scarlet: welcome to "bloomberg markets." i'm scarlet fu. moments from now you will be hearing from the ceo of eli lilly. dave ricks will be speaking to david bernstein at the economic club of washington. let's give you a set up in terms of where we are standing with financial markets. unchanged for the s&p and the nasdaq after making a steady string of record highs

post-thanksgiving. s&p and nasdaq 100 have stalled out before tomorrow's cpi print. yields getting across the curve before three-year bond auction in 30 minutes time. notable, dollar-loony is unchanged at the moment, although the dollar is the highest against the loonie since april 2020. trump's tariff that's are seen as hurting sentiment in canadian currency. the bank of canada is cutting rates by 50 basis points. we will keep an ion that as we get closer to the rate decision. since the election we have seen financial stocks outperform and in particular citigroup shares. the cfo today announcing that the firm is set to hit the high-end of its 2024 revenue guidance, and once there is more clarity on the outlook for capital, the bank does intend to boost share buybacks. citi is the subject of today's "big take" story, in which the

ceo jane fraser says she needs five years to pull off the elusive turnaround, and now that we are halfway through that period, she says she is committed to those goals. she spoke exclusively to sonali basak. jane: my ambition is to be a high-returning, high-quality earnings, modern, simpler institution that continues to play a shaping role in the global financial system. we are truly privileged to be as -- in as many locations as we are with the talent base and such a global mindset and an ambition about it. i think about we have the right strategy and vision, we are executing with the right organization, we've -- making sure we've got the right talent and culture in the firm, and that we are simpler and more controlled organization. sonali: if you could give yourself a great on the restructuring plan-- a grade on

the instruction plan, what would you give yourself? jane: we aren't done yet, so i can give ourselves a grade yet. this is -- we will be disciplined about making sure we do not take shortcuts, and the problem with grading yourself along the way is it becomes too tempting to do a quarter-by-quarter grade, as opposed to we are very focused and accountable for delivering the end product. sonali: speaking of the end product, you set out a deliver returns on, equity closer to 11, 12%. jane: in the medium-term and bit after. sonali: bloomberg has the return at 6.8%. what do you say to critics who feel you're not getting there fast enough? jane: we have undertaken a multiyear, major transformation of an institution. we are working with ambition, with accountability, and with urgency. we've already divested all but

one of our international consumer franchises and wandered down those that we couldn't -- we have undertaken a massive reorganization of a company of 240,000 employees and s-- in six months, such that 50,000 people have a different manager than six months ago. it's been major change. we've been bold, ambitious, we are holding ourselves to account to deliver on the outcomes, and i say lord of the proof. where delivering and we are determined to keep on doing so. scarlet: now let's move on mid-day movers and the equity side because we see citigroup shares rising in trading today. we are seeing another stock that was up about 6% but halted on trading from breaking news. abigail, tell us what is going on with walgreens. abigail: they are in talks to sell themselves to a private equity firm, sycamore partners.

it would be a big buy potentially for sycamore. it could be it large one. walgreens market value reached a peak -- it has been a wild ride for walgreens, over $100 billion in 2015 podesta $27.5 billion. this has been a beleaguered company. they made the boots alliance acquisition in 2012 and the pharmacy business it's has been under lots of different pressures through the pandemic and lots of consolidation. this stock has been in the world of hurt. ahead of the stopping halted, up 6%, investors seeing this as possible relief, and this is coming out of "the wall street journal" and we don't know that it is the case at. the headline is that walgreens is and talk to sell itself to private equity firm sycamore partners. scarlet: ucd spike in the share -- you see the spike in the share before the trading pause. when it resumes trading, we will let you know.

