Eli Lilly on Tuesday said it will spend $6 billion to build a manufacturing plant in Huntsville, Alabama, to help boost production of its closely watched experimental obesity pill and other drugs. 

It is the third facility in a string of new planned U.S. investments by the drugmaker. Eli Lilly announced in February that it would spend at least $27 billion to build four new domestic manufacturing plants, adding to $23 billion in previous investments since 2020.

The company said it expects construction of the Alabama plant to start in 2026 and for it to be completed in 2032. 

“Today’s investment continues the onshoring of active pharmaceutical ingredient (API) production, strengthening supply chain resilience and reliable access to medicines for patients in the U.S.,” said Eli Lilly CEO David Ricks in a release. 

That added production capacity for Eli Lilly’s obesity pill, orforglipron, is crucial as the company races to file for its approval and tries to maintain its dominance in the booming market for GLP-1s. The company and its chief rival, Novo Nordisk, faced supply shortages for their existing weekly injections after demand skyrocketed in the U.S. in recent years, though they have managed to alleviate those issues.

Eli Lily’s pill in November won a priority review voucher from the Food and Drug Administration, which will significantly speed up the regulator’s assessment of the drug to potentially a few months. 

Drugmakers have been scrambling to boost their production in the U.S. after threats by President Donald Trump to impose tariffs on pharmaceuticals imported into the U.S. But concerns about those potential tariffs have eased following recent drug pricing deals with Trump that exempt companies from the levies.

Eli Lilly said the Alabama site will bring 450 jobs to the area, including engineers, scientists, operations personnel and lab technicians, as well as 3,000 construction jobs. 

President Donald Trump on Thursday struck landmark deals with Eli Lilly and Novo Nordisk that could mark a turning point in how many people can access their costly blockbuster obesity drugs. 

Under the agreements, Medicare will start covering GLP-1s for obesity for certain patients for the first time beginning in mid-2026 – a shift that will open access to millions of older adults and could spur more employers and other private insurers to follow suit, some experts said. Novo Nordisk and Eli Lilly are also lowering the prices that all state Medicaid programs will pay for GLP-1s, but it’s up to states to opt into coverage. 

Obesity drug coverage among state Medicaid plans, employers and other private insurers remains spotty due to the $1,000 or more monthly list prices of existing GLP-1s, including Eli Lilly’s obesity injection Zepbound and Novo Nordisk’s competitor Wegovy. 

The limited insurance coverage has blocked out patients who can’t afford their hefty price tags. That lack of access has led to mounting pressure on health plans and the government to expand coverage — and the government agreements with drugmakers could mark a major shift.

“I think it’ll start with the government, start with Medicare, and the insurers will quickly follow,” Nick Fabrizio, an associate teaching professor in Cornell’s health policy program, told CNBC. “I do think that’s coming.”

“This is a great step towards trying to address a chronic and serious issue, and for those patients who may feel like they have no hope,” he said.

Roughly 8 to 9 million people in the U.S. are using GLP-1s, Eli Lilly CEO David Ricks said at a briefing with reporters on Thursday. The added Medicare coverage under the deal could bring in as many as 40 million new eligible patients, and prompt more commercial plans to cover the medicines, he said.

The deals could also address the inability of many patients with limited or no insurance coverage for obesity drugs to access them, by offering the treatments at a discount on the Trump administration’s direct-to-consumer website, TrumpRx.gov. 

The monthly out-of-pocket cost of existing injections and upcoming pills could range from $50 to $350 starting next year, depending on the dosage and insurance coverage a patient has. 

Still, there is a law prohibiting Medicare from covering weight loss drugs, so any changes would have to come from Congress. Eli Lilly’s Ricks told reporters Thursday that for now, the government will launch an initial pilot program in the spring of 2026 under a temporary legal mechanism. It would be voluntary for Medicare prescription drug plans, so “it may be possible that a few plans do not participate, but I would expect almost all do,” he said. 

But Ricks said that it will transition into a formal so-called Center for Medicare and Medicaid Innovation pilot program in 2027, which means it will be mandatory for all Medicare Part D plans.

“So we expect broad coverage in all plans both in 2026 and beyond,” he said.

Likely the most notable feature of the deals is Medicare coverage of obesity drugs, as it will allow the treatments to reach new patients in the program and could lead to broader private insurance coverage. 

