Eli Lilly (LLY, Financial), the American pharmaceutical giant, has reported disappointing financial results for the third quarter, with sales of its popular diabetes and weight loss drugs falling below market expectations. This led to a significant drop in its stock price, falling over 10% during early trading. Despite a strong year with a stock price surge of 55%, making it the world's most valued healthcare company earlier this year, the recent earnings release was less than favorable.
The company reported third-quarter revenue of $11.44 billion, missing the market expectation of $12.11 billion. Adjusted earnings per share came in at $1.18, well below the anticipated $1.47 per share. The underperformance of key drugs, Zepbound and Mounjaro, contributed significantly to the disappointing results.
Sales of Zepbound reached $1.26 billion, falling short of analysts’ prediction of $1.7 billion, while Mounjaro generated $3.11 billion in sales compared to the expected $3.7 billion. Both drugs are part of the GLP-1 class of weight-loss medications, which work by suppressing appetite and slowing gastric emptying. Despite having the same active ingredient, tirzepatide, Zepbound is marketed as a weight loss drug, whereas Mounjaro is sold as a diabetes medication.
Eli Lilly attributed the sales shortfall to reduced inventory levels held by wholesalers. Analysts from JPMorgan noted that wholesalers did not place new orders as anticipated, having depleted their existing stocks. Previously, Eli Lilly had increased its sales forecasts twice this year. However, due to this quarter's performance, the company has now lowered the upper limit of its annual revenue guidance for 2024 to between $45.4 billion and $46.0 billion, from the previous forecast of $45.4 billion to $46.6 billion.
Despite the recent setback, analysts from BMO Capital Markets remain optimistic about Eli Lilly's long-term prospects, suggesting that even industry leaders can face occasional challenges.
