Lilly counts on growing markets to boost lagging Taltz, Trulicity

David Ricks
It's “important to understand that there is far more growth opportunity left in the classes we're participating in than share erosion threat," Lilly CEO David Ricks told investors Wednesday. (Eli Lilly)

Eli Lilly is counting on Type 2 diabetes drug Trulicity and immunology launch Taltz to keep rolling amid challenges elsewhere. But both meds missed Wall Street's expectations, prompting questions from analysts.

Despite some new competition to the drugs, Lilly CEO David Ricks on Wednesday said the company remains confident in its treatments. Lilly’s Trulicity is facing off against Novo Nordisk’s highly anticipated new oral GLP-1 option, Rybelsus, and an injectable version of the same compound, Ozempic, which won approval in 2017. With AbbVie’s recent approval for Skyrizi, expected to hit blockbuster heights, Taltz faces a fresh threat, as well. 

RELATED: Lilly's quick-launching Trulicity and Taltz stumbled this quarter. What gives? 

On Trulicity, Ricks said the company grew volumes more than 40% in the U.S. last quarter in the face of competition from Ozempic. Taltz grew volumes, too, as Skyrizi launched and Johnson & Johnson player Tremfya continued to snap up share of its own.

How? Both treatment classes are expanding, Ricks said. It's “important to understand that there is far more growth opportunity left in the classes we're participating in than share erosion threat," he noted.

Where immunology is concerned, J&J agrees. “We do look at immunology as being very, very attractive, and in certain areas, there’s so much unmet medical need,” Jennifer Taubert, J&J executive vice president and worldwide pharma chairman, said in January, adding that the psoriasis market—where Tremfya and Taltz are duking it out—is still “dramatically underpenetrated” by biologics.

Trulicity sales grew 24% in the third quarter to $1.01 billion, but the drug missed consensus estimates by $58 million, according to a Wednesday note from Wolfe Research analyst Tim Anderson. Taltz sales swelled 29% to $340 million for the quarter; that drug fell $59 million short of expectations.

RELATED: Bring on Novo Nordisk’s semaglutide, Eli Lilly says. We’re ready

Lilly will need more from those drugs, especially as Rybelsus, a med expected to shake up the diabetes market, gains steam. It’ll take “at least a couple of quarters’ worth of launch experience” to assess how the new rival will affect Trulicity, Anderson wrote.

That's not to say Lilly doesn't have some launches of its own going. It recently won approval for new migraine treatment Reyvow, which followed last year’s FDA nod for migraine prevention med Emgality. Emgality’s launch is picking up steam, and the company believes it can leverage “significant synergies” between the two meds, Lilly Bio-Medicines President Patrik Jonsson said on Wednesday's call.  

Meanwhile, negative pricing movements continue to hurt the drugmaker. Across the entire portfolio, Lilly reported that prices in the U.S. slipped 5%. The Indianapolis drugmaker paid out higher rebates, Ricks said, and it had to pay bigger discounts in Medicare's coverage gap after Congress passed new legislation last year. The company had estimated the change would bring a $200 million hit to revenues this year, and that’s now playing out, Ricks said.  

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