Eli Lilly

Phase A — Understand the business

Lens 1 · Company Overview

Eli Lilly is, as of mid-2026, the most valuable pharmaceutical company in history and the 15th most valuable company in the world, with a market cap that crossed $1 trillion in June 2026 (all-time high $1,182.73 on 2026-06-08). Founded 1876, Indianapolis. It is a discover-develop-manufacture-and-sell integrated pharma — it owns the molecule from medicinal chemistry through global commercialization, and (critically for this name) increasingly owns the manufacturing plant too.

The business is, right now, overwhelmingly an incretin company wearing a diversified-pharma costume. The growth engine is a single molecule — tirzepatide, a dual GIP/GLP-1 receptor agonist — sold under two brands:

• Mounjaro (type-2 diabetes): Q1 2026 worldwide revenue $8.7B, +125% YoY.
• Zepbound (obesity): Q1 2026 US revenue $4.1B, +79% YoY.

Together tirzepatide is running at roughly a $50B+ annualized run-rate. For scale: total company revenue was $19.8B in Q1 2026 (+56% YoY), so tirzepatide is ~65% of the company.

The rest of the company is a genuine, if overshadowed, diversified franchise:

• Verzenio (abemaciclib, breast cancer / oncology) — established blockbuster.
• Kisunla (donanemab, early symptomatic Alzheimer's) — FDA full approval Jul 2024; EU + Australia marketing authorization granted; three-year data show benefit that grows over time; novel "stop once amyloid is cleared" dosing.
• Ebglyss (lebrikizumab, atopic dermatitis), Omvoh (IBD), Jaypirca, Taltz, plus the legacy diabetes book (Trulicity, Humalog, Jardiance via alliance).
• Foundayo (orforglipron) — the new oral GLP-1, launched Apr 2026 (see Lens 5/pipeline).

Customers: payers (commercial insurers, PBMs, and — newly material in 2026 — Medicare Part D), national health systems (NRDL in China for Mounjaro), and an unusually large and growing cash-pay/DTC channel via LillyDirect. Suppliers: API is increasingly in-house (the $50B+ manufacturing build); fill-finish and devices via CDMO partners. Competitors: the duopoly counterparty is Novo Nordisk (semaglutide — Ozempic/Wegovy/Rybelsus + the oral Wegovy pill + CagriSema); behind them, Amgen (MariTide), Roche, Viking Therapeutics, Structure, and the compounded/generic GLP-1 flood in markets like India.

Contract/payment structure: classic pharma — no take-or-pay, but the obesity franchise is shifting toward net-price compression as the dominant variable. Q1 2026 growth was "strong demand partially offset by lower realized prices" on both Mounjaro and Zepbound — volume is outrunning price erosion, but the spread is the whole game (see Lens 13).

Lens 2 · Supply Chain

Upstream → Lilly → patient, with named chokepoints:

Upstream inputs. Peptide API (tirzepatide is a synthetic peptide) requires large-scale solid-phase/liquid-phase peptide synthesis capacity — historically the binding constraint for the entire GLP-1 class and the reason both Lilly and Novo spent 2023-2025 on FDA shortage lists. Lilly's answer is vertical integration: it has announced >$50B in US manufacturing investment since 2020 (~$23B of it in net-new plants/expansions), with six new plants and three of the future sites dedicated to API for tirzepatide.

• Lebanon, Indiana API site: investment raised from $3.7B → $9B; production expected to begin near end of 2026.
• $6.5B Texas API facility and additional Indiana ($4.5B), Puerto Rico, Pennsylvania ($3.5B injectable obesity plant) sites.

The orforglipron supply twist — a structural advantage. Orforglipron is a small molecule, not a peptide. It is made by conventional small-molecule chemical synthesis, which is dramatically cheaper and more scalable than peptide synthesis and is not constrained by the peptide-API bottleneck. This is the single most important supply-chain fact in the whole dossier: it lets Lilly manufacture an oral GLP-1 at a cost structure and volume ceiling that injectable peptides — including Novo's injectable semaglutide and even Novo's peptide oral semaglutide — cannot match. Lilly pre-built $1.5B of Foundayo inventory ahead of the April 2026 launch specifically to avoid repeating the injectable shortage.

Downstream. Distribution via traditional pharmacy/wholesaler channel plus the company-owned LillyDirect DTC platform (Zepbound $299-$499/mo cash) and the new federal TrumpRx channel (Zepbound ~$346/mo). The DTC channel disintermediates PBMs — strategically important because it lets Lilly set net price directly and capture cash-pay demand the insured channel misses.

