Eli Lilly announced on Jan. 12 that it will partner with Nvidia to build an innovation lab in the San Francisco Bay area. The lab will bring together Eli Lilly researchers and Nvidia engineers to collaborate on AI models for drug discovery. The two companies plan to invest up to $1 billion over five years in this initiative.
Developing new medicines is a slow and costly process, often taking over a decade and more than $1 billion. Many compounds fail to reach the market. Eli Lilly hopes AI can improve success rates.
This is not the company's first AI move. Last year, Eli Lilly announced it was building the industry's most powerful supercomputer with Nvidia. It aims to train this supercomputer using clinical trial data accumulated over years.
Previously, Eli Lilly launched TuneLab, an AI drug-discovery platform offered free to smaller biotechs. Access to the platform provides Eli Lilly with additional data for training AI models.
Eli Lilly's AI efforts are unlikely to yield immediate results. However, the company appears well-positioned to benefit if AI transforms drug discovery.
Beyond AI, Eli Lilly shows strength in other areas. Its weight management drug tirzepatide, sold as Zepbound, became the world's best-selling drug in the third quarter. The company's revenue grew 54% year over year to $17.6 billion in the third quarter, with earnings per share at $6.21, a 480% increase from the previous year.
Eli Lilly is also close to launching orforglipron, an oral medication for diabetes and obesity. Pipeline candidates like retatrutide are delivering strong results.
The company has diversified its pipeline with recent approvals including Ebglyss for eczema, Jaypirca for cancer, and Kisunla for Alzheimer's disease. Its pipeline spans oncology, immunology, pain management, and rare diseases.
Eli Lilly is a dividend-growth stock, with dividends increasing by 103.5% over the past five years. The company generates substantial free cash flow and consistently rewards shareholders.
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