Once again, fueled by booming sales of their GLP-1 products, Eli Lilly and Novo Nordisk were the top performers in the biopharma industry in the second quarter. But there was a better story afoot in the aggregate as drugmakers revealed their second-quarter financials.
The period saw a consistent surge in sales throughout the sector. Of the top 25 drugmakers, nine had double-digit increases year over year, and nine more companies saw sales increases of between 6% and 9% in the second quarter.
Only two companies saw a drop in sales—Viatris at -3% and Bayer at -1%—while two others—Biogen and Merck KGaA—were flat. But, in keeping with the positive tone of the quarter, all four of the companies that failed to achieve year-over-year growth still had sequential revenue increases of at least 4%.
Earnings reports across the sector shared a similar tone, as more than half of the top 25 drugmakers made positive adjustments to their annual sales projections. Lilly had the biggest adjustment, increasing its guidance by a head-turning $3 billion, on top of the $2 billion guidance increase the company made following the first quarter.
Even Pfizer—which last year made it a quarterly ritual to slash its revenue projection by billions to line up with the plummeting demand for its COVID-19 vaccine—boosted its guidance by $1 billion.
Long-troubled Bayer also brought evidence of a turnaround as it raised its guidance for 2024 by a significant margin, projecting year-over-year revenue growth of between 0% and 3%. Just three months earlier, the pharma had figured it was headed for a revenue decline of between -4% and 0%.
Investors took note of the health of the industry in the second quarter, as the top 20 companies saw combined market cap growth of 4.3%, from $3.8 trillion to $4 trillion. Leading the way, predictably, was Lilly with a 16% increase, followed by AstraZeneca (15%), Vertex (12%), Moderna (11%) and Novo (11%).
Lilly booming, Novo stagnating
This was the sixth straight quarter in which either Lilly or Novo led the pharma growth rankings. Since the first quarter of 2023, Novo has had year-over-year sales increases of at least 22% in each period. Meanwhile, since the second quarter of 2023, Lilly has had year-over-year revenue boosts of at least 28% in each reporting period.
That run could last a while. In 2030, the duo is projected to command 94% of the GLP-1 diabetes and obesity market, which will reach $142 billion by 2030, according to a report this week from GlobalData. That figure is up from the GLP-1 market size of $37 billion last year.
As for the most recent quarter, while Lilly’s sales provided more evidence of its upward trajectory, Novo’s indicated some stagnation.
While Novo pulled off a 27% year-over-year increase in revenue for the quarter, it was only a 6% boost sequentially, as Ozempic’s sales of 28.9 billion Danish kroner ($4.3 billion) matched those of the first quarter and came up short of analyst expectations. Sales of obesity drug Wegovy also came up short of the consensus at 11.7 billion Danish kroner ($1.7 billion), fueling increased concern from investors that the company is still struggling to ramp up its manufacturing of the GLP-1 drugs. On the day Novo announced those results in its second-quarter report, its shares fell by 7%.
By contrast, Lilly’s manufacturing ability hit its stride in the second quarter, with sales of diabetes drug Mounjaro reaching $3.1 billion, which routed the consensus expectation of $2.4 billion. Meanwhile, its obesity treatment Zepbound came in at $1.2 billion, which exceeded the analyst projection of $819 million.
Third Bridge analyst Lee Brown called Lilly’s second-quarter performance “phenomenal” and noted that the company’s market cap increased by 10% with the news of its quarterly results.
Morningstar analyst Damien Conover, however, called investor reaction “too bullish.” He wrote in a note to clients that the market is not fully accounting for “expected price declines, the high-cost burden for some patients, eventual competition beyond Novo Nordisk, tolerability issues, and potential long-term safety issues.”
Major gains for Japanese big 3
Japan’s three pharma giants—Astellas, Daiichi Sankyo and Takeda—each realized major revenue increases in the second quarter, at 26%, 24% and 14%, respectively.
The boost for Astellas can be attributed to increasing sales of its formidable cancer trio of Xtandi, Padcev and Xospata. Also playing a role was Astellas’ geographic atrophy treatment Izervay, which was acquired last year in the company’s largest-ever M&A deal, a $5.9 billion buyout of Iveric Bio. The drug accounted for $82 million in sales in the quarter and is showing signs of drawing customers away from Apellis’ Syfovre. In response to the report, Mizuho analyst Graig Suvannavejh said that his team was slashing sales estimates for Syfovre.