Under the deals, Eli Lilly and Novo Nordisk agreed to cut the price Medicare and Medicaid pay for GLP-1s to $245 per month. In Medicare specifically, certain patients will pay a copay of $50 per month for all approved uses of injectable and oral GLP-1 drugs, including diabetes and obesity treatment.

But the Trump administration is putting some constraints on which Medicare beneficiaries will be eligible to receive GLP-1s for obesity and cardiovascular and metabolic benefits. People who qualify include patients with a body mass index of 27 or above with prediabetes or established cardiovascular disease; people with a BMI of 30 or more with related health conditions; or those with severe obesity, or a BMI of 35 and above. 

GLP-1s for weight loss are approved for a broader population: people who have obesity or are overweight with one related condition. In a note Thursday, Leerink Partners analyst David Risinger also said it’s unclear whether the government will allow patients to stay on a GLP-1 for obesity after their BMI levels drop. 

Even with those restrictions, “I think in practice, it’s still going to cover a fair number of people,” said Darius Lakdawalla, chief scientific officer at the University of Southern California’s Schaeffer Center.

JPMorgan analyst Chris Schott said the eligibility criteria mean 80% of the obese population in Medicare could receive coverage for GLP-1s, despite the limits.

“Today’s deal will open up meaningful access to obesity drugs,” Schott said in a note about Eli Lilly on Thursday. 

Lakdawalla added that while there isn’t clear evidence that private insurers will expand coverage on the heels of government plans, “it’s just optically harder for them to continue to constrain coverage when Medicare and Medicaid are covering them.” 

“That’s going to exert some pressure for commercial coverage of these drugs to expand as well,” Lakdawalla said. 

Coverage for GLP-1s for obesity has ticked up slightly, but remains sparse: A May survey of more than 300 companies by the International Foundation of Employee Benefit Plans found that 36% provided coverage for GLP-1s for both weight loss and diabetes, up from 34% in 2024. 

Lakdawalla said the direct-to-consumer offerings under the deal could be useful for people who are underinsured, uninsured or may not have coverage for obesity medicines. Still, it’s unclear how many more patients the drugs will reach due to the offerings. 

Both Eli Lilly and Novo Nordisk have introduced lower cost options for their drugs for people paying in cash and purchasing the drugs directly through their websites. But the deals with Trump will give those patients even bigger discounts.

On TrumpRx, the average monthly cost for Wegovy, Zepbound and other injectable GLP-1s will start at $350 and drop to $250 within the next two years, according to senior Trump administration officials. Eli Lilly and Novo Nordisk both offered some GLP-1s on their direct-to-consumer platforms for up to $450 to $500 per month.

Starting doses of obesity pills from Eli Lilly and Novo Nordisk — expected to hit the market next year — will be $149 per month on TrumpRx, Medicare and Medicaid.  

Eli Lilly on Thursday said it would lower prices by $50 on its own direct-to-consumer platform, LillyDirect, which already offers Zepbound and other drugs at a discount to cash-paying patients. The multidose pen of Zepbound will be available for $299 per month at the lowest dose, with additional doses being priced up to $449 per month.

In terms of Medicaid, Cornell’s Fabrizio said states will likely want to start covering obesity drugs at the lower price point, “but the question is how will they pay for it?”

Around a dozen state Medicaid programs cover obesity drugs, according to 2024 estimates from KFF, a health policy research organization. While GLP-1s offer substantial health benefits to Medicaid beneficiaries, state programs are already facing constrained budgets and administrative demands.

Fabrizio added that raising taxes to cover the drugs “could be a sticky issue.”

Still, JPMorgan’s Schott said offering lower prices to Medicaid programs could lead to a “significant increase in coverage” in that channel, where Zepbound has very limited uptake. 

Eli Lilly cut its revenue guidance on Tuesday as it said demand for its weight loss and diabetes drugs would not meet its lofty expectations.

The drugmaker’s shares closed more than 6% lower on Tuesday.

Eli Lilly said it now expects full-year 2024 revenue of about $45 billion. That’s lower than the $45.4 billion to $46 billion the company anticipated in October. The new outlook would still mark a 32% jump in revenue from the prior year.