there have been a lot of m&a announcements, but there've also been earnings even though we are at the tail end of it. a big name in the old tech space that is trying to make its impact in the ai world as well. abigail: oracle -- i love that you say it is an old-school tech stock, because it is, and it had been not performing so well, but this year it is not the case. what happened was for their fiscal second quarter, november quarter, essentially, they missed slightly on the top and the bottom line, and then sales growth came in at 9%. but for this current quarter we are in now, sales growth is expected to be closer to 8%, down sequentially. the cloud business did jump 52%, but that is only in line. they are competing with the likes of amazon, microsoft, and the ai demanded that everybody wants this extra cloud space that has really fueled oracle. investors are a little bit disappointed.

it was a high-bar quarter and they didn't quite deliver. scarlet: you hit the nail on the head when the stock was up to 80% heading to the results malaak priced in. boeing, another company with a lot of expectations and has not necessarily delivered. it is up today. abigail:abigail: it is the best day since july 2023, depending on when you look. a big relief rally. reuters reported 737 next jetliner production restarted last week. the november numbers, they delivered nine and then two of the 787 and two of the 777, and that has to do with the strike. they are restoring those factories for scarlet: abigail doolittle with the movers we should be keeping an eye on. let's move to washington because david rubenstein is about to speak to eli lilly's ceo. this is that the economic club of washington. we will check in with them as they begin to speak. let's listen in.

dave: one is paid more than me. david: he shouldn't be paid more than you, but ok. that's talk about the phenomenon that is change the will to some extent, the anti-obesity drug. to make sure everybody's on the same page, what is the name of your anti-obesity drug? dave: ok, the name is zepbou nd, the active ingredient is to his appetite.-- terzepitide. david: who comes up with these names? dave: not me, david. we cannot have names that are similar to each other because cracks ares make prescribing doctor --doctors make prescribing errors. we cannot have names that only work in english so we have the strange sounding names. david: a number of years ago you could tell us that somebody was working on a diabetes-related

drug, and that drug got to be approved by the fda, but somebody discovered it actually helps you reduce weight. when was that discovered? was that ever the intention the drug was being developed? dave: pretty early on. we launched the medication in 2005. it was a twice-daily injection and it was indicated for people the diabetes. like a lot of things in medicine, there is iterative steps of improvement, but that was the first effort. on the cover of the animal report was a woman using the drug and she said "my diabetes is under control and i'm losing a little weight." 2006, the cover of rhino will report. but we had to improve the medicines to make them effective for weight loss. one big improvement was to make them weekly, a convenience benefit but even more important, the action of the medicine flatter, meaning more consistent through the day and night. when we had it twice a day,

there were ups and downs. one effect of the medications is they cause nausea and other g.i. stress. that is a function of the up-and-down in your system. when we made it weekly it was flattering we could dose higher for more weight loss. that was an accidental breakthrough of trying to make it more convenient. david: and there is another company in the same business, novo nordisk, which is in denmark. they have a similar product. they have a product that is the same thing. one is for obesity, anti-obesity, and one is for diabetes. is there really any difference between the two of your -- dave: drugs? there are. there is no difference between the drug name for diabetes vs. obesity for either company. we do that for insurance reasons. but this is the latest version. it had fused modes of action -- we having a conversation about the loss medications right after

you just ate lunch. [laughter] i know that may cause anxiety. right now because you just ate lunch, your g.i. tract's communicant with the rest of your body. it is telling it that you have been fed and you need to absorb nutrients and other things that are essential to life, because food is essential to life. we are boosting some of the signals with the medications. they boosting the signal that you are full, boosting the signal that you know om group want to eat more, and boosting signal -- you no longer want to eat more, and boosting signals that you need more nutrients. ours does that with two different hormones. ozempic just uses one. david: what the drug does is it tells your body you are full when you are not as full as you used to be? dave: it tells your body were full, and it does that to the brain. we have learned over time our

sense of fullness becomes conditional. as people eat more habitually, that signal kicks in later and later. that is a cause and of obesity. it does other things, too. it makes your stomach full or because it slows gastric motility. it slows down your nutrients, which seems counterintuitive, but when you eat, when our ancestors were alive 10,000 years ago, meals were rare and you wanted to absorb all the nutrients out of it, so the signal says absorb nutrients. david: i don't want to confuse people, but there are four different names for these drugs. you haven't anti-obesity drug. dave: zepbound. david: and then anti-diabetes drug. dave: montara. david: novo nordisk has -- dave: ozempic and we go v.