Single-source / chokepoint read: the historical chokepoint (peptide API) is being engineered away with capital; the orforglipron small-molecule route removes it entirely for the oral franchise. The residual risk is execution — bringing $50B of greenfield capacity online on schedule (Lebanon end-2026 is the near tell) and the fill-finish/device supply for injectables. Manufacturing execution is now a top-3 risk because the company has chosen to make it the moat (Lens 13).

Lens 3 · Competitive Advantages (moats)

Four stacked moats, in descending durability:

1. Best-in-class efficacy (the molecule moat). This is the deepest and most underappreciated. On weight loss, the efficacy ladder is now: tirzepatide (~21-23% in SURMOUNT) > semaglutide (~15%) — head-to-head, SURMOUNT-5 showed tirzepatide superior to semaglutide. Then CagriSema (Novo's next-gen) failed to demonstrate non-inferiority to tirzepatide at 84 weeks (Feb 2026), capping at ~23% — i.e. Novo's best future drug could not beat Lilly's current drug. And waiting behind tirzepatide is retatrutide at 30.3% at 104 weeks — bariatric-surgery-level (Lens 5). Lilly has the #1 and the #2 drug in the category, and the #2 is unlaunched. Efficacy leadership compounds: it wins formulary preference, share, and pricing power.

2. The oral franchise / small-molecule cost moat. Orforglipron is the first and (with oral semaglutide) one of only two approved oral GLP-1s — and the only one with no food/water/timing restriction, because its non-peptide structure needs no absorption enhancer. Goldman models Lilly at 60% of the daily-oral segment by 2030 ($13.6B) vs Novo oral semaglutide ~21%. The cost-to-manufacture advantage of a pill vs an injectable peptide is the moat that survives the price war.

3. Manufacturing scale + vertical integration. $50B of owned capacity is a capital moat a new entrant cannot replicate on any relevant timescale, and it converts the historical industry weakness (supply) into Lilly's relative strength.

4. Patent estate (the legal moat, time-boxed). Tirzepatide molecule patent to Jan 2036, formulation patents to Jun 2039, follow-on filings cited out to 2041 (53 US applications, 16 granted). ~10-13 years of runway — long, but finite and the subject of patent-thicket criticism (Lens 10/13).

Bargaining power: over patients/prescribers — high (best efficacy, demand >> supply for years). Over payers — deteriorating, and this is the crux. With Medicare now covering obesity GLP-1s at a negotiated ~$245/mo base and a $50 copay cap (mid-2026), and a public price war underway, the payer relationship is shifting from "Lilly sets price" to "government/PBM negotiates price." Volume power up, price power down.

Lens 4 · Segments

Lilly does not report clean obesity-vs-diabetes-vs-other GAAP segments the way a multi-division industrial does; the public disclosure is by product and by geography. Web-sourced build (re-ground against segments.csv when the research layer exists):

By product (Q1 2026, worldwide unless noted):

Trend & cause: the defining segment dynamic is OUS Mounjaro inflecting — international revenue went from $1.2B (Q1'25) to $4.4B (Q1'26) as ex-US launches and the China NRDL listing took hold. This is accelerating and is the next leg after US saturation begins. The offsetting force inside every product line is negative price/mix (lower realized prices on both brands), which is why revenue +56% but the quality of that growth (volume-led, price-pressured) matters for the forward margin.

By geography: US still the majority but the growth delta is now international. The China NRDL listing trades price for volume — a deliberate land-grab.

Whole-company context: FY2025 total revenue $65.18B (+45% from $45.04B); the 45% was "driven by Mounjaro and Zepbound." So at both the quarter and the year, this is a one-molecule growth story with a solid diversified base underneath.

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Phase B — Measure performance

Lens 5 · Earnings Result (latest print: Q1 2026, reported 2026-04-30)

Headline: Revenue $19.8B (+56% YoY); non-GAAP EPS $8.26 (+170% YoY). A clear beat — the stock rose on the print.

