pill and it has seen worldly request from customers. Pfizer (NYSE: PFE) is moving connected a agelong acting mentation of a GLP-1 weight-loss drug, arsenic well. There's nary warrant that Eli Lilly tin proceed to support its pb successful the accelerated processing weight-loss niche.

Notably, adjacent Eli Lilly recognizes the risks it faces. That's wherefore it has been utilizing the windfall from its GLP-1 occurrence to get companies with promising drugs successful different areas. That's the close happening to do, but there's nary warrant that the drugs Eli Lilly is adding to its pipeline volition cookware retired arsenic hoped. In fact, it isn't astatine each uncommon for drugs to autumn abbreviated of expectations.

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