Much of Daiichi’s boost, meanwhile, can be attributed to the company’s sale of three antibody-drug conjugate investigational treatments to Merck for $4.5 billion up front in October of last year. Daiichi is deferring the payments and booking them as revenue.
For its part, Takeda is thriving on the continued strength of irritable bowel disease market leader Entyvio and the growth of new products that are compensating for the loss of exclusivity of attention-deficit hyperactivity disorder therapy Vyvanse.
Double-digit drivers
The upward trajectory for Amgen (20%), AstraZeneca (14%), Regeneron (12%) and GSK (10%) continued in the second quarter, though much of Amgen’s year-over-year revenue increase can be chalked up to products gained in the company’s $27.8 billion buyout of Horizon Therapeutics last year.
Excluding sales of drugs gained from the Horizon buyout, Amgen still had a 5% increase thanks to its foursome of growth products: osteoporosis drug Evenity, cholesterol medicine Repatha and cancer treatments Blincyto and Imdelltra.
AZ’s strong performance builds on a 17% year-over-year revenue increase in the first quarter. Illustrating the depth of the British company’s portfolio was the fact that eight products achieved sales of at least $1 billion in the first half of the year, with a ninth drug, Enhertu, on the verge of achieving the standard at $932 million. With its second-quarter report, AZ lifted its 2024 revenue projection from a low double-digit increase to a range of the low-teens to mid-teens.
Regeneron’s quarterly showing was encouraging after the company saw a rare sales decline (-1%) in the first quarter, which was partially attributed to the continued slide for Eylea in the face of competition from Roche’s Vabysmo. But Eylea rebounded in the second quarter as uptake of a high-dose version of the eye disease treatment fueled a turnaround. After three straight quarters of sequential declines in sales of the Eylea franchise, they were up 9% over the first quarter.
GSK’s long-acting HIV offerings, new launches in oncology and COPD inhaler Trelegy continued to perform better than expected in the second quarter, paving the way for the company’s double-digit increase. With the performance, the British drugmaker lifted its 2024 revenue guidance from an increase of 5% to 7% to a new range of 7% to 9%.
Other gainers
Other companies that performed well in the second quarter included Novartis, which pulled off a 9% revenue increase on top of its 10% year-over-year gain in the first quarter. With a 7% boost, Merck also kept its momentum going from the first quarter, when it charted a 9% increase, as cancer powerhouse Keytruda accounted for $7.3 billion in sales, representing a 16% gain year over year and 5% sequentially, compensating for suddenly flat sales of HPV vaccine Gardasil.
Bristol Myers Squibb improved on its 5% first-quarter growth with a 9% jump in the second quarter and bumped up its 2024 revenue projection from a low single-digit increase to the upper end of the low-single-digit range. Anemia drug Reblozyl, which was up 82%, and blood cancer CAR-T Breyanzi, which increased sales by 55%, did the heavy lifting in the second quarter.
Sanofi posted an 8% second-quarter increase, thanks largely to anti-inflammatory superstar Dupixent, which was up 29%. Teva, which was up 7% year over year and 9% sequentially, provided more evidence of the success of its transformation under CEO Richard Francis.
Gilead Sciences followed its 5% increase from the first quarter with a 6% gain. These increases came after Gilead tumbled in the fourth quarter of last year by 4%. Credit for the turnaround goes to the company’s liver disease products, which were up 17%, as well as its oncology treatments, which saw a 15% gain.
Also notable was a 7% increase both year over year and sequentially for Roche. The boost, which was fueled by booming sales of eye disease treatment Vabysmo, came after the Swiss company saw a 6% decline in the first quarter, which was attributed largely to lost revenue for COVID-19 products.
AbbVie showed that it is recovering from the loss of exclusivity of Humira as it posted a revenue increase of 4% year over year and 17% sequentially. With $14.5 billion in sales for the quarter, AbbVie is approaching the $15.1 billion figure it accomplished in the fourth quarter of 2022, when Humira still had patent protection in the U.S.