Already splurged over $20 billion this year! Eli Lilly (LLY.US) CEO: Will target pharmaceutical "white spaces" and continue to seek larger-scale M&A.

Eli Lilly (LLY.US) CEO Dave Ricks said investors can expect the company to pursue larger deals, similar to its $7.8 billion acquisition of Centessa Pharmaceuticals Plc, as it scours the scientific "white spaces" for assets. Lilly is now the world's largest pharmaceutical company and is spending at a record pace, using the windfall from its weight-loss and diabetes injectables to expand into new areas that could drive its next phase of growth. Thanks to its Mounjaro and Zepbound injections and the weight-loss drug Foundayo, the company's sales are on track to reach $88 billion this year, nearly double the level of two years ago. Yet the pharmaceutical industry's brutal cycleexpensive research, high-risk development, and a short sales window to recoup investmentnever lets up. Ricks is determined to act early to avoid the spiraling sales declines that have trapped previous industry leaders. "We don't have a sense of time pressure," Ricks said in an interview on the sidelines of the European Association for the Study of Diabetes annual meeting in Milan. That kind of urgency would force drugmakers to strike deals under financial pressure. "We call that 'shopping when you're hungry,' and that's when you make mistakes." Ricks highlighted infectious diseases, women's health, and mental illness as areas where he believes Lilly has an opportunity to make an impact. The company acquired three vaccine makers earlier this year for as much as $3.8 billion, and recently agreed to buy psychedelics company AtaiBeckley Inc. for roughly the same amount. Ricks said these deals are examples of Lilly "stepping a little further out," and investors will see more such moves in the future. He noted that the company prefers more mature assets when they can solve entirely new problems. Lilly's Mounjaro and Zepbound are said to have about a decade of patent protection remaining. The company has historically targeted earlier-stage, relatively cheaper drugs. Ricks said he prefers to step in before major data readouts and before any bidding process begins. "Our thinking is to evaluate clinical data that isn't fully mature yet and place bets before the company's valuation reaches $5 billion. At that point the target might be valued at just $500 million," he said. "If we make enough smart bets, the returns tend to be substantial." He said this strategy allows Lilly to cultivate pipeline programs internally and build them up before revenue pressure arrives. Still, recent deals show Lilly is willing to spend more to acquire late-stage drugs as a way to build a competitive edge in markets beyond obesity. In addition, Ricks has little interest in traditional ways of returning capital to shareholders. "We face a choice: reinvest these returns in productive areas outside obesity, or buy back stock and pay dividends," he said. "Investing in human health is much more fun." Ricks disclosed that the Indianapolis-based company has completed about 40 deals so far this year. According to compiled data, Lilly's total deal value this year has exceeded $20 billion to date, the highest on record for the company.