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Eli Lilly Shares Plunge Over 10% After Disappointing Sales of Weight-Loss and Diabetes Drugs
Eli Lilly faces a setback as sales of its weight-loss drug Zepbound and diabetes treatment Mounjaro fall short of estimates, leading to a 10% drop in shares.
ND
by News Desk
2024-10-30
Eli Lilly Shares Plunge Over 10% After Disappointing Sales of Weight-Loss and Diabetes Drugs

Eli Lilly and Company (LLY) reported on Wednesday that sales of its high-profile weight-loss and diabetes drugs fell short of Wall Street estimates, resulting in a more than 10% drop in its shares. The disappointing performance stemmed from wholesalers working through their existing supply of the treatments rather than placing new orders, which analysts had anticipated.

 

Despite strong earnings in previous quarters driven by high demand for its weight-loss drug Zepbound and diabetes treatment Mounjaro, the company's recent results raised concerns. Wholesalers typically purchase these medicines directly from manufacturers to supply hospitals, clinics, and pharmacies.

 

CEO David Ricks revealed that Lilly had delayed plans to advertise Zepbound and postponed international launches to focus on increasing inventory levels in the U.S. "There is an excess supply... but we haven't been stimulating demand the way we had originally planned," he told CNBC.

 

In the latest quarter, Mounjaro generated $3.11 billion in sales, while Zepbound contributed $1.26 billion. Although these figures indicate continued strong demand, they fell short of analysts' projections of $4.20 billion for Mounjaro and $1.69 billion for Zepbound, according to data from LSEG. Combined, the two drugs are expected to generate approximately $19 billion in revenue this year.

 

Lilly's stock has risen 55% year-to-date, positioning the company as the world's most valuable healthcare entity, as investors remain optimistic about the potential success of its weight-loss drug. However, the recent sales miss has prompted J.P. Morgan analyst Chris Schott to suggest that wholesalers had utilized existing inventories without placing additional new orders as previously expected.

 

The Indianapolis-based drugmaker also revised its annual adjusted profit forecast downward to $13.02 to $13.52 per share, down from an earlier estimate of $16.10 to $16.60. This revision was attributed to acquisition charges in the third quarter, including a previously disclosed $2.8 billion acquisition-related charge and rising manufacturing costs.

 

Lilly's Zepbound and Mounjaro have faced supply shortages throughout the year due to unprecedented demand. However, the company indicated that supply has started to catch up with demand, allowing it to backfill orders and increase stocks at U.S. wholesalers. The FDA also removed Lilly's drugs from its shortage list in late September, although the agency is currently reviewing that decision.

 

To meet the rising demand, Lilly has invested billions in expanding production, including approximately $7 billion in its Indiana facility and additional sites in Ireland. Mounjaro, which is chemically known as tirzepatide, is marketed for both diabetes and weight loss outside the U.S.

 

Lilly has trimmed the upper end of its full-year sales forecast by $600 million, now estimating total sales between $45.4 billion and $46 billion. The competition in the weight-loss market remains fierce, with analysts estimating the sector could reach $150 billion in annual revenue by the next decade. Both Lilly and rival Novo Nordisk are racing to increase production capacity to meet this unprecedented demand.

 

In August, Novo Nordisk also adjusted its full-year profit forecast and reported a rare miss on quarterly sales of its weight-loss drug Wegovy, reflecting the competitive pressures facing both companies.
Tagged:

EliLilly

Zepbound

Mounjaro

WeightLoss

DiabetesTreatment

Pharmaceuticals
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