We recently compiled a list of the 13 Best Pharma Dividend Stocks To Buy In 2024. In this article, we are going to take a look at where Eli Lilly and Company (NYSE:LLY) stands against the other pharma dividend stocks.
The pharmaceutical industry in 2024 faced a relatively quiet year, with deal volumes similar to 2023 but lower deal values, reflecting a shift toward smaller, more strategic transactions. Despite challenges such as patent expirations and market uncertainty, innovation remains strong, and there is a better investment environment for biotech. Lower interest rates have also eased capital costs, contributing to increased mergers and acquisitions activity. Biotech IPOs and venture capital investments are seeing a slight recovery, though investment is more concentrated in established companies. However, major pharmaceutical companies face a $300 billion growth gap due to patent expirations, making dealmaking crucial for future growth.
Looking ahead to 2025, EY believes that the pharmaceutical sector is expected to see more deal activity, especially if interest rates remain low. There may be a rise in larger acquisitions to address growth gaps, although smaller, strategic deals are likely to persist. Politically, the US policy environment is shifting with potential impacts on business, including lower corporate taxes and deregulation, but also the possibility of higher tariffs and continued drug pricing reforms. Changes in immigration and leadership within health agencies could also affect the pharmaceutical and biotech industries, with new appointees potentially disrupting the regulatory landscape.
As executives prepare for 2025, drug pricing and access remain their top concerns, according to a Deloitte survey. The survey highlighted that primary concerns include competition from generic drugs and biosimilars and the looming patent cliff, with over $300 billion in sales at risk due to expiring patents by 2030. This has executives expecting a surge in mergers and acquisitions in 2025.
Innovation remains at the forefront as companies look to fill gaps left by expiring patents. However, competition in profitable areas like oncology and immunology is fierce, leading to price pressures even before generics or biosimilars hit the market. On the flip side, the success of GLP-1 receptor agonists is sparking renewed interest in general medicines, with companies racing to tap into the $200 billion market. Additionally, about 20% of companies are adjusting their portfolios to focus on high-potential candidates and better meet market demands. Advanced therapies like cell and gene therapies are also gaining attention, with a shift away from more traditional drugs.
In addition to the competitive landscape, life sciences companies are also keeping a close eye on regulatory changes. In the United States, concerns about the Inflation Reduction Act are growing, while in Europe, shifts in clinical trial regulations could add complexity. As a result, life sciences companies are preparing for a year of both innovation-driven growth and regulatory challenges.
Our Methodology
In this article, we reviewed Insider Monkey’s Q3 2024 database to identify pharmaceutical dividend stocks that hedge funds favored the most. The companies listed below are ranked in ascending order based on the number of hedge fund holders in each firm.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here)
An array of pharmaceutical pills with the company’s logo on the bottle.
Eli Lilly and Company (NYSE:LLY)
Dividend Yield as of December 28: 0.78%
Number of Hedge Fund Holders: 106
Eli Lilly and Company (NYSE:LLY) is a global pharmaceutical company that offers treatments for diabetes, oncology, rheumatoid arthritis, psoriasis, migraines, and more. The company’s main products include Humalog, Trulicity, Alimta, and Taltz. Eli Lilly and Company (NYSE:LLY) also focuses on RNA and DNA-based therapies at its Lilly Seaport Innovation Center.
Eli Lilly and Company (NYSE:LLY)’s revenue grew by 42% in Q3 2024, driven by strong sales of Mounjaro and Zepbound, with US demand continuing to rise. Non-incretin product revenue grew by 17%. The main milestones included the approval of Ebglyss for atopic dermatitis, Kisunla for Alzheimer’s, and positive data from studies on tirzepatide and donanemab. Eli Lilly and Company (NYSE:LLY) also expanded its manufacturing footprint, investing nearly $2 billion in Ireland and committing $4.5 billion to develop the Lilly Medicine Foundry in Indiana. The company returned $1.6 billion to shareholders and saw a 13% increase in R&D expenses. Gross margin improved to 82.2%, and earnings per share rose to $1.18, up from $0.10 in Q3 2023.
The Egyptian Drug Authority has granted approval for EVA Pharma’s insulin glargine injection, developed in collaboration with Eli Lilly and Company (NYSE:LLY). This approval marks an important milestone in their 2022 partnership, which aims to provide affordable insulin to one million people with diabetes in low- and middle-income countries, particularly in Africa. Eli Lilly and Company (NYSE:LLY) supplies the active ingredient at a discounted price and supports EVA Pharma with technology transfer to locally manufacture the insulin. This initiative is part of Eli Lilly’s 30×30 goal, aimed at enhancing healthcare access for 30 million people annually in underserved regions by 2030.
On December 10, Eli Lilly and Company (NYSE:LLY) increased its quarterly dividend by 15.4%, raising it from $1.30 to $1.50 per share. The dividend will be paid on March 10, 2024, to shareholders on record as of February 14.
Eli Lilly and Company (NYSE:LLY) is a favorite pharma stock among hedge funds. 106 Wall Street funds were bullish on Eli Lilly and Company (NYSE:LLY) at the end of Q3 2024, up from 100 funds in the earlier quarter.
Overall LLY ranks 2nd on our list of the best pharma dividend stocks to buy in 2024. While we acknowledge the potential of LLY as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than LLY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.