Poor sales of weight loss drugs! Eli Lilly's Q3 revenue fell short of expectations, significantly lowering its full-year profit guidance, dropping 10% in pre-market trading | Earnings report insights

Affected by the poor sales of popular weight loss drugs Zepbound and Mounjaro, Eli Lilly's profits and revenues in the third quarter fell short of expectations, leading to a significant downward revision of its full-year adjusted profit forecast, causing a pre-market stock price drop of about 10%.

On Wednesday, October 30th, U.S. pharmaceutical giant Eli Lilly announced its third-quarter financial report for 2024, which showed:

1) Key Financial Data

Revenue: Third-quarter revenue increased by 20% year-on-year to $11.44 billion, falling short of the market expectation of $12.18 billion. The revenue growth was mainly driven by the sales increase of Mounjaro and Zepbound, with a 42% revenue growth excluding the Olanzapine combination.

Profit: Net profit was $970 million, with adjusted earnings per share of $1.18 (Non-GAAP), lower than the analyst expectation of $1.51, compared to $0.10 in the same period last year.

2) Performance Guidance

Revenue: Eli Lilly has guided its full-year revenue for 2024 to be between $45.4 billion and $46 billion, down from the previous estimate of $45.4 billion to $46.6 billion;

Profit: The expected full-year adjusted earnings per share is between $12.05 and $12.55, down from the previous estimate of $16.1 to $16.6.

It is worth mentioning that in August, Eli Lilly's competitor Novo Nordisk lowered its full-year profit forecast and reported that its weight loss drug Wegovy's quarterly sales were unusually below expectations.

After the financial report was released, Eli Lilly's stock fell over 10% in pre-market trading.

Weight Loss Drug Revenue Below Expectations

Eli Lilly's popular weight loss drugs Mounjaro and Zepbound reported third-quarter revenues below market expectations, which the company attributed to reduced inventory in wholesale channels. Eli Lilly has currently invested billions of dollars to expand the production of Mounjaro and Zepbound, including approximately $7 billion in its Indiana plant and Irish facilities.

Specifically, Mounjaro's global revenue was $3.11 billion, compared to $1.41 billion in the same period last year; Zepbound's revenue was $1.26 billion, both falling short of expectations.

Analysts had an average forecast of $4.2 billion in sales for Mounjaro this quarter and $1.69 billion for Zepbound, expecting total sales for both drugs to reach $19 billion this year.

Mizuho medical expert Jared Holz stated in a report on Tuesday:

Sales of the diabetes drug Mounjaro may fall slightly short of the expected $3.8 billion, as more patients are turning to Zepbound due to its high-dose weight loss efficacy. Some assert that the stock and the group have peaked, and given the complexities in the healthcare industry, making a simple argument is difficult; we believe investors will still be very enthusiastic about weight loss drug stocks.

Regarding Eli Lilly's performance in the third quarter, Eli Lilly Chairman and CEO David A. Ricks stated:

Eli Lilly achieved strong growth in the third quarter, with total revenue increasing by 42% after excluding asset divestiture activities from the same period last year. While the growth of Mounjaro and Zepbound is impressive, we are equally proud that revenue, including the oncology, immunology, and neuroscience portfolios, grew by 17% compared to the third quarter of 2023.

The approval of new products Ebglyss and Kisunla, exciting new pipeline data for tirzepatide, donanemab, imlunestrant, and lebrikizumab, as well as significant milestones achieved in the supply chain, all indicate that the company will also achieve substantial growth in the future.

In addition, regarding the latest R&D progress, a 176-week study of tirzepatide showed a 94% reduction in the risk of developing type 2 diabetes for adults with prediabetes, obesity, or overweight; the 6-month Alzheimer’s drug TRAILBLAZER-ALZ 6 trial showed that the modified titration method achieved similar levels of amyloid plaque removal while reducing the incidence of ARIA-E to 14%, compared to 24% for the standard dosing regimen