Carnival Leads Cruise Stocks Lower on Weak 3Q Outlook

Summary

Bloomberg Intelligence Podcast – June 23, 2026

Episode: Carnival Leads Cruise Stocks Lower on Weak 3Q Outlook
Hosts: Paul Sweeney & Scarlet Fu

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Episode Overview

In this episode, Paul Sweeney and Scarlet Fu use insights from Bloomberg Intelligence to dissect key stories moving Wall Street, focusing first on Carnival Cruise Lines' weak third-quarter outlook and its effect on the cruise sector, then pivoting to SpaceX’s debut bond issuance and equity volatility, Google’s AI talent woes, and conclude with Eli Lilly’s transformation into a pharmaceutical giant on the strength of its blockbuster weight loss drugs. In each segment, they bring on expert analysts and reporters to provide research-driven commentary and real-time interpretation.

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Segment 1: Carnival Cruise Lines' Outlook and Industry Trends

Guest: Brian Edger, Senior Gaming & Lodging Analyst – Bloomberg Intelligence
Timestamps: 02:01 – 07:45

Key Points

• Carnival’s Q3 Weakness

  • Carnival’s reported numbers disappoint, stock trades down 5% for the day.
  • Recent Middle East conflict, particularly in Iran, elongated travel uncertainty, affecting air travel and specific cruise itineraries (Eastern Mediterranean).
  • “When they last gave guidance in March, they were not expecting we’d still be talking about this into May and June.” (Brian Edger, 02:29)

• Booking Trends & Yield Growth

  • Despite disruptions, Carnival and the broader industry show positive yield growth.
  • The company reports ~93% bookings for the year, with early positivity for 2027.
  • “The industry is still proven to be quite resilient, notwithstanding the fact that… the war itself was a factor.” (Brian Edger, 03:16)

• Fuel Costs & Hedging

  • Unlike airlines, not all cruise operators hedge fuel. Carnival currently is not hedged.
  • Fuel is a significant part of cruise cost structure (~10%+). Declining prices could flip from headwind to tailwind.
  • “Certainly the relaxation or the easing of Brent fuel… is a positive for them.” (Brian Edger, 04:31)

• Capacity Growth

  • Sector growing mid-single digits; Carnival takes a more conservative path with only 1% capacity growth in 2026.
  • “They will be adding maybe one or two ships a year… quite measured.” (Brian Edger, 05:15)

• Market Segmentation

  • No sharp split in demand between high-end and low-end cruises currently; broad-based strength observed.
  • “For cruises, the strength has been fairly broad based.” (Brian Edger, 06:01)
  • Luxury and niche segments like river cruises (e.g., Viking Cruises) outperforming.

• Las Vegas Check-In

  • Slight improvement over last year with market bifurcation between luxury and value segments.
  • “Vegas is better than last year… a bit more stabilized this year.” (Brian Edger, 07:19)

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Segment 2: SpaceX Market Debut, AI Investment & Bonds

Guests: Robert Schiffman, Senior Tech Credit Analyst; Mandeep Singh, Global Tech Research Head – Bloomberg Intelligence
Timestamps: 10:09 – 23:34

Key Points

• SpaceX’s Market Movements

  • SpaceX stock experienced volatility following IPO, down as much as 22% in three days but showing signs of stabilization.
  • “It just felt like the stock was trying to find a home here and that’s maybe like who really wants to own this thing long term and who’s just playing the deal a little bit.” (Scarlet Fu, 10:32)

• Debut Bond Issuance

  • SpaceX launches investment-grade bonds to refinance bridge loans and fund AI infrastructure; seen as highly attractive in the credit markets.
  • Bonds are expected to price wide compared to similarly rated issuers, drawing broad investor demand.
  • “These bonds are going to come wildly wide to where comparably rated investment grade names trade… that’s going to attract a lot of attention.” (Robert Schiffman, 11:13)

• Credit Rating Context & Elon Musk Factor

  • “You can’t have negative free cash flow… without access to low cost, cheap capital.” (Robert Schiffman, 12:22)
  • SpaceX’s rating bolstered by substantial equity raised, liquidity, and commitment to low leverage.
  • “I would actually argue there’s Elon Musk reward… Elon Musk is to today’s generation what Warren Buffett was to the prior generation in terms of value creation.” (Robert Schiffman, 14:03)
  • Bond investors seek spreads that compensate for risk; wide spreads on SpaceX bonds seen as reflecting perceived uncertainties but also attractive.

