Every family has one relative who cannot stop overachieving. In the Capital Wealth Growth Portfolio, that relative is Eli Lilly (LLY). On Wednesday it did it again.
Lilly earned $8.38 a share last quarter. Wall Street expected $6.01. That is not just beating expectations. That is showing up to a potluck with a wedding cake.
The engine is the GLP-1 franchise — the new family of diabetes and weight-loss medicines. Mounjaro, the diabetes drug, sold $9.94 billion in the quarter, up 91% from a year ago. Zepbound, its weight-loss sibling, added $4.93 billion, up 46%.
Pause on those numbers. One drug is closing in on a $40 billion yearly pace. There are entire Fortune 100 companies smaller than Mounjaro.
Lilly also raised its own estimate of how fast this category can keep growing. Most companies talk expectations down so they can beat them. Lilly keeps talking them up — and then clearing them anyway. The stock rose 4.9%.
The pharmacy deal
The quieter news may matter longer. Lilly struck a partnership with CVS Health (CVS). It puts clear, app-based pricing on Zepbound, rebrands a version of the drug as Foundayo, and offers same-day pickup at the pharmacy.
Why that matters: the two biggest headaches with these drugs are confusing prices and hard-to-get access. A drugmaker that solves the errand — clear price, pick it up today, at the drugstore you already use — is building a moat — a durable advantage a rival cannot easily copy — out of convenience. Convenience is the most durable moat there is.
CVS itself had a stranger day. Its quarterly profit roughly tripled, yet the stock fell 5.1% over a detail in its forecast. We note it without alarm. Markets grade the forecast, not the quarter — a theme this week keeps repeating.
The other giant stumbled
Now the contrast. Novo Nordisk (NVO), the other GLP-1 giant, raised its outlook — and its American shares fell 6%.
The complaint: Novo's new Wegovy pill has topped five million prescriptions, but sales still came up short of hopes, and a study of its next-generation drug disappointed. Same category. Same tailwind. Different report card.
This is why our house rule exists: adapt to the GLP-1 era; don't chase the drugmakers. Betting on the category means guessing who wins the pricing wars, the research races, and the patent expirations. We would rather own the companies that benefit no matter which drug wins.
Novo's Wednesday shows the risk in one line. An investor who bought “the GLP-1 boom” through Novo a year ago watched the boom arrive on schedule and the stock go the other way. The category was right. The pick was the problem.
The earned exception
Lilly is the one exception to our rule, and “earned” is the operative word. It holds its place in the Capital Wealth Growth Portfolio because it keeps beating its own raised bar — four quarters in a row now — not because the category is exciting.
The day Lilly starts merely meeting expectations, it becomes an ordinary holding subject to ordinary review.
The adapters, meanwhile, do their quieter work. Johnson & Johnson (JNJ) and AbbVie (ABBV) stay among our health holdings — businesses positioned for a world where GLP-1 drugs change what patients need, without asking us to guess which molecule wins.