With Eli Lilly's diabetes and obesity products Mounjaro and Zepbound booming in popularity, the drugmaker finds itself in a welcome predicament: What to do with all that cash?
One answer: the Indianapolis-based pharma giant on Monday laid out a plan for a board-approved share buyback campaign worth $15 billion.
During a “period of rapid growth,” Lilly is sticking with its capital allocation priorities of "supporting new launches, expanding our manufacturing capacity, and advancing our pipeline through research and development and business development," CFO Lucas Montarce said in a Monday press release.
“However, given the strong growth profile of the company, we're also increasing the amount of capital we plan to return to shareholders,” Montarce added. “We expect to execute this program over the next three years."
The program comes right on the heels of a $5 billion buyback scheme the drugmaker completed during the current quarter.
Along with the share buybacks, the board announced a 15% increase in Lilly's quarterly divided. Lilly's first-quarter 2025 dividend of $1.50 per share will be payable on March 10.
While Lilly has enjoyed rapid growth in recent years, the company's Mounjaro and Zepbound sales fell short of analyst expectations during the third quarter. While Mounjaro sales hit $3.11 billion and Zepbound revenues came to $1.26 billion during the period, both figures failed to reach Wall Street estimates. At the time, the company chopped $600 million from the top end of its annual revenue projection, and investors responded by sending the company's share price lower by about 8%.
Still, with both products helping to boost overall company revenue by 42% compared with 2023's third quarter, the drugmaker is by no means strapped for cash.
During the first 9 months of the year, Lilly dedicated $6.7 billion to R&D, $3.4 billion to capital investments, $4.5 billion to business development, $3.5 billion to dividend payments and $400 million to buybacks, according to a recent investor presentation (PDF).
Manufacturing capacity remains an area that Lilly is continuously putting its chips behind to contend with sky-high demand for Mounjaro and Zepbound. Just last week, the company committed $3 billion to expand the Kenosha, Wisconsin, plant it purchased from Nexus Pharmaceuticals in April for $925 million. The $3 billion project will enable the company to bring on 750 additional staffers at the plant.
Besides that project, Lilly in October devoted $4.5 billion to a new R&D and manufacturing facility in Indiana.