A pharmacist holds boxes of Eli Lilly & Co. Mounjaro brand tirzepatide arranged at a pharmacy in Provo, Utah, U.S., Monday, Nov. 27, 2023.
George Frey | Bloomberg | fake images
Demand has skyrocketed for a class of treatments for weight loss and diabetes. Eli Lilly to new heights over the last year. But the drugmaker has much more work to do with that hard-won success, outgoing CFO Anat Ashkenazi told CNBC.
Ashkenazi, who will take over as the new CFO of Alphabet on July 31, has been key in managing the extraordinary revenue gains and wave of investor optimism stemming from Eli Lilly's Mounjaro diabetes shot and the recently launched anti-obesity drug Zepbound. Ashkenazi took over as Eli Lilly's chief financial officer in 2021, after roughly two decades at the pharmaceutical giant. She was named to CNBC's inaugural Changemakers list earlier this year.
“You have to be a very good student of the business and understand it inside and out and understand the industry,” he told CNBC in an interview before announcing his departure. “Only when we understand the entire system can we navigate it well to bring value… That's my role as CFO.”
His mandate has not been without challenges: Eli Lilly and his rival Nordisk Both have struggled to manufacture enough quantities of their treatments to meet unprecedented demand, leading to nationwide shortages of those drugs.
Their weekly injections are part of a class of medications called GLP-1 agonists, which mimic certain hormones produced in the intestine to suppress a person's appetite and regulate blood sugar. Some analysts expect the market for these drugs to be worth $100 billion by the end of the decade.
Eli Lilly's revenue boom has allowed the company to invest heavily to increase manufacturing, which will eventually put more drugs in the hands of patients, Ashkenazi said.
“As we begin to sell products and get the revenue and cash flow associated with that sale,” the company wants to “channel that cash flow back into the business to invest in those manufacturing facilities,” he said.
Eli Lilly doesn't expect to match the pace of demand this year and maybe not even in 2025, Ashkenazi said at a conference in March. But the pharmaceutical giant has so far made encouraging progress.
An Eli Lilly and Company pharmaceutical manufacturing plant is shown in Branchburg, New Jersey, on March 5, 2021.
Mike Segar | Reuters
Ashkenazi said Eli Lilly has several manufacturing sites under construction or “accelerating,” including two locations in North Carolina, two in Indiana, one in Ireland and one in Germany, along with a seventh site the company recently acquired from Nexus. Pharmaceuticals. Eli Lilly also said late last month that it would invest another $5.3 billion in its manufacturing plant in Lebanon, Indiana.
Those facilities add to the company's “very large” existing manufacturing footprint in the United States and Europe, Ashkenazi said. Since 2020, Eli Lilly has spent more than $18 billion to build, expand and buy manufacturing plants in those regions, the company said in May.
Ashkenazi noted that Eli Lilly is also addressing another barrier to patient access: limited insurance coverage for weight-loss drugs in the U.S.
Some employers and other health plans are still reluctant to cover GLP-1 for weight loss because of its high prices, which they say could significantly strain their budgets. Insurers also have other questions, such as how long patients actually stay in treatment.
Still, Ashkenazi said Zepbound coverage by U.S. commercial insurers is improving, with about 67% commercial coverage as of April 1. Eli Lilly is working to build that access for the rest of the patients, she said.
“It's not enough to have a highly effective and safe drug that can really change people's healthcare, but also to make it accessible,” Ashkenazi said.
He also expects patients enrolled in the federal Medicare program to eventually see expanded coverage of weight-loss drugs as Eli Lilly and other drugmakers demonstrate their ability to treat a wide range of obesity-related conditions.
Eli Lilly is studying tirzepatide, the active ingredient in Zepbound and Mounjaro, in patients with obesity and fatty liver disease, obstructive sleep apnea, chronic kidney disease and heart failure, among other health conditions.
Under new guidelines released in March, Medicare Part D plans can cover obesity treatments that receive regulatory approval for an additional health benefit. Medicare prescription drug plans run by private insurers, known as Part D, currently cannot cover those drugs alone for weight loss.
According to Ashkenazi, a bigger problem is the long-held misconception that obesity is a “lifestyle choice” and not a chronic disease.
Eli Lilly is trying to change that.
“Our goal is to ensure that society, the health care system and the patients themselves really see this and understand that this is a chronic disease… and therefore it should be treated as such,” Ashkenazi said.
