Eli Lilly: Easy pill to swallow
The trillion-dollar market cap club is dominated by the tech giants, Tesla and Berkshire Hathaway, and now it has its first member from the pharmaceutical sector as Eli Lilly’s meteoric rise this year hits the big number.
This is quite a turnaround for a company that was long regarded as a second-tier player in the backwaters of Indianapolis but is now worth more than Walmart and boasts a valuation more than twice that of Johnson & Johnson, the second largest in big pharma.
This remarkable success is based on tirzepatide, the active ingredient in its blockbuster drugs for obesity and diabetes. Zepbound, Lilly’s therapy for obesity, can help a well-upholstered American shed up to 20% of their body weight without having to darken the doors of their local gym and has the potential to help organs such as the heart and kidneys. Mounjaro, the diabetes drug, allows about 80% of sufferers to keep their blood sugar in a healthy range.
Combined sales of Zepbound and Mounjaro in the first nine months of 2025 were just shy of $19bn, which makes them the best-selling drugs in the world and puts Lilly in the driving seat of a market that is expected to reach $100bn in annual sales by 2030.
Demand is so great that Lilly has announced what it says is the biggest investment in synthetic drug production in US history, and it is about to launch one of the first weight-loss treatments in pill form. As investors get nervous about AI valuations, this is an attractive alternative.
Ocado: No delivery
For years Ocado has been trying to persuade the market that it is not an online grocer; it’s in fact a technology company and should be valued as such.
Its share price was 180p when it listed in 2010 and rose to a high of £29 during the pandemic in 2020, when lockdowns had much of the world stuck on the sofa panic-ordering baked beans in industrial quantities.
In 2018 Ocado bolstered its tech company credentials by signing a deal with supermarket giant Kroger to build 20 of its state-of-the-art distribution centres in the US, but this has come back to bite it.
With only eight of the planned 20 built, Kroger has announced that after a review of its operations it would be closing three of them, and Ocado’s share price is back at 180p.
The problem seems to be that Ocado’s warehouses require huge investment in automation, robotics and refrigerated vans, and Kroger has said it will be heading in the opposite direction by increasing its use of rapid delivery services that involve people grabbing products from the shelves and sticking them on a bike.
Ocado will be getting $250m in compensation for the early closures and has announced that it still “expects significant growth in the US market”. However, it’s a bit light on detail as to how it’s going to bring that about.
Investors who have spent a decade and a half waiting for jam tomorrow may well have lost patience and may remember the £59m that CEO Tim Steiner was paid in 2019 with less than complete delight.
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