Eli Lilly Shares Face Mounting Headwinds

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Eli Lilly & Co. has encountered a turbulent start to the new year. The US pharmaceutical giant's equity closed Monday's session down 3.6% at $1,041.51, pressured by a confluence of negative developments. These include competitive threats in the crucial obesity drug market, aggressive pricing actions in China, and fresh legal challenges at home.

Adding to the pressure, a lawsuit was filed Monday by the Attorney General of Indiana. The suit alleges that Eli Lilly, alongside other industry players, artificially inflated insulin prices by over 1,000% during a period spanning more than a decade. The company has refuted the accusations, pointing to its existing $35 cap program and prior price reductions of 70%. Nonetheless, this litigation introduces a new layer of legal and reputational risk during a sensitive period for the stock.

Competitive Landscape Shifts with Novo Nordisk

A primary catalyst for the share price weakness was news that competitor Novo Nordisk commenced US sales of its oral Wegovy version on January 5. The daily pill is priced at $149 per month for direct purchases, with insured patients paying only $25. This move grants the Danish rival a significant first-mover advantage in the oral GLP-1 agonist market. Eli Lilly's own candidate, Orforglipron, is not expected to receive FDA approval until the second quarter of 2026 at the earliest—a potential six-month delay that could carry a substantial commercial cost.

China Market Strategy: Deep Price Cuts

Simultaneously, a radical pricing strategy shift in China was confirmed on Monday. On the JD.com platform, Eli Lilly has slashed the price for the lowest monthly dose of Mounjaro to 599 yuan (approximately $86). This represents a reduction of nearly 70% from the introductory price of 1,758 yuan set the previous year. The highest dose now costs 1,599 yuan. This aggressive discounting is a direct response to Novo Nordisk's own pricing tactics and increasing competition from local drugmakers.

Lofty Valuation Under Scrutiny

The market's reaction also reflects the company's premium valuation. Trading at a price-to-earnings ratio exceeding 51, Eli Lilly shares are priced significantly higher than Novo Nordisk, which trades around a P/E of 15. While Lilly's third-quarter 2025 results surpassed expectations with earnings per share of $7.02—driven by a 185% year-over-year revenue surge for Zepbound—the deep price cuts in China signal that the era of unlimited pricing power in the obesity segment may be ending.

The company is scheduled to report fourth-quarter results on February 5, 2026. Market experts are anticipating earnings per share of around $7.30. Investor focus will be keenly on management's commentary regarding the Orforglipron development timeline and the margin implications of the new competitive pricing strategy in China.