Weight-loss drugs became one of the biggest stories in 2023, with Eli Lilly's (LLY) Mounjaro and Zepbound among the pack leaders for GLP-1 pharmaceuticals.

Eli Lilly CEO Dave Ricks joins Yahoo Finance Health Reporter Anjalee Khemlani at the annual JPMorgan Healthcare Conference to discuss expanding the drugmaker's pipeline past obesity treatment

"If you're an investor and you're looking at Lilly, and you're thinking, this is a Zepbound-Mounjaro story, I don't think you're reading it right," Ricks says, elaborating on the other treatments Eli Lilly seeks to expand into from the success of its GLP-1s. "I think we've been on... a long climb, and it's really driven by the productivity of our R&D organization. So I think a bet on Lilly is to bet we can keep inventing new things, not just sell the one we have invented, which are great as well."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

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ANJALEE KHEMLANI: Welcome back to Yahoo Finance Live. I'm senior health reporter Anjalee Khemlani, here in San Francisco at the annual JP Morgan Health Care Conference. And here to kick it off with me is Eli Lilly CEO Dave Ricks to talk about-- of course, to start off with your absolutely runaway year, anticipated, this year. Thanks for joining us today. Let's talk about this.

DAVE RICKS: Thank you. Thank you.

ANJALEE KHEMLANI: Yeah. You know, GLP-1 is absolutely the talk of the town. We're still talking about it at the start of the year after a record year last year with Mounjaro, Zepbound being approved. What can you tell us about how this is all coming together for the company? Because you really shot the firing gun in 2005 with Vita.

DAVE RICKS: That's right. We've been in this space a long time, as you mentioned. You said GLP-1, but now we're actually adding other gut hormones, incretins, we call them, together. So tirzepatide, which is Mounjaro, and Zepbound is two modes of action, GIP and GLP.

And in the pipeline, we have another one coming with three modes of action. So you can see we're now learning how to exploit this biology to really affect a whole number of metabolic diseases. So last year was about the launch of Zepbound, the introduction that happened in the fall, I think, going well so far.

Mounjaro had a great year as well in diabetes. Trulicity, our older product, continues to do well. This year, I think, will be about some of the new data releases as we study these drugs, not just to demonstrate they lose weight, which almost everybody loses weight, but what happens to your broader health.

We're studying a population with congestive heart failure, a specific subtype called HFpEF, which is preserved ejection fraction. And that's really driven by obesity, so we're really anxious to get those results sometime in the second half. And then also a condition called sleep apnea, which is a common condition that almost 10 million Americans have that we think we can reduce those signs and symptoms of sleep apnea by losing weight on tirzepatide. So this will be now the next step to translate those health benefits with great weight loss.

ANJALEE KHEMLANI: Yeah, absolutely. Certainly, something we're all looking at, right, is how much more can you get? What other diseases can get benefited by the work that you've been doing? I also know that you launched LillyDirect. You're trying to get to the consumer.

As we saw how much of a run had on just Mounjaro alone last year, these drugs are in high demand. You're running out at some points in the year. So launching LillyDirect, getting to the consumer, directly to them, with Zepbound first and then a couple other of your diabetes drugs, what is the goal? Are you trying to cut out the pharmacies and the PBMs here?

DAVE RICKS: We're not trying to cut out anyone. We're happy to work with all those players. What we're trying to do is optimize the patient experience. And we listen carefully to the patients that want to use our drugs or are using our drugs.

They're pretty frustrated with the state of US health care and how it works for them. So we're, with LillyDirect, trying to do three things. One is the direct part, which is get supplies or products from a manufacturer directly. That's an experience we all have in many parts of our life. And some people prefer it.

I would say, in particular, people with obesity, who when they go out into the world, they're often shamed for the way they look-- many people don't consider obesity a health condition. They get blowback at the pharmacy counter, et cetera. So they, in particular, like the discretion of getting that product directly.

Secondly, telehealth, which a lot of Americans had experience with in COVID. And some don't like and some do. So here, we're serving up a partner in different disease states, actually, three different partners who are good at telehealth. And people have a place to land to get that.

And why do we do that? Because, you know, we've worked with them in various ways to make sure the quality of the programs are very high. And so Lilly can be a trusted source to get that telehealth provided. And then, you know, I think the other thing I would say is, in particular with obesity, here, again, our patients report kind of doctor shopping to find someone who will write them what they know is a solution for their health problem.

And so here, it's just more convenient. It's not just, though, telehealth. We have a Doctor Finder tool on our site. So you can put in your ZIP code and find out who is a certified obesity specialist in your area. And access to health care and that knowledge gap with patients and the health care system is pretty vast in the US, so here's a way to bring that closer together.

ANJALEE KHEMLANI: Well, it's certainly an interesting play, one we haven't seen before from a legacy pharma player. So we'll have to see what the response is to that and whether or not patients actually see it. You also are having a pretty good year, your stock up-- in the last year, sorry,

DAVE RICKS: It's a new year.

ANJALEE KHEMLANI: It's a new year.

DAVE RICKS: So we go to 0 and do it again. Yeah.

ANJALEE KHEMLANI: [LAUGHING] It resets.

DAVE RICKS: Yeah.

ANJALEE KHEMLANI: But you had a good run, really reaching record highs. You've been sort of on a slow climb since the pandemic. You were involved with products there. And now, with the obesity space, you have a lot more going for you.