• Broader Credit Context

  • Other tech giants like Amazon or Alphabet, with “Mount Rushmore balance sheets,” get easier credit; SpaceX judged on potential and unique positioning.
  • “Even if the long term you think there’s real question marks, in the short term you’re going to try to get bonds. You’re going to buy bonds now and ask questions later.” (Robert Schiffman, 15:12)

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Segment 3: SpaceX’s Narrative Post-IPO & Google’s AI Talent Wars

Guest: Mandeep Singh, Head of Global Tech Research – Bloomberg Intelligence
Timestamps: 19:08 – 23:34

Key Points

• SpaceX Investor Realignment

  • SpaceX requires major upfront investment—“this is not a free cash flow or a stock buyback story anytime soon.” (Mandeep Singh, 19:49)
  • Ongoing shakeout among shareholders, especially with expected dilution from the Cursor acquisition.

• Google’s AI Talent Exodus

  • Recent high-profile departures from Google’s AI teams provoke concern about Google’s competitive position.
  • “When it comes to frontier models, there’s no doubt that Anthropic is ahead. Even OpenAI has been releasing their models at a faster pace… does Google have an equivalent model? No.” (Mandeep Singh, 20:56)
  • Anthropic praised for “frontier” advances, now the top magnet for elite AI talent.
  • Talent is the key arms race—Google’s market cap drop reflects competitive anxieties.

• Importance of Acquisitions and Talent

  • Cursor acquisition praised as “really did make a difference” (Mandeep Singh, 22:23), both for agentic AI use cases and the addition of elite technologists.

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Segment 4: The Rise of Eli Lilly and the GLP-1 Boom

Guest: Madison Miller, Healthcare Reporter – Bloomberg News
Timestamps: 26:25 – 33:15

Key Points

• Lilly’s Historical Transformation

  • Company founded over 150 years ago, underwent a major resurgence driven by success of weight-loss drugs Zepbound (tirzepatide) and Mounjaro.
  • Blockbuster drug launches have made Lilly the world’s most valuable healthcare company (now a $1T company).
  • “They had sort of a dry spell… their stock price was down, there was CEO turnover. But now we’ve seen weight loss drugs really pull them out of that.” (Madison Miller, 27:07)

• From Stagnation to Speed

  • Dave Ricks became CEO in 2017, prioritized reducing drug development timelines from 13-14 years to as little as 5 years.
  • “He said… we need to make speed the number one priority and we need to look at everything we’re doing, find the most promising science, and then go as fast as we possibly can.” (Madison Miller, 29:01)
  • Active ingredient “tirzepatide” moved from lab to market using this new fast-track approach.

• Engaging Consumers & Price Pressure

  • Ricks shifted Lilly to be more “consumer-facing” and responsive to public outrage over drug prices—e.g., reducing cash-pay price for GLP-1 drugs.

• Navigating Patent Expiry & Sustaining Success

  • Lilly’s strategy for post-patent world: massive reinvestment in internal and external research, record M&A spending, and heavy AI investments (in partnership with Nvidia, use of a supercomputer).
  • “If they are able to sort of break out of this boom and bust cycle that every pharmaceutical company… has had to deal with, it will be pretty incredible.” (Madison Miller, 33:15)

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Notable Quotes & Memorable Moments

• “When they last gave guidance in March, they were not expecting we’d still be talking about this into May and June.”
  — Brian Edger, on Carnival and Middle East impact (02:29)

• “I would actually argue there’s Elon Musk reward… Elon Musk is to today’s generation what Warren Buffett was to the prior generation in terms of value creation.”
  — Robert Schiffman, on Musk’s impact on credit perception (14:03)

• “When it comes to frontier models, there’s no doubt that Anthropic is ahead… does Google have an equivalent model? No.”
  — Mandeep Singh, on the AI talent shift and market reaction (20:56)

• “He said… we need to make speed the number one priority… find the most promising science, and then go as fast as we possibly can.”
  — Madison Miller, on CEO Dave Ricks’ impact at Eli Lilly (29:01)

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Segment Timestamps

• Carnival’s Weak 3Q Outlook & Cruise Sector Trends: 02:01 – 07:45
• SpaceX Bond Issuance & Market Reaction: 10:09 – 16:16
• SpaceX Post-IPO & Google AI Talent: 19:08 – 23:34
• Eli Lilly & the Weight Loss Drug Boom: 26:25 – 33:15

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Themes and Tone

Throughout, the hosts and guests maintain a highly analytical yet conversational tone, balancing hard data with real-world market savvy and industry anecdotes. There is a clear appreciation for strategic vision (highlighting leadership at both SpaceX and Eli Lilly), a willingness to dissect hype versus substance (SpaceX’s capital needs, Google’s AI standing), and a strong grounding in data-driven research.