Eli Lilly has been racing to meet soaring demand for its diabetes treatment Mounjaro and obesity drug Zepbound, investing billions to ramp up its manufacturing capacity of the company’s booming so-called incretin drugs. The efforts appear to be paying off: The Food and Drug Administration in December reaffirmed its decision to declare the U.S. shortage of tirzepatide — the active ingredient in both drugs — over.

In an interview with CNBC on Tuesday, Eli Lilly CEO Dave Ricks said the company has “tons of supply coming online” and “that kind of growth will likely continue.”

He also noted that the company will add more manufacturing capacity and expects to produce at least 60% more sellable doses of its incretin drugs in the first half of the year compared with the same period in 2024.

For the fourth quarter, Eli Lilly expects $13.5 billion in revenue. The total includes about $3.5 billion for Mounjaro and $1.9 billion for Zepbound.

Wall Street had expected fourth-quarter and full-year revenue of $13.94 billion and $45.49 billion, respectively, according to analysts surveyed by LSEG.

The outlook cut comes as Eli Lilly competes with Novo Nordisk and other, smaller rivals for share of the exploding weight loss and diabetes drug market. Eli Lilly is developing an obesity pill that would be more convenient for patients and easier to manufacture, and Ricks expects it to be approved as soon as early next year.

“While the U.S. incretin market grew 45% compared to the same quarter last year, our previous guidance had anticipated even faster acceleration of growth for the quarter. That, in addition to lower-than-expected channel inventory at year-end, contributed to our Q4 results,” Ricks said in a statement.

The drugmaker also said it expects sales of $58 billion to $61 billion in fiscal 2025.

Eli Lilly is expected to report full quarterly results on Feb. 6.

Eli Lilly on Tuesday reported first-quarter adjusted profit that topped Wall Street’s expectations and hiked its full-year guidance on strong sales of its blockbuster diabetes drug Mounjaro and newly launched weight loss treatment Zepbound.

The drugmaker now expects full-year adjusted earnings of $13.50 to $14.00 per share, up from previous guidance of $12.20 to $12.70 per share. Eli Lilly also expects revenue for the year to come in between $42.4 billion and $43.6 billion, an increase of $2 billion at either end of the range.

Analysts surveyed by LSEG expected full-year adjusted earnings of $12.50 per share and sales of $41.44 billion. 

The company said the boosted guidance is in part due to “greater visibility” into its production expansion of Zepbound, Mounjaro and similar drugs for the rest of the year.

The results and guidance raise reflect Zepbound’s first full quarter on the U.S. market after winning approval from regulators in early November. The drug reported $517.4 million in sales for the first quarter, even as most doses of the drug slipped into shortages in the U.S. that are expected to last through June.

Analysts say the weekly injection could post more than a billion dollars in sales in its first year on the market and potentially become the biggest drug of all time.

Eli Lilly noted that demand for Mounjaro and Zepbound — treatments known as incretin drugs, which mimic hormones produced in the gut to suppress a person’s appetite and regulate their blood sugar — outpaced increases in supply during the quarter.

The company said it is continuing to expand its manufacturing footprint, with the most significant production increases expected in the second half of the year.

“Our top priority is making more product, and we’re doing everything we can to do that,” Eli Lilly CEO David Ricks said in an interview Tuesday on CNBC’s “Squawk Box.” “We’re ramping that aggressively. But it’s capital intensive, it’s technically complex and highly regulated.”

Ricks added that Mounjaro and Zepbound are among the “most complicated medicines we’ve ever made.”

Here’s what Eli Lilly reported for the first quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG: 

• Earnings per share: $2.58 adjusted vs. $2.46 expected
• Revenue: $8.77 billion vs. $8.92 billion expected

Eli Lilly posted net income of $2.24 billion, or $2.48 a share, for the first quarter. That compares with a profit of $1.34 billion, or $1.49 a share, a year earlier. 

Excluding one-time items associated with the value of intangible assets, among other adjustments, the company posted a per-share profit of $2.58 for the first quarter of 2024.

The pharmaceutical giant booked first-quarter revenue of $8.77 billion, up 26% year over year.

Shares of Eli Lilly jumped almost 7% in premarket trading Tuesday. They’re up 26% this year after surging almost 60% in 2023 due to the insatiable demand for the company’s weight loss and diabetes drugs. That’s despite their hefty price tags, spotty insurance coverage and intermittent supply shortages. 

With a market cap of about $700 billion, Eli Lilly is the largest pharmaceutical company based in the U.S.