Why Eli Lilly Stock Tumbled on Thursday
A healthcare stock that's been on quite a run so far this young year, Eli Lilly (NYSE: LLY) took a bit of a pause on Thursday. Its price sagged by nearly 1% on the day, in contrast to the S&P 500 index's gain of nearly that amount, on the back of a media report about the pricing practices of the company and several peers.
Popular drug prices hiked by Eli Lilly and peers
Pharmaceutical companies active on the U.S. market have raised prices on no less than 775 branded medications this year, according to a Wall Street Journal article citing an analysis from drug-pricing research firm 46brooklyn. All told, these medications were lifted by a median 4.5%, although select drugs received raises of 10% or more.
That median figure was well higher than the latest inflation reading, which was 3.4% year over year for last December.
Among the companies and products singled out was Eli Lilly. Not surprisingly the company's medication mentioned in the article was Mounjaro, a popular diabetes drug that was approved for weight loss under a different brand name -- Zepbound -- in November 2023.
Mounjaro's price was increased by 4.5%. Interestingly, the rival diabetes treatment Ozempic from Novo Nordisk received only a 3.5% hike.
Same story, different year
It's normal for pharmaceutical companies to adjust their prices at the start of the year. However, investors might be somewhat concerned that Eli Lilly's move with Mounjaro indicates some lack of confidence in its sales. Personally, I wouldn't take it that way. The medication remains very popular on the market, and the company is making its usual effort to ensure it stays profitable.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
