Eli Lilly And Co (NYSE:LLY) is one of several companies benefitting from demand for weight loss drugs. The company is also seeing competition in the market including knockoff drugs that it said could be unsafe.
What Happened: A recent report says Eli Lilly is seeking medical records of people who took knockoff weight loss drugs.
The request, reported by Bloomberg, is being done for safety reasons according to the pharmaceutical company.
Eli Lilly is building a case against businesses that are selling knockoffs of the company's Zepbound and Monjaro. Compounding pharmacies have been capitalizing on Lilly seeing supply constraints and shortages while demand remains high.
Lilly has said that the quality of the compounding pharmacies products are inferior and questions the safety profile of the treatment.
A letter viewed by Bloomberg requested information from a patient who took a Lilly product from a compounded pharmacy.
"We would appreciate if you could complete the enclosed form and sign the Authorization for Release of Medical Information so that we can obtain more details from the treating physician around your experience," the letter says.
Along with items like the letter, Eli Lilly also took out an advertisement in national publications encouraging patients to make sure they are taking the "real product."
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Why It's Important: Obtaining medical records could be a key in Eli Lilly's battle against compounding pharmacies. The short supply of Lilly and other companies' weight loss drugs helped the argument for a legal loophole that allows compounding of drugs when a supply constraint happens.
If Eli Lilly can prove that the drugs are not as safe and are causing side effects or harm to patients, it could help put a stop to compounding pharmacies. Without proof, Eli Lilly may fall victim to the legal loophole and the issue of soaring demand for its own products.
Eli Lilly reported second-quarter revenue of $11.3 billion, up 36% year-over-year. Mounjaro and Zepbound had revenue of $3.1 billion and $1.2 billion, respectively, seeing significant gains in the quarter.
The pharmaceutical company increased its full-year guidance as a result of the second-quarter results and increasing demand for several products.
LLY Price Action: Eli Lilly stock closed Wednesday at $924.56 versus a 52-week trading range of $516.57 to $972.53. Eli Lilly stock is up 56% year-to-date in 2024.
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