• Drivers: tirzepatide, full stop. Mounjaro +125% (OUS the surprise), Zepbound US +79%.
• Margin: operating/"performance" margin guided 43.5-44.5% reported / 45-46% non-GAAP for the year; FY2025 gross margin 83.0% reported / 83.8% non-GAAP — these are extraordinary, structurally-software-like gross margins for a manufacturer, and they are what make the obesity TAM debate a valuation fight not a profitability fight.
• EPS leverage: the +170% EPS on +56% revenue shows the operating leverage as fixed R&D/SG&A is spread over the surging top line, plus easier prior-year comps (2025 had IPR&D charges and ramp costs).
• Guidance — RAISED: FY2026 revenue lifted to $82-85B (from $80-83B); non-GAAP EPS lifted to $35.50-37.00 (from $33.50-35.00). Raising both the top and bottom line one quarter into the year, with the price war already public, is a confident posture.
• Balance sheet / cash: heavy capex outflow ($50B program in flight) pressures FCF conversion vs net income — the spend is the strategy, not a flag, but it means net margin and FCF lag the revenue story.
• Market reaction: notably, one TIKR piece is headlined "Revenue Grew 56% in Q1 and the Market Barely Blinked" — i.e. a 56% beat-and-raise produced a muted move, which tells you how much is already priced in (Lens 8/12).

Unusual vs own history: the magnitude is the anomaly — a $1T-cap company growing revenue 56% is nearly unprecedented at this scale. The watch-item is the widening gap between reported volume strength and realized-price softness.

Lens 5 (overlay) · Pipeline by phase — the +clinical bolt-on; this IS the growth story

This is where the big-cap-pharma exception earns its keep: Lilly's multiple is not justified by the current P&L alone, it's justified by the pipeline that turns one molecule into a metabolic-disease platform. The asset table, by phase, mid-2026:

The pleiotropic thesis Connor cares about, made concrete. The reason GLP-1/incretins are a platform and not a diet drug is that the same mechanism keeps reading out positive on adjacent organ systems, each one a new multi-billion TAM:

• Cardiovascular: SURPASS-CVOT — tirzepatide cut an expanded MACE endpoint vs dulaglutide (HR 0.88); SURMOUNT-5 post-hoc showed bigger 10-yr CV-risk reduction than semaglutide. The big one — SURMOUNT-MMO (MACE in obesity without diabetes) — is still running. A win there reframes obesity drugs as cardiovascular drugs and opens the secondary-prevention payer rationale.
• Sleep apnea: tirzepatide FDA-approved for moderate-severe OSA (SURMOUNT-OSA: AHI down ~2/3, −30.4 events/hr on PAP) — first-ever drug for OSA. A discrete, reimbursable indication.
• MASH / liver: retatrutide's 86% liver-fat reduction / 93% to normal is the most impressive liver-fat result ever in development; the glucagon arm is mechanistically why a triple beats a dual here. Phase 3 MASH readout in 2026.
• Osteoarthritis: TRIUMPH-4 — retatrutide cut knee-OA pain 75.8% (WOMAC) alongside 28.7% weight loss — weight-loss-mediated structural disease modification.
• Kidney: kidney outcomes are secondary endpoints in SURMOUNT-MMO and consistent with the class (FLOW-style benefit).
• Addiction (the frontier signal): mechanistically GLP-1/glucagon agonism is being investigated for alcohol/substance-use reduction; the public retatrutide readouts to date have not reported addiction endpoints — flagged here as optionality, not data. n/a as a Lilly-specific clinical result.

The point: each pleiotropic indication is a separate label, a separate payer argument, and a separate TAM. The bear case (Lens 13) is fundamentally a bet that the valuation already capitalizes all of these; the bull case is that the platform keeps minting indications faster than the multiple can fairly price.

Lens 6 · Earnings Calls (sentiment trend)

No transcripts/ in the research layer, so this is ``-inferred from release language and coverage across the last ~4 prints (Q2'25 → Q1'26):

• Consistent through-line: management has spent four straight quarters raising guidance (Q3'25 raise, Q4'25 guide, Q1'26 raise) — the dominant message is "demand exceeds supply, we are building capacity, the pipeline is broadening." Tone is confident-to-emphatic.
• What they started saying (2026): "momentum of new medicines," "diversified pipeline beyond diabetes and obesity," and an explicit oral GLP-1 / Foundayo launch narrative — a deliberate pivot to show the story is more than one injectable molecule. Manufacturing ("$50B," "Lebanon online end-2026") is now a headline talking point, not a footnote.
• What they're managing/de-emphasizing: price. Releases consistently frame growth as "strong demand partially offset by lower realized prices" — management is acknowledging price erosion while steering attention to volume and pipeline. The CagriSema-miss and Novo price-war news are addressed obliquely (efficacy leadership, breadth) rather than head-on.
• Sentiment shift: from "can we make enough?" (2024-25 supply anxiety) → "we will make enough and we have the oral and the triple coming" (2026 confidence). The risk in the tone is that confident beat-and-raises are now being met with muted stock reactions — the market has recalibrated to expect excellence (Lens 8).

