Everyone knows big pharma likes them Eli Lilly (LLY 0.32%) they have to get regulators to agree that their drugs are safe and effective before they can make money. But regulators aren’t the only group companies need to appease before shareholders can see a profit.

And sometimes those other groups can throw a wrench in the works, dampening long-term growth. As of now, it looks like Lilly may have stumbled into a trap of this type, so let’s break down what the problem is and why she might be slowing down her momentum a bit.

International expansion got off to a rocky start

On 23 October, Lilly’s Alzheimer’s drug Kisunla was approved in the UK by the Medicines and Healthcare products Regulatory Agency (MHRA), following regulators from the US Food and Drug Administration (FDA) and regulatory authorities. in Japan. UK regulators have agreed with clinical trial results that suggest the drug is somewhat effective at slowing or stopping the rate of cognitive decline associated with the disease for up to about seven months. They also found that the side effects associated with the treatment, while potentially life-threatening, are acceptable in light of the benefits it can provide.

But at the same time, Britain’s National Institute for Health and Care Excellence (NICE) issued draft guidance indicating that the drug was not suitable for coverage in the country’s public health system because it was not cost-effective to use , given its modest benefits and burdensome medical testing requirements for patients. NICE has asked Lilly to provide further evidence about Kisunla’s effectiveness and is expected to make a final decision on November 20. It is doubtful that there is any evidence that would sway the agency’s view.

NICE estimates that around 70,000 patients living in the UK would be eligible for treatment with the drug. According to Lilly, the direct cost of the drug is $32,000 per patient annually, but from the perspective of a public healthcare system like the UK, there are also significant associated indirect costs, such as the medical monitoring that patients must undergo . Assuming that all eligible patients in the UK would have used the public system rather than buying Kisunla directly, Lilly was looking at a addressable market worth over $2.2 billion in annual sales.

Now it seems that the chances of realizing that potential income are slim to none. Worse, it is now clear that regulators in other countries with public health systems may be inclined to agree with NICE and refuse to provide coverage for Kisunla. In other words, Lilly’s bid to go international with the drug could fall on its face. And that would be another headwind to growing its top line and, by extension, growing its stock.

Keep the big picture in mind

As bleak as the loss of the UK drug market is, Lilly is far from helpless, and the damage, while significant, may not affect growth by a significant amount if research and development (R&D) pipeline continues to deliver successful drugs for other indications.

Before NICE’s decision, Cantor Fitzgerald’s Louise Chen estimated that Kisunla could bring in annual revenue of around $2 billion by 2029. For reference, its trailing 12-month revenue is $38.9 billion. So while the revenue estimate is likely to be down, it’s important to remember that the drug will always be only a modest component of the company’s top line, especially given that it will launch many more drugs through 2029.

It has 20 more programs in phase 3 clinical trials, including one to treat Alzheimer’s disease that is based on a different molecule than Kisunla. Many of these programs will be approved for sale.

In other words, while there is no way to interpret this new development as good news for shareholders, investment thesis because this stock is still very much alive and well.