Eli Lilly (NYSE:LLY) has recently experienced a significant surge in its share prices, driven by the success of its GLP-1-based drugs, Mounjaro and Zepbound. These drugs have shown remarkable efficacy in treating diabetes and aiding in weight loss, which has led to substantial financial gains for the pharmaceutical giant.

The company reported a net income of $2.97 billion, translating to $3.28 per share fully diluted, on a revenue of $11.3 billion for the second quarter. The impressive results led Eli Lilly to revise its full-year revenue guidance to a range of $45.4 billion to $46.6 billion, and its earnings per share guidance to $15.10-$15.40.

The success of Mounjaro and Zepbound cannot be overstated. Mounjaro generated sales of $3.1 billion, while Zepbound brought in $1.2 billion in the second quarter alone. This achievement is noteworthy, considering that the drugs have only been on the market for less than two years. These two drugs now account for nearly 40% of Lilly's total revenue.

Lilly's performance sent its shares soaring by over 13% overnight, reaching a market capitalization exceeding $825 billion. Investors were buoyed by not just the current earnings, but also by the FDA's announcement that Lilly had resolved its two-year-long shortages of diabetes drugs, paving the way for uninterrupted future sales.

Despite the promise, competition looms. Other pharmaceutical giants are readying their own GLP-1 drugs, which could potentially challenge Lilly's dominance. Nonetheless, the long-term outlook appears bright for those suffering from diabetes and obesity, as GLP-1 drugs emerge as modern-day game-changers, akin to statins in the 1990s.

Lilly's achievement has not only been noted in its revenue but has also raised the profile of its older drugs like Jardiance and Verzenio through increased advertising, further cementing its market position.

However, supply chain issues have plagued the weight-loss drug market. Reuters reported that some doctors are prescribing either Zepbound or its competitor, Novo Nordisk's Wegovy, based on availability rather than effectiveness. Lilly's CEO assured that the shortage would be resolved soon, yet the FDA's updated site confirms the availability of Zepbound while keeping it on the shortage list.

Both Lilly and Novo Nordisk are aggressively expanding their manufacturing capabilities. Lilly announced plans to introduce Zepbound in more markets, including the UK, Germany, and Saudi Arabia, aiming to satiate the growing demand and mitigate supply issues.

Market analysts forecast that the weight-loss drugs market could reach $150 billion annually by the early 2030s. Until supply issues are wholly resolved, the market is expected to split roughly evenly between Lilly and Novo Nordisk in the U.S., the most lucrative market where over 70% of adults are either obese or overweight.

The second quarter results have indeed portrayed Lilly's robust financial health. It reported earnings per share of $3.92, significantly higher than the forecasted $2.60, and revenue of $11.30 billion, beating the anticipated $9.92 billion. This substantial performance underscores the demand for Mounjaro and Zepbound, the so-called blockbuster drugs.

The recent financial results have bolstered investor confidence, with Lilly's stock being a major contributor to Wall Street's strong performance recently. The company's better-than-expected profits, driven by its flagship drugs, have reinforced its standing not just in the pharmaceutical market but also in the stock market, paving the way for continued dominance in the health sector.