Why Is LLY Stock Down? Investors React to CVS Move

LLY stock has taken a hit recently, and it’s all tied to a major move by CVS Health. In a bold decision, CVS announced it would be dropping Eli Lilly’s Zepbound from its formulary. This change has sparked concerns among investors. 

Why? Zepbound, a popular weight-loss drug, has been one of Eli Lilly’s big earners. But now, with CVS choosing to back Novo Nordisk’s Wegovy instead, the future of Zepbound looks uncertain.

CVS Health’s decision is shaking up the competition in the GLP-1 weight-loss drug market. This move could have a big impact on Eli Lilly’s bottom line with CVS controlling a large portion of the pharmacy benefits market. 

Let’s discuss in detail.

CVS Health’s Strategic Shift

Starting on July 1, 2025, CVS Health will stop covering Eli Lilly’s weight-loss drug, Zepbound. CVS has made a deal with Novo Nordisk to offer Wegovy instead. Wegovy will be the preferred drug for weight loss under CVS’s insurance plans.

This is a big deal for Eli Lilly. Many patients rely on insurance to help pay for expensive drugs like Zepbound. It might be harder for some people to afford it without coverage from CVS. CVS covers many people’s prescriptions, so this change could hurt Zepbound’s sales.

CVS has agreed to offer Wegovy as the top choice for weight loss. Wegovy will be sold for about $500 a month for people without insurance. 

CVS’s Caremark program will cover this, and they are pushing Wegovy over Zepbound. This could hurt Eli Lilly because Wegovy is now the go-to option for many customers.

Market Reaction and Investor Response

When CVS made this announcement, Eli Lilly’s stock dropped by more than 5%. Investors are worried that not having Zepbound covered by CVS will hurt the company’s profits. This drop shows that people are concerned about how this change will affect Eli Lilly.

Experts say that this move makes the market more competitive. Zepbound could lose some of its market share to Wegovy. Analysts believe that Eli Lilly may need to lower prices or offer more value to stay competitive in the market.

Financial Implications for Eli Lilly

Zepbound is a big part of Eli Lilly’s revenue. In the first quarter of 2025, the drug earned $2.3 billion in sales. Losing coverage from CVS could hurt these sales in the future.

Eli Lilly has lowered its earnings prediction for the year. This is partly due to the loss of CVS coverage for Zepbound. There are also other factors like trade issues and deal-related costs that are affecting the company’s outlook.

Strategic Responses and Future Outlook

Eli Lilly is planning to adjust its prices to stay competitive. They are also working on offering different dosages to meet the needs of more patients. The company is still investing in its U.S. factories, putting in $27 billion to boost production.

Eli Lilly still controls a large share of the U.S. GLP-1 drug market, 53.3%. They are focusing on new ideas and keeping their operations efficient to stay at the top. Even though CVS’s decision is a challenge, Eli Lilly’s strong position helps them stay competitive.

Final Words

CVS’s decision to stop covering Zepbound is a big problem for Eli Lilly. It may affect sales and cause investors to worry. However, Eli Lilly has plans to adjust and stay strong in the market. Investors will be watching LLY stock closely to see how well the company adapts.

Frequently Asked Questions (FAQs)

Disclaimer:

This content is for informational purposes only and not financial advice. Always conduct your research.