Lens 7 · Comps + (overlay) mechanism comps

Operating comp table (large-cap pharma):

I did not source clean peer multiples for the non-Lilly rows in this web-only pass; rather than fabricate plausible numbers I leave them n/a. The load-bearing fact is the relative one: LLY trades at a large-cap-pharma premium (forward P/E ~30x, EV/EBITDA ~36x) that only the obesity growth justifies. Sector pharma typically sits low-to-mid-teens P/E; Lilly is ~2x that. The entire bull/bear fight is whether that premium is earned.

(Overlay) Mechanism comps — by target, not by P/E:

• vs semaglutide (Novo): tirzepatide superior on weight (SURMOUNT-5 head-to-head); orforglipron superior glycemic control vs oral semaglutide (ACHIEVE-3); CagriSema failed non-inferiority to tirzepatide. Lilly wins the efficacy comparison across injectable, oral, and next-gen.
• vs CagriSema (Novo next-gen): ~23% weight loss, missed its bar; retatrutide ~30% clears it.
• vs Amgen MariTide / Roche CT-388 / Viking VK2735: earlier-stage; the field is real but a phase (or two) behind, and none has shown a triple-agonist's pleiotropic breadth.

Lens 8 · Stock-Price Catalysts (what actually moves LLY)

Pattern over the recent cycle:

• UP movers: Q1'26 earnings beat-and-raise (positive but muted — "market barely blinked"); orforglipron Phase 3 successes; Novo's CagriSema failure (Feb 2026) — a competitor's readout moving LLY up is the duopoly tell; FDA approval of Foundayo.
• DOWN movers: HSBC downgrade to "reduce," PT cut $1,070 → $850 (Mar 2026) on TAM-overhype — the stock slid; Novo's aggressive Wegovy/Ozempic US price cuts sparking price-war fear (the single biggest down-driver of 2026); generic GLP-1 flooding India (LLY share slipped there, Apr 2026); LLY was down ~13% YTD at one point in 2026 despite the fundamentals.
• What the market actually reacts to: (1) the obesity TAM debate (analyst calls on market size, not Lilly's execution, move the stock most — HSBC's $850 is a TAM call); (2) competitive readouts (Novo's wins and losses); (3) pricing actions (the price war); and increasingly (4) clinical readouts (orforglipron, retatrutide) as binary de-riskers. Earnings beats are now expected and move it less. Translation: LLY is a narrative/sentiment stock on a fundamentals rocket — the gap between the two is the opportunity and the risk.

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Phase C — Judge people & books

Lens 9 · Management

David A. Ricks — Chair & CEO since January 2017. The defining fact: he took LLY from a ~$70B market cap to >$1 trillion — a ~14-15x in ~9 years, making Lilly the most valuable pharma in history on his watch. Named CEO of the Year (Chief Executive); among most influential CEOs in oncology.

1. Track record: elite. The tirzepatide franchise, the Kisunla Alzheimer's win, the oral-GLP-1 bet (orforglipron) and the triple-agonist bet (retatrutide) were all built/prioritized under him. He turned a sleepy diabetes major into the growth name of the decade.
2. Tenure & skin in the game: ~9 years, deep institutional Lilly tenure before the top job. Insider ownership figure — n/a (would ground against insider-transactions.csv); Ricks's net worth is tracked publicly (GuruFocus) but personal holdings as % of float not sourced here.
3. Capital-allocation history: the signature is the $50B+ vertical-integration manufacturing build — a high-conviction, capital-intensive bet that owning supply is the moat, accepting near-term FCF/margin drag for durable scale. Plus disciplined, tuck-in M&A pointed at the next platform rather than empire-building: Verve (CV gene-editing), Scorpion (mutant-selective oncology), Morphic (IBD). Reinvestment-and-acquire, not financial-engineering. ROE/ROIC has surged with the franchise (FY2025 net income +95% to $20.6B). Dividend + buyback figures — n/a in this pass (search did not surface a current payout/repurchase policy); to be grounded.
4. Red flags: the only governance-adjacent items are (a) political proximity — Ricks publicly negotiating the $50B build and drug-pricing with the Trump administration (TrumpRx), which cuts both ways (access to favorable channels vs. policy-capture optics); and (b) the patent-thicket strategy (53 filings) that draws "patent abuse" criticism (i-mak.org). Neither is an accounting red flag.
5. Archetype: professional manager operating with founder-like conviction on the manufacturing bet. The right archetype for a scale-and-execute phase — the question is whether a professional-manager culture sustains R&D edge into the post-tirzepatide era.

