Eli Lilly's top dealmaker says don't be surprised to see more M&A that pushes Lilly into new areas

Jacob Van Naarden is busy. 

In addition to running Eli Lilly's oncology business, he's now responsible for finding the drugmaker's next opportunities as head of business development. And Lilly, now the world's largest pharmaceutical company, is hungrier than ever for deals. 

"The company's financial strength right now, driven mostly by the weight loss business, is so strong," Van Naarden said in an interview at the American Society of Clinical Oncology's annual meeting. "We have this really like almost generational opportunity to redeploy that capital in all of our disease areas to not only fuel growth for the company in the decades to come, but to help a lot more patients with all different kinds of diseases, and so we're executing against that strategy."

Not even halfway into the year, Lilly has already announced it will spend more than $10 billion upfront and potentially up to $25 billion on eight acquisitions. For all of last year, Lilly spent about $4 billion on roughly 40 deals. 

The spending spree reflects an intentional shift in how Lilly approaches dealmaking now that the company is larger and more highly valued than ever before. The company's market capitalization now stands at about $1 trillion, up from $190 billion in 2021, according to data from LSEG. Lilly is the first health-care company to join the trillion-dollar club, which is dominated by tech firms.

Previously, the drugmaker primarily liked to place bets on early-stage assets that were inexpensive because they were riskier. Now, it's using the windfall from its GLP-1 drugs like Mounjaro and Zepbound to pursue experimental drugs that are more likely to work – and carry larger price tags because of it. 

"These things are medicines," Van Naarden said in a separate interview at his Stamford, Connecticut office. "How big will they be? What's the development plan? When will they get approved? Like, I don't yet know all that. Obviously we have projections, but you can see enough to say OK, this is real, and we can underwrite paying a bigger price than we pay for some real preclinical thing. So that's been a big part of where we've been focused in addition to running the high-volume, early-stage strategy."

Van Naarden said his boss, Lilly CEO Dave Ricks, approached him last fall about leading business development in addition to his main job as head of Lilly's oncology business. The company wanted to sharpen its dealmaking skills and start widening its aperture beyond the early bets where Lilly liked to focus. 

He started to execute the strategy early this year.

Lilly's planned acquisition of Centessa Pharmaceuticals, announced in March, could reach up to $7.8 billion if the company meets certain milestones for its experimental drugs for sleep disorders like narcolepsy. That would make it Lilly's second-ever largest deal behind the company's $8 billion acquisition of Loxo Oncology in 2019. Van Naarden was the chief operating officer at Loxo at the time.

While large for Lilly, deals of roughly $8 billion are still small compared to agreements from other large pharmaceutical companies. It raises the question of how big Lilly could go.

Van Naarden doesn't want to set arbitrary size spending limits. He says it's about how compelling the science is and how big the opportunity is for patients and for Lilly.

Some of the deals announced this year fall under Lilly's current specialties of oncology, neuroscience, cardiometabolic health and immunology. Others, like Lilly's recently announced acquisitions of three vaccine companies, will take the company into new areas. 

"We're looking at all kinds of things that don't neatly fit into one of those four buckets, so don't be surprised if we have more to come for things that you know don't perhaps neatly fit within what we've done historically," Van Naarden said this week at ASCO. "If you see it, it means we're excited, and we think we can make a big impact."

Is there anything that's off the table?

"No," he said, "not really."