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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. Eli Lilly raised its revenue forecast for 2024, sending its shares soaring, as the world’s biggest drugmaker by market value continues to benefit from bumper sales of its blockbuster diabetes and weight loss drugs.
Indianapolis-based Eli Lilly increased its full-year sales guidance by $3 billion to between $45.4 billion and $46.6 billion, citing the strong performance of Mounjaro and Zepbound, its new class of diabetes and weight loss medicines known as GLP-1s. The company’s revenue in the second quarter increased by 36 percent year on year to $11 billion, while net income rose by 68 percent to $2.97 billion, beating analysts’ expectations on both counts.
The sales boosts suggest that Eli Lilly has an edge over rival weight loss drugmaker Novo Nordisk in the race to boost manufacturing capacity to meet demand for a market that Goldman Sachs analysts estimate could be worth $130 billion in peak annual sales. The Danish drugmaker’s sales came in below analyst expectations on Wednesday due to manufacturing challenges.
Eli Lilly’s chief executive, David Ricks, attributed the better-than-expected sales in its most recent quarter to the GLP-1 medicines as the drugmaker advanced its manufacturing expansion agenda to meet the huge demand for the medicines. Increased pricing power for Mounjaro also boosted revenues, the company said.
Sales of new products, which include the GLP-1 medicines, rose by $3.5 billion to $4.5 billion. Sales of diabetes drug Mounjaro totaled $3.1 billion in the second quarter, while revenues from anti-obesity medication Zepbound reached $1.2 billion.
Pharma industry analyst Evan Seigerman at BMO Capital Markets stated that the quarterly earnings suggested that Eli Lilly was outperforming Novo Nordisk and pulling ahead in the metabolic duopoly.
Eli Lilly’s shares jumped more than 9 percent shortly after Wall Street’s opening bell on Thursday, taking the pharmaceutical group’s market capitalization back above $800 billion for the first time in a fortnight. The company’s share price had slid in recent weeks as a broader market rotation had investors flocking to cheaper pharmaceutical stocks and undervalued weight loss drugmakers such as Roche.
Last week, four different doses of Mounjaro and Zepbound were removed from a US Food and Drug Administration database tracking drug shortages, indicating that supply constraints have eased. The medicines were listed as “available” but still remain on the agency’s shortages list.
Rival weight loss drugmaker Novo Nordisk, which manufactures diabetes drug Ozempic and its anti-obesity offshoot Wegovy, reported second-quarter sales slightly below analysts’ expectations. This provoked concerns from investors that Novo Nordisk was being outmaneuvered by Eli Lilly in the race to boost manufacturing capacity, resulting in Novo’s shares closing 6.7 percent lower on the day.
BMO Capital Markets’ Seigerman stated in a research note that Eli Lilly’s results were impressive and reflected improving supply dynamics for the company’s GLP-1 portfolio and higher realized prices for Mounjaro in the US.
In conclusion, Eli Lilly’s strong performance in the second quarter, driven by the success of its diabetes and weight loss drugs, has positioned the company as a leader in the pharmaceutical industry. With an increase in revenue forecast and market capitalization, Eli Lilly’s strategic advancements in manufacturing capacity and pricing power have set it apart from its competitors. Investors and analysts are closely watching the company’s progress as it continues to innovate and excel in the competitive pharmaceutical market.