david: ozempic is a generic name. people say i want ozempic. ozempic is not the anti-obesity drug. it's the diabetes drug. why don't people get the right names? [laughter] dave: should we blame the media? i don't know. it was the first drug that began to be used off label for obesity. again, it was flat, once a week, and people discovered if i take more than prescribed, i can these more weight. novo did a study that showed clinically that people lose clinically meaningful weight. on their medicine you lose 13 to 15% of your body weight. on air as you lose 20 two journey 6%. -- on hours you lose 20 to 26%. david: there was a study that came out a couple days ago that said one on one comparing the two, your drug, anti-obesity drug loses weight more rapidly for people than the other

product. dave: more rapidly and more. 47% more. after a year and half, people on our drug lost 17 more pounds. david: why do people need to lose so much weight in this country? our country has 75% of the people overweight and 42% are obese. when did that happen when we went to no-fat food? when did we become so obese? dave: if you look at the epidemiology charts, it seems to have started in the 1960's, growth in overweight and obesity in the country. and really accelerated in the 1980's and 1990's. what are the reasons? how we live certainly is one of them. energy expenditure has to be part of the story. what we need has to -- probably more important reason, not just the quantity, which has risen modestly through that period of time, but what is in our food

has changed. i think that is also attributed to this. david: back to the drug. when you realize you could lose weight, did you get the fda to say, yes, it can be prescribed for losing weight, or still you cannot get that prescribed for you? dave: no, as last year when zepbound launched, it is for weight loss for people with high body weight. david: do insurance companies reimbursed people for the cost of these drugs? dave: some do, more should. [laughter] as of today, the federal government has a prohibition on reimbursing any of these drugs, which is a problem, i think, all though the biden administration vance rulemaking to change that and we hope the next administration will continue the process. 17 states in the medicaid program and decided to step outside the federal and rebirth them anyway. california started, massachusetts, other states. about 60% of employers have some form of reimbursement. david: if losing weight makes

you healthier, why would people who care about insurance reimbursement, medicare, not insist on paying for this because it would make you healthier and you don't have other diseases they have to reimburse you for? dave: in four or five years we will say, yeah, that is what should have happened, and it is silly we don't pay for a primary contributor to poor health. two people have different motives and incentives -- we reenroll and commercial insurance every year. insurance companies may not have your best interest at heart. that is tough to say, but they think about it in one-your increments. maybe your employer has a stronger interest in your long-term health. that is probably why many of step forward. and evidence -- our job is to make the evidence, produce the evidence that we are not has having people lose weight, but losing weight with medicine causes improved health, and we

have many studies out this year demonstrating that. david: to take his medicine you have to inject yourself. why not just go to a pill? dave: great idea. [laughter] we are working on that. you have to inject because it is a protein, and if we all really take proteins, your body thinks it is food and it breaks up a protein. you cannot really take these drugs orally. you have to bypass the g.i. tract and go right to the bloodstream. but we are working on a pill. we will have data as early as next year -- single acting, not going to be as good as tirzepatide or zepbound, about as good as ozempic, we hope, and this would be a once-daily pill. david: when you have drugs that are very, very popular, you have people that make counterfeit or copycat drugs. we see them on television all the time advertise. what about for this? do you worry about counterfeit drugs trying to say the same

thing? dave: it's a terrible problem right now, actually. consumers don't really know the dangers of the difference. today the fda and the government has allowed this to sort of grow, and of course a weight-loss medication that is effective would be a popular thing for people to go around the health care system and seek treatment on their own. but the data we have is that 80% of these medicines are coming out of china from unapproved and unregulated sources. we recently with borders and customs seized a big batch that was shipped in dog food. people then reformulate them and sell them in med spa's and other outfits. you really don't know what is in that. we buy them and test them can we find plant material, viruses, fungus. you do not want to be using it. david: but these counterfeit drugs are cheaper, cheaper because they don't have the same ingredients, i assume. how much more expensive are your drugs than the counterfeit ones? if somebody wants to use your