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This summary captures all important analysis and insights from the June 23, 2026 Bloomberg Intelligence episode, skipping ad breaks and focusing strictly on the substance of each segment.

Transcript

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[Scarlet Fu]

Carnival Cruise Lines reported some numbers a little bit disappointing. Stock trading down about 5% here today, I think Michael Barr Bloomberg's Michael Barr was on a Carnival Cruise Line trip last week and he goes crazy there. We know Charlie Pellet, big cruise guy himself. So there's a lot of cruisers around here in Bloomberg. Brian Edger joins us here, senior gaming and Lodging Analyst for Bloomberg Intelligence. Talk to us about Carnival Cruise Lines. What, what, what did you learn on the earnings report?

[Brian Edger]

So I mean they're still looking for some yield growth, positive yield growth this year. I think the change perhaps was the war in Iran clearly had an effect effect. Gas prices affected air Travel and the perception of the ease of air travel and some itineraries in the. In the eastern Med. Mediterranean. I think the big change from their perspective was how long it lasted. You know, it comes down to, I think when they last gave guidance in March, they were not expecting we'd still be talking about this into May and June. So things have gotten better in June, but I think, like, you know, May was a bit of a setback in terms of the duration of a conflict.

[Scarlet Fu]

Yeah. Yep. So what are they finding about? I guess just, you know, the typical bookings, I think, in the Caribbean and all that kind of stuff. How do they hold? How are they holding up? Because I kind of think when I think cruising, that's a big part of it.

[Brian Edger]

Yeah. I mean, overall, quite well, with the exception of the disruptions I talked about, we're still seeing positive yield growth, which in an uncertain economy is, I think, a good thing. They are, I believe they said, 93% booked for this year and they've got some positive early indications for next year. The industry is still proven to be quite resilient, notwithstanding the fact that you've got the disruption from the war itself, which was a factor.

[Scarlet Fu]

So on the fuel side, I know the airlines, by and large do not hedge.

[Brian Edger]

Right.

[Scarlet Fu]

Do the cruise companies hedge?

[Brian Edger]

Some of them do. Carnival Stroke is not hedged. Some of them do have hedges, they have collars in places. In the case of Carnival, you know, when we last heard their guidance, they were providing guidance based on certain expectations about Brent fuel. At the time they last spoke a couple months ago, fuel prices were above that. Now it's below that. Yeah, so. So it's very much tied to the trajectory of this conflict.

[Scarlet Fu]

What's fuel as a part of their cost structure of a typical cruise, to

[Brian Edger]

remember what the exact percentage, it's pretty big, right? It's a pretty, fairly large.

[Scarlet Fu]

So this is something. I mean, what they've been dealing with, a headwind for the last several months may become a little bit of a tailwind on the downside, could be.

[Brian Edger]

I mean, I think they. They went into with some assumptions about forward contracts were grand prices that were, you know, $80, 90. And now, as crude oil eases, it could work the other way. Certainly the relaxation or the easing of rent fuel, even though they use bunker fuel, a certain grade of it is a positive for them.

[Scarlet Fu]

What I noticed sitting on the beach of Aruba is the ship's engine. Even when they're docked, it's running because I see the smoke coming out of the smokestack 247 I guess just to run the thing right. So they burn in fuel 247 here. So that's a big issue. Talk to us about capacity in the industry.

[Public.com Representative]

Are we adding capacity, taking it out?

[Brian Edger]

So the industry overall we're looking at something like 4ish percent mid single digit supply growth. Carnival is an exception in as much as they're growing capacity in 2026 by only 1%. So they've taken a much more measured approach which I think in this environment seems quite prudent. They will be adding maybe one or two ships a year balance between the Caribbean and the rest of the world. But.9% supply growth for them for this year is obviously quite measured.

[Scarlet Fu]

We're seeing lots of parts of the economy, the higher end doing well, the lower end not so much. And I know that the cruise lines, they have different brands just like the hotels have different brands that cater to different I guess income levels. Are you guys seeing that, that dynamic in the cruise?