Lens 10 · Forensic Red Flags

No filings in the research layer, so this is a web + first-principles read; re-ground against 10-K/10-Q and run fetch-regulatory-findings.ts when the layer exists.

• Revenue recognition: standard pharma point-of-sale with gross-to-net reserves. The gross-to-net (GTN) reserve is the number to watch — with a public price war, rebates/discounts/cash-pay programs are expanding fast; an under-reserved GTN would flatter revenue and is the most likely place for a future "miss" to originate. Management already flags "lower realized prices," which is the honest version of this. Watch the GTN bridge in the 10-Q.
• Cash flow vs earnings: the deliberate divergence here is capex — $50B of plant spend means FCF lags net income by design. That is a strategy, not a manipulation, but it does mean "earnings quality" should be judged on operating cash flow net of growth capex, and the headline EPS overstates distributable cash.
• Inventory: Lilly is intentionally building inventory ($1.5B Foundayo pre-build; API ramp). Rising inventory ahead of a launch is bullish-operational, not a demand-warning — but it inverts the usual "inventory outrunning revenue = red flag" heuristic, so don't misread it.
• SBC / non-GAAP: the gap between reported and non-GAAP EPS (FY2025 $22.95 GAAP vs $24.21 non-GAAP) is moderate and driven mainly by acquired-IPR&D charges from the M&A, not aggressive SBC add-backs — relatively clean by large-cap-pharma standards.
• Goodwill/intangibles: rising with the M&A cadence (Verve/Scorpion/Morphic); impairment risk concentrated in those pipeline bets if they fail. Not yet material vs the asset base.

Regulatory findings (web-only sub-section). No regulatory/regulatory-findings.md was generated (web-only run). Web scan for SEC/FTC/DOJ/FDA enforcement against Eli Lilly surfaced no material 2025-2026 enforcement action, consent decree, or AAER. The live legal/regulatory themes are commercial-policy, not fraud: (1) drug-pricing litigation/negotiation (Medicare negotiation, TrumpRx, the price war) — policy, not enforcement; (2) patent-thicket criticism (i-mak.org alleges "patent abuse" on the 53-application tirzepatide estate) — advocacy, not a finding; (3) ordinary-course product liability / IP litigation disclosed in 10-K Item 3 (not sourced in this pass — flag to pull). Net: no material regulatory or legal red flag found via web search as of 2026-06-15; SEC EDGAR (LR/AAER) and 10-K Item 3 to be verified when the research layer is built.

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Phase D — Project & stress-test

Lens 11 · Forward Projection + (overlay) catalyst-gated rNPV thinking

Base anchor: FY2026 company guidance — revenue $82-85B, non-GAAP EPS $35.50-37.00. FY2025 actual non-GAAP EPS $24.21.

Three-year non-GAAP EPS path (FY2026 → FY2028), every input labeled, output ``:

• Bull path EPS FY2028: ~$60+.
• Bear path EPS FY2028: ~$42-45.

Implied valuation check: at ~$1,131 and base FY2027 EPS ~$44, that's ~25.7x FY27; on FY28 ~$53, ~21.3x. So the stock is not absurd on out-year earnings IF the growth holds — the premium is forward-growth, not bubble-froth. The bear's whole argument is that the out-year EPS is too high because the TAM and price assumptions are too generous.

(Overlay) Catalyst-gated framing. Unlike a pre-revenue biotech, Lilly's "runway to catalyst" is not a cash question (it gushes cash) — it's a narrative-de-risking question. The value-inflection catalysts that convert pipeline optionality into priced-in earnings:

1. Foundayo (orforglipron) commercial ramp — already de-risked clinically + approved; the 2026 sales print ($1.5-2.8B est) is the proof.
2. Retatrutide TRIUMPH-2/-3 readouts + filing (2026 → late-26/early-27) — converts 30% weight loss + 86% liver-fat into a fileable second-generation franchise.
3. SURMOUNT-MMO MACE readout — the binary that reframes obesity drugs as cardiovascular drugs (timing not pre-specified; ongoing).
4. Retatrutide MASH Phase 3 (2026) — opens the liver TAM.