product zepbound, how much would it cost a month? dave: you can buy direct from lily for 399 -- david: $3.99? [laughter] dave: no. valuable innovation, david. $399. with insurance most people pay $25 a month. that is why we buy insurance, to shield us from the health costs. these are companies that one all the benefits of being a drug company but none of that was once abilities. david: you have this under pattern for how many years? you have 20 years -- dave: from invention, yeah. david: how many more years until he goes generic? dave: mid-2030s, another 10, 11 years. david: is this the most

popular draghi lilan li has ever had?--drug eli lilly has ever had? dave: should be by the things with you. david: some say there are side effects that are not clearly desirable. dave: all drugs that were cap side effects, and sometimes untoward effects. that is why we do controlled studies and measurement carefully. many people have mild to moderate g.i. distress when they start. we start with a low dose can we recommend a low dose and go up slowly. almost everybody stays on the drug and goes through that. by the third or fourth month, really don't have any effects at all. there are a few people where we don't have data or we are cautious. one is women who could become pregnant. neither of the medications have information about that. and then there is the inflamed pancreas. we worry about that with these drugs.

david: what suppose you take the drug and say i have lost weight and i'm happy with my body, i'm going to get off the drug. some people say that it is very difficult to not regain the weight. dave: and science tells us there is a reason for that. some people maintain the weight reduction or stay in that range. they have to change a lot about how they live, burn more energy, eat different foods. we should all try to, actually. some people cannot. there is a recent paper in "nature" that will is why, which is that -- that told us why, which is that once you become obese, your fat cells learn that is their new state, and then they defend that state. they are wanting more energy. that is sent to most of your brain and so forth. once we as adults gain weight and have that on for a while, it is very difficult to reset your thermostat, to reset that level. for now we do recommend if they cannot maintain weight loss off

the drug to go back on the drugs and use them chronically. david: we do put fluoride in the water now, at least for the time being. what about putting this in the water and just solving all the problems? [laughter] dave: well, we shouldn't put it in the water. people should use it under the guidance of their doctors. but we should have broad coverage just like we think it would be crazy if we didn't have inter-hypertensive medications or anti-diabetes medications. obesity causes 236 adult diseases. we know it is a precursor for these things. why not try to prevent it? we have a stigma in our country and many other countries that this is some personal failing. but many of us are here because our ancestors conserve energy very effectively. that is how they survived famines and floods and so forth. your predetermined 20 -- we are predetermined to want to keep weight on by the genetic background.

we in a world of plenty have an abundance and we need medical help sometimes. david: what about over-the-counter? why not just buy it like an aspirin or something? dave: we will try to work on that over time. the oral pill is a great candidate because it is easier to dispense in a pharmacy setting. we'll need to get more evidence that it is broadly safe. here you don't have the doctor's supervision piece. we want to make sure to help pregnant women and other settings that that can be safely done. we have interest in expanding access to this medication and reducing the price. david: how many times a day do you get asked about this drug? dave: today? many, dozens. and it's a pleasure to talk about it, because it is such a breakthrough. they can change our country. david: but nobody expect that to happen. sometimes things happen unexpectedly. let's talk about other things. let's talk about eli lilly itself. when was this company started?