What are you looking at next? How do you sort of, you know, give back shareholder value in all of this? And how do you justify all that?

DAVE RICKS: Yeah. Well, I think we've-- and I'll talk tomorrow at this conference. I think if you're an investor and you're looking at Lilly and you're thinking, this is a Zepbound, Mounjaro story, I don't think you're reading it right. I think we've been on, as you mentioned, a long climb, and it's really driven by the productivity of our R&D organization.

So I think a bet on Lilly is to bet we can keep inventing new things, not just sell the ones we have invented, which are great as well. Additionally, one of the features of how we've built our R&D engine is one that can innovate inside of a timeline that's shorter than your patent life. And of course, we all know at this conference, you always hear about, OK, who's got a patent cliff coming? And what deal do they have to do to make up for that?

We want to get out of that business. And the way to do that is to launch products faster than you lose them. That's how we grow in our industry. Everything we launch will go to zero someday, even Mounjaro and Zepbound, right? So we need to create something better faster than that event.

And we've been able to do that. Now, if you look at Trulicity, our GLP-1 once weekly, which launched in 2014, and then in 2022, just eight years later, inside the patent life, we launched Mounjaro, which is by all means probably a better product. And then probably in 2026 or '27, we'll launch retatrutide just five years after that, which is probably going to be a better product than that.

So that sort of serial innovation and rapid innovation is something we're very focused on. And then the other part of the story is success across not just weight loss and diabetes, but other areas. You mentioned COVID. We were, I think, the largest seller of COVID antibodies in the US during the crisis. We were proud to do that and save probably 30,000 or 40,000 lives with those.

But in oncology, we're making moves and growing that portfolio of targeted oncology beyond Verzenio, which is our blockbuster breast cancer drug, really the only CDK4/6 indicated in adjuvant, which can be a curative setting. But we're building a pipeline of, I think, really exciting molecules in oncology, along with Alzheimer's. We do expect approval early this year for donanemab in Alzheimer's and immunology. Important products like Taltz and Olumiant and Omvoh just launched for Crohn's and colitis.

ANJALEE KHEMLANI: A really diverse portfolio. And at a time where-- generally, let's go broader, the market. You know, a lot of companies are looking at where to make the moves next, especially with all the pressure you're seeing from DC. There's general sort of contraction, I think, a little bit in how people are thinking about where to go, what's beneficial, what you can get into without really getting penalized or getting into trouble. How do you think about that space right now?

DAVE RICKS: You're probably referencing the IRA. But also, I think the broader sort of regulatory environment around the world for our industry is tightening. It's true. I think that has two primary effects. One is product life cycles will be shorter. I just commented on our strategy, which is to be faster than the life cycle.

So we're moving even faster so that we can launch successive innovation before something like a government negotiation in the US, which is the IRA issue, or shorter patent lives, which are happening. There's a debate in Europe about that, for instance. And so that's how we inoculate ourselves against that.

The second thing is the world's awash in choice. What used to be branded drugs are now generic and very cheap, and we have to make better and better medicines. That threshold of improvement is going up. I think people expect even more impact from the next medicine.

So we have to change how we invest, which is to really demand that when we put our money behind a phase III program, and those are a billion, $2 billion tickets, that it's going to really change that field of medicine. That's the question we ask ourselves. When we do that, sometimes we're right. Sometimes we're wrong. We end up with a good medicine, we want it. Great. But I think it allows us to compete in a tougher future for biopharma.

ANJALEE KHEMLANI: And then a final question for you. Going back to the GLP-1 space, lots of interest, lots of competitors coming down the pike. I know you're talking about how you're differentiating by targeting different disease states, as well as getting that timeline faster, like you mentioned.

How are you planning to keep the market share, though? Because there are a lot of people interested. There's orals coming. I know you have that too. So there are so many different options that are going to be coming down the pike.

DAVE RICKS: And that's great for patients. I think that's sort of how the industry works. When there's a big success, everyone will pile in and follow. I think the question if you look at historic performance is, will we be the leader who gave up the lead or will we exploit the lead? There will be room for others in various niches and so forth.

So of course, we want the second. And we're doing that, as I talked about, with successive innovation. We've got retatrutide in phase III or IV within the oral, which is the most advanced oral program out there. We have six other clinical-stage assets in obesity and the various manifestations.

And I think that's where the game will turn next, is who's indicating hated for what? How can we prove value, not just in weight loss. Yes, we need drugs that provide more weight loss. That's retatrutide's promise, potentially 25% or even 30% weight loss, which is about what bariatric surgery can do.

But also, what have you proven in terms of downstream health consequences? That's where payers around the world are looking for that value. And I expect that envelope of indications to expand.

Today, we're pursuing something like a dozen different indications for our portfolio of obesity medications. That will get wider and wider through time. And I think that's exciting, you know, for the health of the world.

If you look at adult health, there are so many things tied to excess body weight. And we're just beginning to learn, by the way, all the ways to use these drugs together or in sequence, how to get people on lower doses or even off medication eventually to get those benefits. I think it's going to be an exciting decade ahead for innovation with weight loss.

ANJALEE KHEMLANI: Absolutely. Well, good thing you got a lead on that.

DAVE RICKS: Yeah.

ANJALEE KHEMLANI: We'll have to leave it there. Eli Lilly CEO Dave Ricks, thank you so much for joining us.

DAVE RICKS: Good to be with you. Thanks.