Logged forecast (Brier-scoreable): "LLY FY2027 non-GAAP EPS ≥ $42, p=0.72, resolves 2027-12-31" (base path ~$44 with margin of safety to the threshold). And a clinical binary: "Retatrutide receives FDA filing/submission by end of Q1 2027, p=0.78." (Not logged via forecast.ts — no research layer in this web-only run; record these if/when the topic is registered.)

Lens 12 · Bull vs Bear

Bull case. Lilly owns the two best drugs in the largest new therapeutic category in a generation, with the #2 (retatrutide) still unlaunched and the only no-restriction oral pill (Foundayo) just approved. The franchise is being protected by a $50B owned-manufacturing moat and a patent estate to ~2036-39, while the same molecules keep reading out positive on cardiovascular, sleep apnea, liver, kidney and osteoarthritis — each a new multi-billion TAM that the market has only partly capitalized. 83%+ gross margins mean every incremental indication drops to the bottom line. Management is the best operator in pharma. At ~30x forward / ~21x FY28 EPS, a name growing revenue 50%+ is not expensively priced if the platform compounds as it has. The contrarian read: the market is fixated on the price war (a margin question on a 83%-gross-margin business) and the TAM ceiling, while under-pricing the pleiotropic platform — obesity is the wedge, metabolic-and-cardiovascular disease is the prize.

Bear case (2-3 permanent-impairment risks).

1. TAM is smaller than priced. HSBC's core call: obesity GLP-1 TAM is $80-120B by 2032, not the $150B+ consensus; at a smaller TAM, today's out-year EPS is too high and the multiple compresses. A "reduce" rating with an $850 PT (−25% from $1,131) is the explicit bear number.
2. The price war eats the spread. Novo cutting Wegovy/Ozempic to ~$675 (Jan 2027), TrumpRx at ~$346, Medicare negotiating ~$245 with a $50 copay cap, DTC at $149-499 — net price is in structural decline. Volume is winning now, but if price erosion outruns volume in the insured channel, revenue growth and margin both compress.
3. Multiple compression on a maturing growth rate. The stock is a narrative asset (Lens 8) — a 56% beat already barely moved it. As YoY comps inevitably decelerate from triple-digit Mounjaro growth, even strong absolute results re-rate the multiple down. A move from 30x to 22x forward, on flat EPS, is a ~27% de-rating with nothing "wrong" operationally.

Pre-mortem (18 months out, thesis broke): Foundayo's launch disappointed (Novo's first-mover oral pill + the duopoly split the market more evenly than Goldman's 60/40), the price war compressed net price faster than OUS volume could backfill, one of the 7 retatrutide 2026 readouts disappointed (or a tolerability signal emerged at the 30%-weight-loss doses), and the multiple compressed from 30x to 20x as growth normalized — the stock is at $850 not because the business broke but because the expectations did.

Are multiples too high? Not on out-year EPS if the base/bull path holds (~21x FY28). They are too high only in the bear-TAM world. This is a probability-weighted bet on TAM and price, not a valuation absurdity.

Contrarian view the market is refusing to see: the consensus argues obesity-drug pricing; the under-priced variable is the pleiotropic label cascade (SURMOUNT-MMO cardiovascular, MASH, OSA already approved) that turns a price-warred consumer drug into reimbursed chronic-disease standard-of-care — which raises payer willingness and expands TAM in the exact direction the bears are discounting.

Lens 13 · Devil's Advocate (short-seller)

Dismantling the bull case:

