The Jensen Investment Team Adds a New Position in Eli Lilly and Co to the Jensen Quality Growth Strategy
June 2025
Founded in 1876, Eli Lilly and Co is a global pharmaceutical leader with a long history of scientific innovation, strong execution and disciplined capital allocation. It exemplifies the qualities we seek in the Jensen Quality Growth Strategy: durable competitive advantages, consistently high returns on equity and a long runway for growth supported by strong fundamentals.
Lilly is helping lead a transformation in how chronic metabolic diseases — particularly obesity and Type 2 diabetes — are treated. Its most important innovation today is tirzepatide, a next-generation GLP-1-based therapy marketed as Mounjaro for diabetes and Zepbound for obesity. Tirzepatide has demonstrated superior clinical results compared to other approved GLP-1 treatments, driving rapid adoption and enabling Lilly to gain significant share in the overall GLP-1 market.
Lilly’s strong momentum reflects meaningful product differentiation. Its dual-mechanism therapy has demonstrated greater efficacy and broader physician adoption compared to existing single-pathway treatments, including leading GLP-1 therapies. These clinical advantages are supported by early investments in manufacturing capacity and patient access infrastructure, which have enabled the company to meet demand and scale effectively.
Lilly’s growth is underpinned by the continued expansion of its metabolic disease franchise, including new indications for tirzepatide and next-generation assets in development. The company is building on its success in obesity by targeting related conditions such as sleep apnea, cardiovascular disease and metabolic-associated fatty liver disease. It is also developing an oral GLP-1 and therapies with novel mechanisms of action, aimed at further improving outcomes and extending its leadership in the category. Beyond metabolic disease, Lilly continues to invest in earlier-stage programs in oncology, neuroscience and immunology that are positioned to drive longer-term growth. Its strong balance sheet supports sustained R&D investment and strategic flexibility across these therapeutic areas.
While Lilly trades at a premium relative to large-cap pharmaceutical peers, we believe the valuation is justified by its leadership in a large and underpenetrated category, a broad pipeline, and a superior outlook. The GLP-1 market is expanding rapidly, and Lilly is positioned to be its primary long-term beneficiary. With expected double-digit earnings growth over the next decade, the valuation, in our view, appears reasonable given the quality of the company and the durability of the opportunity.
Headlines around drug pricing, policy shifts and competition may introduce short-term volatility, but Lilly’s clinical edge, execution strength and investment discipline position it well to sustain leadership over time. We contend that it remains one of the most compelling long-term opportunities in global healthcare, and is a strong addition to the Quality Growth Strategy.
This trade marks a continuation of deliberate actions in response to a dynamic market environment, ranging from managing risk exposures in an ebullient 2024 to subsequently taking advantage of recent market volatility and tariff-induced economic turbulence. As such, we have strategically upgraded both the quality and growth profile of the portfolio, as this heightened market instability and uncertainty reveals opportunities for disciplined active managers like ourselves.
Strategy holdings are subject to change and should not be considered recommendations to buy or sell any security. Please click here for a listing of the Quality Growth Strategy’s current holdings.
The company discussion is solely intended to illustrate the application of our investment approach and is not to be considered a recommendation by Jensen. The specific security identified is taken from a representative accounts of the Jensen Quality Growth Strategy and does not represent all of the securities purchased and sold for the Strategy. Our views expressed herein are subject to change and should not be construed as a recommendation or offer to buy or sell any security and are not designed or intended as a basis or determination for making any investment decision for any security. Our discussions should not be construed as an indication that an investment in a security has been or will be profitable, or that the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of any security discussed herein.
Certain information contained in this material represents or is based upon forward-looking statements, which can be identified by the use of terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “target,” “project,” “estimate,” “intend,” “continue” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or the actual performance of a client account may differ materially from those reflected or contemplated in such forward-looking statements.
This information is current as of the date of this material and is subject to change at any time, based on market and other conditions.
Jensen Investment Management, Inc., is an investment adviser registered under the Investment Advisers Act of 1940. Registration with the SEC does not imply any level of skill or training. Although taken from reliable sources, Jensen cannot guarantee the accuracy of the information received from third parties.
© 2025 Jensen Investment Management
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