This unstoppable stock has gained 100,203% over the past 50 years, creating many millionaires in the process. Here are 3 reasons why I think it will continue to create generational wealth.

A few months ago, I came across a podcast with Palantir co-founder Joe Lonsdale and Home Depot co-founder Ken Langone. During the discussion, Lonsdale asked Langone a few questions about his investment philosophy. At first, I thought these questions were a bit bizarre. After all, given Home Depot’s success over the past few decades, wouldn’t it make sense for Langone to make his fortune this way?

But to my surprise, I learned that Langone was involved in many businesses outside of his home improvement empire. Among all, one company with which the billionaire has close ties is the pharmaceutical one Eli Lilly (NYSE: LLY). Langone has been a proud shareholder since Lilly bought a medical device company he was involved with decades ago. In fact, Langone is rumored to be Lilly’s largest single shareholder (though he said he couldn’t confirm that for sure).

What is certain, however, is that Lilly shares have brought generational wealth to many investors. Since 1972, Lilly stock has produced total returns of 100,203%.

Companies that have witnessed this level of success are few and far between. And yet, what if I told you that more growth looks set for Lilly over the next few years?

Below, I’ll break down three emerging catalysts in the pharmaceutical industry and explain how Lilly is at the forefront of each.

1. The GLP-1 narrative is still in its infancy

One of the biggest narratives in the pharmaceutical space right now is around weight loss. Glucagon-like peptide-1 (GLP-1) agonists such as Ozempic, Wegovy, Mounjaro and Zepbound are just a few of the successful drugs emerging in the indication. Two companies dominate the GLP-1 realm right now.

Novo Nordisk makes Ozempic, Wegovy, Rybelsus and Saxenda, which are approved to treat diabetes and obesity. This list of treatments has fueled him to the top of the GLP-1 atmosphere for now. Lilly is the developer behind Mounjaro and Zepbound (both are formulations of the same compound, tirzepatide), and current demand trends and broader market themes suggest the company is positioned for much greater growth.

Grand View Research issued a report suggesting that the total global addressable market (TAM) for GLP-1 treatments was worth USD 36.8 billion in 2023 and is forecast to grow at a CAGR of 21.6% between 2024 and 2030 . JPMorganHis forecast is for the GLP-1 market to exceed $100 billion by 2030. JPMorgan also estimates that 9% of the US population could be using a GLP-1 treatment by the beginning of the next decade.

The story continues

While the outlook for GLP-1 looks generally optimistic, I think there is a chance that the above estimates significantly underestimate their growth potential. Earlier this year, Novo Nordisk received an expanded indication from the Food and Drug Administration (FDA) for Wegovy. Specifically, Wegovy can now be prescribed to treat obese patients who also face cardiovascular complications, such as high blood pressure or risk of stroke.

Lilly might not be far behind. The company announced earlier this year that it was exploring the possibility that its GLP-1 drugs could add a new indication as a treatment for people with obstructive sleep apnea. Longer term, I see GLP-1 drugs becoming much more used for conditions beyond diabetes and chronic weight control.

Given that Mounjaro and Zepbound are relatively new drugs on the market, I think Eli Lilly’s best days in the GLP-1 industry are well ahead. Additionally, I suspect that Lilly will become much more aggressive with its marketing campaigns as the competition with Novo Nordisk heats up.

2. A new $31 billion opportunity

Lilly gave investors another reason to cheer earlier this summer when its Alzheimer’s drug donanemab won FDA approval.

According to Market.us, the global TAM for the treatment of Alzheimer’s disease is currently worth about $6.5 billion, but the research firm estimates that this market will grow at a compound annual rate of 19% between 2024 and 2033 — putting the estimated size of market to about $31 billion by the beginning of the next decade.

Currently, major players in the treatment of Alzheimer’s disease include biogenic and Come on. Given that donanemab just received approval a few months ago, I suspect it will take some time for investors to start seeing the drug have a material impact on Lilly’s growth.

The tailwinds fueling demand for GLP-1 and the strong prospects for the treatment of Alzheimer’s, combined with limited competition in both spaces, lead me to believe that Lilly is on a launch pad that should not be undervalued.

3. Artificial intelligence and the future of healthcare

The last catalyst I think investors should be aware of revolves around the intersection of artificial intelligence (AI) and healthcare. AI is more than just self-driving cars, humanoid robots and productivity software. An under-the-radar use case is how technology can advance the healthcare industry.

Eli Lilly takes these insights seriously. The company is working with ChatGPT maker OpenAI to use generative AI to help develop antimicrobial drugs that can fight drug-resistant bacteria and pathogens.

Antimicrobial resistance (AMR) is an enormous health problem, one that already affects millions of people globally. But like many areas of healthcare that need more attention, AMR is a complex problem, and finding cures for it has proven daunting and expensive. The World Bank estimates that healthcare costs around AMR could reach $1 trillion by 2050. While this may seem far-fetched, the World Bank also estimates that AMR could reduce global gross domestic product by up to 3 .4 trillion dollars annually by 2030.

While it may be years or even decades before Lilly makes progress in AMR, I’m encouraged that the company is thinking about opportunities outside of its core markets and how it can continue to impact medicine in the long term.

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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Adam Spatacco has positions in Eli Lilly, Novo Nordisk and Palantir Technologies. The Motley Fool has positions in and recommends Home Depot, JPMorgan Chase and Palantir Technologies. The Motley Fool recommends Biogen and Novo Nordisk. The Motley Fool has a disclosure policy.

This unstoppable stock has gained 100,203% over the past 50 years, creating many millionaires in the process. Here are 3 reasons why I think it will continue to create generational wealth. was originally published by The Motley Fool