• Where revenue is concentrated: ~65% of the company is one molecule (tirzepatide) and the growth is ~entirely incretin. If anything structurally impairs GLP-1 economics — a class-wide safety signal, a payer revolt, a faster-than-modeled price collapse, or a superior competitor mechanism — the whole growth story breaks at once. This is not a diversified pharma; it's a one-franchise stock with a diversified hedge.
• The most dangerous competitor bulls underestimate: not Novo (wounded — CagriSema missed, de-rated). It's price + the US government. Medicare negotiation, TrumpRx, and the structural shift to cash-pay/DTC mean the buyer is becoming the most powerful counterparty, and a 83% gross margin is a giant target for political price-setting. The "competitor" is policy.
• Why the moat may be weaker than bulls think: patents expire (molecule 2036), and the patent-thicket-to-2041 strategy invites legal and political challenge (i-mak.org "patent abuse"). The efficacy moat is real today but Amgen/Roche/Viking are one cycle behind, and oral semaglutide is already a launched oral competitor — the 60% Goldman share is an assumption, not a fact.
• Worst capital-allocation risk: the $50B manufacturing bet is a leveraged call on demand staying ahead of supply. If the TAM is the bear's $80-120B and Lilly over-builds, it owns $50B of under-utilized peptide capacity into a price war — capacity that, unlike the small-molecule orforglipron line, is purpose-built for the injectable franchise that the oral pill may cannibalize. Building injectable-peptide capacity while simultaneously launching the pill that undercuts injectables is an internal contradiction the bulls hand-wave.
• What must hold for today's price: $150B+ TAM, 60% oral share, retatrutide launches cleanly, price war stays "volume-positive," and the multiple holds ~30x. That's a stack of assumptions, each individually plausible, jointly demanding.
• Valuation if growth disappoints 20-30%: FY28 EPS to the bear ~$42 and a de-rated ~18x = ~$760 — roughly the HSBC $850 zone, ~25-33% downside.
• Single scenario that permanently impairs: a class-wide long-term safety signal (e.g. a serious adverse outcome surfacing only at scale/duration across the GLP-1 class) — low probability given the breadth of positive CV/renal data, but it's the one event that breaks the platform thesis rather than just the multiple. Plausibility: low, but non-zero and catastrophic — the true tail.

Lens 14 · Management Questions (ordered by information value)

1. In a world where Medicare negotiates ~$245/mo, TrumpRx sells at ~$346, and Novo cuts to ~$675 — what is your 2028 net realized price per script assumption for tirzepatide in the US insured vs cash channels, and at what net price does the obesity franchise stop being margin-accretive?
2. The $50B manufacturing build is overwhelmingly injectable-peptide capacity. If orforglipron and future orals take the share Goldman models (~60% of daily-oral), how much of that injectable capacity is at risk of underutilization, and what is the option to repurpose it?
3. What is your internal estimate of the 2032 obesity-drug TAM, and which specific pleiotropic indications (CV, MASH, OSA, kidney, addiction) do you include in it — i.e. where exactly do you and HSBC disagree?
4. When does SURMOUNT-MMO read out, and what MACE hazard ratio do you need to change the payer conversation from "lifestyle drug" to "cardiovascular standard of care"?
5. Across the 7 retatrutide Phase 3 readouts in 2026, which single one is the highest-stakes for the franchise, and what tolerability profile at the 30%-weight-loss doses would you consider a launchable risk/benefit?
6. How do you think about cannibalization between injectable tirzepatide, oral orforglipron, and injectable retatrutide — is the strategy to maximize total franchise revenue or to defend the higher-priced injectable?
7. What is the gross-to-net trajectory for the obesity franchise over the next 3 years, and how much GTN reserve build is embedded in current revenue?
8. On capital allocation: with FCF compressed by the capex program, what is the dividend + buyback plan over 2026-2028, and how do you prioritize that against further M&A?
9. The patent estate runs molecule-2036 / formulation-2039 / filings-2041. How do you respond to the "patent thicket / patent abuse" critique, and what is your realistic LOE-cliff planning assumption?
10. Beyond incretins, which pipeline asset (oncology Ph3 ×4, Remternetug, Verve CV gene-editing) is most likely to be a >$5B franchise by 2032 — i.e. what is the company after tirzepatide?
11. What is the OUS pricing strategy after the China NRDL listing — is the trade of price-for-volume in emerging markets a deliberate global template, and what does it do to blended gross margin?
12. On addiction / neuropsychiatric indications for the glucagon/GLP-1 mechanism — is Lilly running or planning trials, and do you view substance-use as a credible future label?
13. How exposed is the franchise to compounded/generic GLP-1 in markets like India, and does that foreshadow anything for US dynamics post-LOE?
14. What is the single operational risk that most worries you about bringing $50B of greenfield capacity online on schedule (Lebanon end-2026 being the near tell)?
15. If the multiple compresses to a sector-average ~15-18x as growth normalizes, how do you think about per-share value creation for a long-term holder from here — buybacks, pipeline, or absolute earnings growth?

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