What's the Driving Force Behind Eli Lilly's Recent Acquisition Spree?

Eli Lilly LLY has been on an acquisition spree since the beginning of this year to bolster its pipeline, which should drive long-term growth. Although the cardiometabolic health space remains its core area, the company is also expanding strategically across various other therapeutic areas, like oncology, neuroscience and ophthalmology, through targeted deals.

Last week, Lilly announced a definitive agreement to acquire Adverum Biotechnologies for a total deal value of under $300 million. The acquisition will add Adverum’s lead candidate, Ixo-vec, an intravitreal, single-administration gene therapy being developed in a late-stage study to treat vision loss associated with wet age-related macular degeneration. The transaction, expected to be completed by year-end, is subject to customary closing conditions and clearance from regulatory authorities.

Once completed, Adverum Biotechnologies will join several other biotech acquisitions Lilly has made this year. In January, it signed a $2.5 billion deal for Scorpion Therapeutics’ experimental oncology drug, STX-478, a novel mutant-selective PI3Kα inhibitor. In May, Lilly agreed to acquire SiteOne Therapeutics in a deal valued at $1 billion to strengthen its pipeline of non-opioid pain treatments. The company recently closed the $1.3 billion Verve Therapeutics acquisition, which added a pipeline of novel gene therapies targeting heart diseases.

Lilly continues to dominate the GLP-1 drug market alongside Novo Nordisk NVO. Its tirzepatide injections — marketed as Mounjaro for diabetes and Zepbound for obesity — have seen rapid demand growth despite entering the market later than Novo Nordisk’s semaglutide injections, marketed as Ozempic (for diabetes) and Wegovy (for obesity). This strong commercial momentum has provided Lilly with the financial strength to fund and execute these targeted acquisitions.

Pharma M&A Activity Picks Up Pace

Following a relatively quiet start to the year, Big Pharma dealmaking has picked up momentum. Since early September, several large players have announced multi-billion-dollar acquisitions aimed at strengthening innovation pipelines and diversifying revenue bases.

Earlier this week, Novartis NVS announced that it will acquire Avidity Biosciences for $12 billion to strengthen its late-stage neuroscience pipeline. The acquisition intends to bolster Novartis’ neuroscience franchise with three late-stage programs targeting myotonic dystrophy type 1 (DM1), facioscapulohumeral muscular dystrophy (FSHD) and Duchenne muscular dystrophy (DMD). However, Avidity’s early-stage precision cardiology programs are not a part of this deal and will be merged into a new company before the transaction closes.

Earlier this month, Novo Nordisk announced plans to acquire Akero Therapeutics for $4.7 billion, plus $0.5 billion in contingent milestone payments tied to FDA approval of efruxifermin (EFX), Akero’s lead pipeline candidate. EFX is an FGF21 analog being evaluated across several late-stage studies for metabolic dysfunction-associated steatohepatitis (MASH) — a fatty liver disease closely tied to obesity and diabetes.

Last month, Pfizer PFE revealed plans to acquire obesity drug developer Metsera in a deal valued at $4.9 billion. This deal is significant since it marks Pfizer’s attempt to re-enter the lucrative obesity space after it scrapped the development of its oral GLP-1 drug, danuglipron, earlier this year. The transaction — expected to be completed before this year’s end — will add four novel clinical-stage incretin and amylin programs to Pfizer’s pipeline.

Collectively, these transactions reflect a shift toward selective, innovation-driven acquisitions rather than broad-scale consolidation — signaling a renewed focus on long-term growth through precision science.

LLY’s Price Performance, Valuation and Estimates

Shares of Lilly have outperformed the industry year to date, as seen in the chart below.

From a valuation standpoint, Eli Lilly is expensive. Based on the price/earnings (P/E) ratio, the company’s shares currently trade at 27.90 times forward earnings, higher than its industry’s average of 15.57. However, the stock is trading below its five-year mean of 34.54.

EPS estimates for 2025 have declined from $23.15 to $22.73, while those for 2026 have decreased from $30.82 to $30.78 over the past 30 days.

Eli Lilly currently has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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