[Brian Edger]

I don't know if we're seeing that much of a parsing between the upper and lower end with respect to cruising specifically. You're absolutely right. For hotels for a while we refer to the K shaped economy and now it's more like the C shaped economy where the, you know the as Hilton CEO earmarked that with the lower end now coming back. I think for cruises the strength has been fairly broad based. What's really driving it? If you're in the Caribbean it's these island destinations that help drive pricing.

[Scarlet Fu]

Interesting. Yeah. I'm going on my first cruise in October, a Viking cruise that stocks up 40% this year. It's doubled over the last 12 months. What's going on there? That is having my deposit impact helps. Yes.

[Brian Edger]

I think that the niche they're in which is that luxury segment and is a niche market, the river cruise market and the somewhat smaller ocean cruise presence has done quite well. So that may be an example of what you're talking about where the high end is doing quite well and that's a high end consumer. Clearly more luxury focus. So while we don't see those patterns necessarily broad based across the sector, they are high end kind of river cruise oriented luxury niche.

[Scarlet Fu]

For what I'm paying. This thing better be all inclusive. Go back and check. I'm not going to sit there, pay for every cocktail. A glass of rose. Vegas, real quick, 30 seconds. How's Vegas doing?

[Brian Edger]

Vegas is better than last year I think is one way to look at it. Certainly we have still see on the lower end of the market where you do see that kind of bifurcation between high and low end in Vegas. A bit more stability there where visitation is kind of flattened out, pricing is a bit better. 2025 was a rougher year where you had tougher event comparisons and pressure on midweek leisure stays. So it's a bit more stabilized and better this year.

[Chase Sapphire Reserve Representative]

Stay with us.

[Paul Sweeney]

More from Bloomberg Intelligence coming up after this.

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[Paul Sweeney]

We've been talking all morning and really for the last few days, Paul, about Space X and where this stock has been moving, it's currently up so that 40 decline did not come to pass. It has stopped at three days for now, but it was a painful three day slump down about 22% if I recall correctly. So you know, definitely a repricing of the initial euphoria following the ipo.

[Scarlet Fu]

Yeah, having done a bunch of these equity deals, it just felt, felt like the stock was trying to find a home here and that's maybe like who really wants to own this thing long term and who's just playing the deal a little bit. So here we are.

[Wise Representative]

All right.

[Paul Sweeney]

And of course we know that at the same time Space X, the company has announced a big, big bond sale as well. Getting ready to sell investment grade bonds for the first time to refinance a

[Chase Sapphire Reserve Representative]

bridge loan, but also, let's face it,

[Paul Sweeney]

to fund this AI build out as well. So for that of course we need to bring in our in house expert on tech and bonds and that is Robert Schiffman, he's our senior tech Credit analyst here for Bloomberg Intelligence.

[Chase Sapphire Reserve Representative]

Rob, what will you be watching for

[Paul Sweeney]

and listening for the next couple of hours here? When it comes to this Space X

[Robert Schiffman]

bond debut, I think I already know the story. Bondholders are going to welcome Space X with arms wide open. You know nobody owns this deal, right? There's hundreds of billions of AI related tech bonds that have been issued this year. There's hundreds of billions of tech bonds outstanding. But this is an inaugural offering, so everyone's going to want a little piece. And quite frankly, the difference between how SpaceX is going to trade in the bond market versus the equity market couldn't be much different. The valuations from the equity side may seem really, really lofty. I think it's the reverse for the credit markets. These bonds are going to come wildly wide to where comparably rated investment grade names trade. And I think that's going to attract a lot of attention.

[Paul Sweeney]

Did it surprise you that it got investment grade ratings even though it doesn't have much of a track record? Almost no track record as a publicly traded company? I mean, one of our Bloomberg news stories or other reporters have pointed out that Nvidia was given the same rating and Nvidia had a much longer track record as a publicly trade company traded company than SpaceX does at the moment?

