Healthcare major Eli Lilly (NYSE:LLY) plans to invest nearly $2.17 billion in a new plant in Alzey, Germany, according to Reuters. The plans for Lilly’s first major production facility in the country come as companies increasingly look to locate their production facilities closer to the markets being catered to.
Importantly, the new facility will focus on diabetes medicines that can also potentially be used for the treatment of obesity. Demand for Lilly’s diabetes treatment, Mounjaro, has been on the rise. The drug can potentially be used for obesity and was recently cleared in the U.S. and Europe for weight loss.
Lilly’s recent third-quarter results were characterized by an impressive 37% year-over-year jump in its top line led by higher sales of Mounjaro, Verzenio, and Jardiance. Besides Lilly, Novo Nordisk (NYSE:NVO) is also racing to grab a share of the rapidly expanding market for diabetes and obesity with a planned $6 billion expansion of its current manufacturing facilities in Kalundborg, Denmark.
NVO is planning the investment with future demand in mind. Its anti-obesity drug, Wegovy, clocked a 481% increase in sales during the first nine months of 2023. Obesity is on the rise in the U.S. as well as in major global markets, and these pharma giants stand to potentially reap huge rewards for their weight loss treatments over the coming periods.
What is the Target Price for LLY?
Overall, the Street has a Strong Buy consensus rating on Eli Lilly, and the average LLY price target of $645.72 implies a modest 9.85% potential upside in the stock. But that’s after a mega 68% rise in LLY shares over the past year.
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