Shares of Eli Lilly (LLY) are marching higher after the pharmaceutical company announced plans to accelerate drug discoveries using artificial intelligence (AI).
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Specifically, Eli Lilly has reached a $2.75 billion deal with Hong Kong-based Insilico Medicine to bring drugs developed using AI to the global marketplace. The agreement gives Insilico $115 million upfront, with the remainder of the money subject to regulatory and commercial milestones.
Insilico will also be able to earn royalties on future sales of AI-made medications, according to the two companies. Insilico says it has developed at least 28 prescription drugs using generative AI, with nearly half of those medications now in clinical trials.
Eli Lilly’s China Push
Eli Lilly and Insilico have worked together on various AI-related projects since 2023. The latest deal with the Hong Kong-based company comes after Eli Lilly announced plans to invest $3 billion in China over the next decade. About 3% of the company’s annul revenue currently comes from China.
Eli Lilly says that AI can help to reduce research times on new medications, and that AI can synthesize molecules faster than those discovered using more traditional laboratory methods and procedures. Insilico Medicine went public in Hong Kong late last year and its stock has since risen more than 50%.
Is LLY Stock a Buy?
The stock of Eli Lilly has a consensus Strong Buy rating among 19 Wall Street analysts. That rating is based on 16 Buy, two Hold, and one Sell recommendations issued in the last three months. The average LLY price target of $1,247.38 implies 31.53% upside from current levels.