[Robert Schiffman]

No, I wasn't surprised, quite frankly. I think the plans for the buildout have been reasonably well known. For people who are looking at the SpaceX Equity IPO, they had a really good understanding of how much money was going to be spent over the next handful of years. Quite frankly, you can't have negative free cash flow that's 20, 30, $40 billion annually without access to low cost, cheap capital. A big pool that was equities. They raised $85 billion of equity, but they're probably going to need another $100 billion of debt. If you had plans to borrow that much and thought you can do it in the junk markets, you'd be thought of as crazy. I think this is pretty well understood. I do get it why people say, how are these ratings so high? I think you just need to look into the future a little bit and look at the past. One is they're sitting on $100 billion of cash. Two is they're committed to IG ratings and reasonably low leverage. Three is their liquidity profile looks fantastic. They have access to huge pools of both equity and debt capital. And their burn rate, it's going to take them three or four years to even get through the amount of capital that they have today. Do you want to question where this company might be in five years and what leverage is going to look like and are they going to be successful? I think it's a good debate. And I think when you're comping, are they an aerospace and defense company, are they a communications company, are they an AI tech company? All of that creates, I think, more opportunity for bondholders because the bond deal gets priced probably wider than inherently it should.

[Scarlet Fu]

There's definitely an Elon factor, a positive Elon factor in the equity markets. Is this such a thing with you credit guys who are a little bit more sober?

[Robert Schiffman]

I hear so much about how everyone in the AI world rather just invest in equity because if they're right, there's huge upside. And with bonds, if you're right, you get paid back par, and if you're wrong, you get crushed. That's actually silly. Every basis point in the fixed income markets make a huge difference. If you're coming at spreads that are 100 basis points wide to peers, that pays for the Elon Musk risk. I would actually argue there's Elon Musk reward. I know this. Some people have cringed at this. But I think Elon Musk is to today's generation what Warren Buffett was to the prior generation in terms of value creation. I think the future that he sees is a lot different than what a lot of other people see. I think his ability to execute is much higher than what people are giving credit for quite frankly, he does get a lot of credit. And it's a $2 trillion equity market cap. So for everyone who wants to poo poo, all the risk people are riding the Elon wave.

[Paul Sweeney]

Okay, so the bond market is giving Elon Musk the benefit of the doubt. It sounds like.

[Chase Sapphire Reserve Representative]

Does the bond market give any other

[Paul Sweeney]

CEO, founder company that same level of benefit?

[Robert Schiffman]

Well, the difference between Space X and the rest of these other AI companies, you know, we've said this so many times before, is the other names are basically the Mount Rushmore credits. You know, they're double A's and triple A's. So they inherently have built in credibility because they have so much financial flexibility. So what if Amazon borrows another 100 billion or if Alphabet borrows 150 billion? The balance sheet's going to be fine. Here you're starting with a company that doesn't have a lot of ebitda. It's big negative free cash flow, doesn't have this long, long track record of success. So ultimately what happens. Listen, spreads are at historically tight levels. Everyone is looking for the next basis point to outperform. If you price something right, it's going to sell. These bonds look like they're going to be priced dramatically wide to Triple B alternatives. So even if the long term you think there's real question marks, in the short term you're going to try to get bonds. You're going to buy bonds now and ask questions later. And I think that's going to support this deal.

[Chase Sapphire Reserve Representative]

Stay with us.

[Paul Sweeney]

More from Bloomberg Intelligence coming up after this.

[Public.com Representative]

Support for this show comes from public.com if you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge on public. You can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English like if the Vix hits 25, buy a put option on the S&P 500 or if my cash balance goes above $20,000, move the excess into my direct index. You approve the workflow and your agent handles the risk, monitoring the market, watching for your conditions and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com market and fund your account in five minutes or less. That's public.com market paid for by Public

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[Paul Sweeney]

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[Chase Sapphire Reserve Representative]

All right, well we talked a little

[Paul Sweeney]

bit about SpaceX and it's a company that we kind of can't ignore given the market debut it had over the last couple of days. And Mandeep Singh is here with us. He is our go to guy in all things tech. He is our global tech research head here at Bloomberg Intelligence. Mandeep, you look at what is happening with Space X and Paul put it really well in that it's just kind of trying to find its place. People are trying to figure out what the right price looks like for a company like this after all the fanfare and then you know, the fleshing out maybe of some of the early investors. What do you see as the most enduring narrative for this company now that it's just over a week into its life as a publicly traded company?

[Mandeep Singh]

Well, I think clearly during the roadshow people got really excited about the orbital data centers and you know, the space launches, but we know they don't generate any revenue right now and I think people are coming to the realization that this requires a lot more upfront capital, which is why they are doing that bond issuance and then there will be some equity issuance to close out the Cursor acquisition. So they will be adding, you know, 3% more stock to close out that deal. And look, if you are an investor in this company who is getting diluted right now, it's reasonable to say some people, you know, aren't it there for the long term? And there is a shakeout that's going on and we'll figure out who wants to believe in the company long term because this is not a free cash flow or a stock buyback story anytime soon.

