With Eli Lilly (NYSE:LLY) on top of the world thanks to its advances in weight loss drugs and diabetes treatments like Mounjaro, it’s easy to see why some less-than-scrupulous operations would try to piggyback on those gains. In fact, reports note, Eli Lilly is taking aim at several more such operations in a series of lawsuits. That vigilance in defending intellectual property gave Eli Lilly a fractional boost in Thursday afternoon’s trading.
The reports note that Lilly is taking on six different targets, including “wellness centers” and medical spas, for selling products that claim to offer the active ingredient in Mounjaro, tirzepatide. Since Lilly is currently the only company that the Food and Drug Administration (FDA) gave license to sell the drug to, that’s giving Lilly ammunition to pursue the suits.
The biggest conflict, reports note, is that these other entities are claiming that their versions of tirzepatide, which are compounded versions, are approved by the FDA when they’re not. Lilly, meanwhile, asserts that the compounded versions are risky and rising online sales for these compounds are dangerous.
An Odd Legal Issue
While I’m not a lawyer, a look at the FDA’s own words on the matter provides some insight here and why Lilly’s suits may not go very far. Compounded drugs aren’t FDA-approved, so anyone who says that their compounds are FDA-approved may indeed be in for some legal trouble. However, compounded drugs themselves aren’t really illegal, but there are conditions to offering compounded drugs.
One of these is that “…the drugs must be compounded based on the receipt of valid patient-specific prescriptions.” So, if these spas and other centers are offering compounded tirzepatide without prescriptions, or calling the compounds FDA-approved, then there may indeed be issues here.
Is Eli Lilly a Good Stock to Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on LLY stock based on 16 Buys and three Holds assigned in the past three months, as indicated by the graphic below. After a 99.62% rally in its share price over the past year, the average LLY price target of $878.88 per share implies 1.17% downside risk.
