Eli Lilly surpasses UnitedHealth as world’s biggest health-care firm

Lilly’s climb has been fueled by its drugs to treat obesity led by Mounjaro, already approved to treat diabetes, along with an experimental treatment for Alzheimer’s.

Eli Lilly & Co became the world’s biggest health-care company by market value, surging ahead of health insurance giant UnitedHealth Group Inc.

The drugmaker gained 0.9 per cent on Wednesday, extending its advance after four straight months of gains while adding more than $94 billion to its value this year. Lilly ended June at a record high.

Lilly’s climb has been fueled by its pipeline of drugs to treat obesity led by Mounjaro, already approved to treat diabetes, along with an experimental treatment for Alzheimer’s disease. The rally has made Lilly the top-performing stock in the S&P 500 Pharmaceuticals Index so far this year and marks the first time the drugmaker has closed above UnitedHealth in market value in more than a decade.

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UnitedHealth closed down 1.4 per cent and has fallen 11 per cent so far this year.

Lilly’s “success in obesity and to a lesser extent Alzheimer’s disease is driving this,” Evan Seigerman, an analyst at BMO Capital Markets, said in an interview. “They not only have the drugs, they also have the ability to successfully commercialize and launch them.”

The milestone came less than two months after Lilly crossed Johnson & Johnson to become the largest pharmaceutical company in the world. That “speaks to the size of the obesity opportunity,” and Lilly’s leadership position in the space, according to Carter Gould, a Barclays analyst.

In late April, Lilly said its diabetes drug Mounjaro had succeeded in a second final-stage trial in obesity, paving its path toward competing with Novo Nordisk A/S’s Wegovy, the leader in a new class of weight-loss drugs.

Lilly also plans to apply for approval of its Alzheimer’s drug donanemab, after a late-stage trial showed it was capable of modifying the disease course of the most common form of dementia. Its drug would compete with Eisai Co’s Leqembi.

UnitedHealth is down 15 per cent from a record high reached at the end of October. Health insurers have been pressured by concerns about changes to Medicare and Medicaid, and rising scrutiny in Washington of pharmacy-benefit managers.

In the latest blow, UnitedHealth Chief Financial Officer John Rex warned last month that a rebound in elective surgeries and other medical care might push expenses higher than expected, sending shares to the lowest level in a year.