[Scarlet Fu]

All right, switching gears to Google here. Get some AI dudes are departing Google. I mean, should Google be worried about this? Some of their talent leaving?

[Mandeep Singh]

I think so. I mean, the fact that the market cap dropped by 250 billion probably is an exaggeration. So just goes to show they probably should have paid these guys anything to retain them. But look, when it comes to frontier models, there is no doubt that Anthropic is ahead. Even OpenAI has been releasing their models at a faster pace. And this space is all about leapfrogging your competitors when it comes to the model intelligence layer. I mean, Anthropic Methos release, everyone is freaking out in terms of the capabilities of the model to the extent that the government has blocked access. Why? Because they're at the frontier of intelligence. So does Google have an equivalent model? No. The answer is no. And when will they be releasing it? We don't know, which is why they will end up losing talent. Because everyone now believes Anthropic is at the frontier. And Anthropic seems to be gaining a lot of talent.

[Scarlet Fu]

It's always been a talent driven technologies,

[Paul Sweeney]

you know, but it feels more bloody than ever has, right? I mean, in terms of the pecking order of companies that have their pick for talent. Anthropic, you point out, is at the top.

[Chase Sapphire Reserve Representative]

Is OpenAI still up there? I mean, OpenAI has lost a little

[Paul Sweeney]

bit of its momentum to Anthropic. Where does Space X rank? Where does, you know, the hyperscalers? Where do they land?

[Mandeep Singh]

And that's a great question. So which is why that acquisition of Cursor was so timely. I know the stock is dropping last three days, but had it not been for the Cursor acquisition, I bet you the stock would be under $100. So cursor really did make a difference in terms of one, getting that coding agent use case and giving a narrative that they can scale this and also the talent. I mean Cursor co founders are probably the smartest guys in AI and highly sought after so I hope they're able to retain that talent that they got from Cursor. But clearly a great acquisition. And to your point about OpenAI, yes they have lost momentum. Remember OpenAI ended up bringing on the co founder or the founder of openclaw. Openclaw was like the next big thing at the start of the year. Everyone was talking about what is going to be that agentic platform on your smartphones and Edge devices. OpenClaw co founder went to OpenAI and you know that's where it makes a huge difference where these guys end up because they have the vision and if they find anthropic to the to be the place or open air that makes a huge difference.

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Stay with us.

[Paul Sweeney]

More from Bloomberg Intelligence coming up after this.

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[Podcast Host/Announcer]

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.

[Scarlet Fu]

You know, we love the big take stories. They come out every day on the Bloomberg Terminal and bloomberg.com they're really fascinating stories, deeply resourced, deeply sourced, lots of cool stuff. This is a good one today. How Eli Lilly Got Huge by Making

[Public.com Representative]

Us Thin Remember Eli Lilly?

[Scarlet Fu]

They're the maker of Zepbound. I think that's one of the big, big, big GLP1 drugs out there. And it's just been a massive market for.

[Chase Sapphire Reserve Representative]

And now Moonjaro.

[Scarlet Fu]

Now Moonjaro. Yep. It's just awesome. Madison Miller joins us here, healthcare reporter for Bloomberg News. I know you guys did a big, big take story on this, Madison, about Eli Lilly and how they plan to keep the GLP1 boom going. Talk to us about what you found out.

[Madison Miller]

Yeah, definitely. Thank you for having me on to talk about this. I mean Lilly is an amazing story. The company is 150 years old. There's only a handful of American companies that are still, still sort of look the same as they did 150 years ago. And so Lilly is one of them. It's a pretty good American company story, but they've really transformed over the last few decades. They had, you know, they were one of the first to develop the pulk so the polio vaccine treatments for Covid. They've had antibiotics, penicillin, many, many things over the years and have been at the forefront of many different medical breakthroughs. But they had sort of a dry spell in between that a couple, you know, couple decades ago that really made it hard. I mean their stock price was down, there was CEO turnover. But now we've seen weight loss drugs really pull them out of that and make them into this trillion dollar company and the most valuable healthcare company in the world. So it's, it's a pretty amazing transformation and story of what happens to a company when they have a huge blockbuster product. Weight loss drugs have been.