dave: 1876, started by a colonel, eli lilly, who served in the civil war, pharmacist by training, led an infantry, artillery company, was a prisoner of war in alabama, actually, and he saw firsthand the atrocities of medical care in the civil war. i know you are a student of history. more people died after injury than from their injury due to medical care. at the time this was the era of snake oil salesman. medicine wasn't very advanced. medicine often was packed to the counterfeiting discussion--back to the counterfeiting discussion, made of things, armful ingredients. he started with a pledge that everything and this is on the label. if it is in there, you know about it. transparency. that evolved into a company that embraced the scientific method and develop the methods the modern industry has come taking after products,

what most medicines were in 1876, and refining them to what we think of as medicine willow bark into aspirin, pancreases of cows into insulin. david: how long did he live after he started the company? dave: about 25 years, and he handed the keys to his son, who handed the keys to his two sons, also named eli and j.k. that's a little odd. for three generations it was a family-run business. david: the family is not an owner now? dave: our largest shareholder, the lilly endowment -- david: probably the biggest foundation in the united states. dave: and they have one asset, essentially. david: bigger shareholder. ok, when eli lilly evolved over the years in the 20th century, water its big products? dave: insulin was the birth of the modern company, and this was a terrible condition, type one

diabetes, and we were part of commercializing that around the world, invented the manufacturing method, created that business. that was followed by penicillin. during world war ii, lily was commissioned as one of the manufacturers of antibiotics for the army. we iterated for 40 years antibiotics, including some that are used today, like the last line of defense for the worst infections. prozac we are famous for, which brought modern psychiatry into the fold. and now zepbound. david: what about the future? what are the human problems you are working on in the future? alzheimer's icing is one of them. dave: absolutely. we use scientific medicines to create medicines to solve problems. we are not interested in niche problems. we are here to do hard problems that are scalable. that makes our business work but is also the most human impact. we selected diseases that are common and tough.

you mentioned alzheimer's. neurodegenerative conditions of the most frightening people think about -- parkinson's, als, alzheimer's. we launched our first medicine and we are getting revenue after 30 years on that project. we are working on a prevention study for the same medicine, which could really transform alzheimer's. we think other neurodegenerative conditions are becoming more tractable science, and you will see us invest heavily in that area going forward. chronic pain, another area we are interested in. david: let's talk about the company today. how many employees do you have? dave: 44,000. david: you're headquartered in indianapolis. where do you manufacture your drugs, mostly u.s., mostly overseas? dave: mostly in the u.s. a large majority in europe as well. those are our two big bases for production. in the u.s. we are building lots of plants, mostly to support zepbound and one charo, but spinning footprint.

--spreading your footprint. david: your stock went up about 10 times. when did you realize this was so transformative that you were going to become the most valuable pharmaceutical company in the world by a factor of four or five times? dave: as you know from running companies, it is hard to know exactly what the scale of something is. the story of tirzepatide or zepbound for me is this -- in 2016i was named as the incoming ceo, and that fall one of our scientists in the diabetes group called me about early results they were receivining from singaporean site we had that was doing a phase i study with tirzepatide, the ingredient in zepbound. we had to stop the study because people were losing too much weight to stay in it. at first this was seen as an alarming thing, but we began to process that as this could be something very special. we sped to the next stage of development where you try to show safety and efficacy in a

bigger study. i remember in a moment i was showing my daughter to colleges and we were at cal-berkeley standing outside the hall of signs, and i got a phone call, the team had gotten the results showing that people were losing over 20% body weight. there was in april of 2018. we disclose the results later that year. you could argue a lot of the run-up in lilly was execution from that moment forward because we had a pretty big study with great results. we didn't know it would be this much. we knew it was special. we moved our chips -- david: if i'd been in your job i would've have taken credit for all this. are you the person responsible for this happening or not? dave: as the ceo you have a role

in all of this but it would be overstating if i took credit. we're an old company and people have worked there for 30 years on this problem. th credit goese to the scientist to begin with. secondly, we have in common capabilities -- how do you take a protein like glp1, which in the natural body lasts only a few seconds, and make it into a weeklong injection? that is a pharmacology exercise that is difficult. we have people who can do the clinical trials in every thing else to see the opportunity and go for it and people who make it every day, 24-7, who run our factories. it is a giant team sport just like the legacy on my watch will go beyond my tenure. i'm inheriting that -- david: is there one scientist we can point to responsible for this revolution? dave: there is 4 scientists at lily who invented this drug -- by the way, three are immigrants to this country. that's an inte