[Paul Sweeney]

Yeah, I'm just thinking about, you know, as recently as June of 2020, we're looking at Pfizer as kind of the shining star of the pharma world because of its COVID vaccine. And Eli Lilly, you know, did not come up in the same kinds of conversations.

[Chase Sapphire Reserve Representative]

What you've done in your story is

[Paul Sweeney]

really highlight how much has changed between say 2017 to 2026. Dave Ricks became CEO of Eli Lilly back in 2017. And at the time, the pharma industry was not held in high esteem by Americans. There was a lot of mistrust directed at the pharma companies.

[Chase Sapphire Reserve Representative]

He has helped turn that around.

[Paul Sweeney]

I wonder how much of the credit

[Chase Sapphire Reserve Representative]

he deserves versus what was kind of

[Paul Sweeney]

already in the pipeline at Eli Lilly and he was at the helm when it all came to fruition.

[Madison Miller]

Yeah, no, that's a great question, Scarlet, because, you know, over time these, these drugs don't come out of thin air. And I think that that's one of the things that this GLP1 boom really surprised people, is like, it seemed like it was sort of an overnight sensation that these weight loss drugs became popular, that people started talking about them. But really, scientists at both Lilly and Novo Nordisk have been working on GLP1 drugs for several decades. And so it's something that has been going on behind the scenes for a while. But to Dave Ricks credit, he was the one, you know, when he became CEO, he was like, we need to move as fast as possible. At the time, Lilly was one of the slowest in the industry when it came to drug development. Took them 13 to 14 years to bring a drug from their lab labs to an actual approved product. And there's lots of trial and error in that too. You know, most drugs don't actually make it to an approval. And so he said, you know, to all of their scientists and all of the executives at the time, like, we need to make speed the number one priority and we need to look at everything we're doing, find the most promising science, and then go as fast as we possibly can. So that's what they did really with Tirzepatide, which is the molecule that became Manjaro and Zepbound. That's the active ingredient. And that was sort of like the pilot. That was the first time that they really did this and gave it the full speed treatment. And what we saw was that they were able to bring this drug really to the market in around five years, which is a huge reduction in time from what we were seeing before with Lilly. And so they've applied that across the board now to everything. And Dave Rooks has also taken steps to make the company more consumer facing, to engage more directly with patients, to cut prices. When we've been seeing a lot of outcry and a lot of attention on how expensive GLP1 drugs are, they're still pretty expensive, maybe not necessarily super affordable for all Americans, but to Rick's credit, he's taken steps to cut the cash pay price of these drugs so that more people can afford them, because we're still seeing a lot of patchy insurance coverage with these obesity medications. So he's taken, he has been, you know, unafraid to take risks and to do things differently than his predecessors and then, then his peers in the pharmaceutical industry. So he does deserve a lot of the credit for that.

[Scarlet Fu]

Madison One of the challenges, I think, for managing these pharma companies and investing in these pharma companies is if you're lucky enough to get a really successful drug, sooner or later patents expire and competition arrives here. How does Eli Lilly plan to deal with that with its weight loss drugs?

[Madison Miller]

Yeah, that's exactly right. And that's something Lilly's still trying to figure out. The strategy right now is to sort of deploy this, this cash that they have, this massive windfall from the success of its obesity medications into everything. I mean, they're infusing billions of dollars into their internal R D programs. So, you know, focusing on the science that they have going on in their labs. But they're also looking externally, they've been on a record spending spree this year. Lilly was a company that typically didn't do as big of deals as its pharmaceutical rivals. But now we're seeing Lilly spend a lot more on other external science, acquiring different companies, doing more deals. So that's part of it. We're also seeing them spend a lot on AI. And AI is interesting in drug development because there's a lot of promise there. But so far we haven't seen a lot of that come to fruition in terms of, you know, turning these, you know, AI finding new drugs and those coming to market and being revolutionary cures for patients. Like that's not really happening yet, but it could happen one day. And so Lilly is spending on AI as well. They have a partnership with Nvidia they have a supercomputer at their headquarters in Indianapolis. And so they're also looking to AI and saying if this is something that's going to revolutionize and change drug development, we want to be there. And so they're really doing everything they possibly can. But it'll be a fascinating story to watch because obviously right now we don't know what's going to happen. Lilly doesn't know what's going to happen. And it will be pretty incredible if they are able to sort of break out of this boom and bust cycle that every pharmaceutical company you know in the history has sort of had to deal with.

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