Sales of Eli Lilly’s diabetes and weight loss drugs fell far short of expectations in the third quarter, leading the juggernaut company to reduce its annual revenue guidance and triggering speculation that skyrocketing demand for the blood sugar modulating treatments has maxed out.
In the third quarter, sales of Mounjaro were at $3.11 billion, which came up significantly short of the analyst projection of $3.7 billion. Similarly, sales of obesity drug Zepbound reached $1.26 billion, failing to approach the analyst expectation of $1.7 billion.
The momentum halt for Mounjaro came after a huge sequential increase in sales from $1.81 billion in the first quarter to $3.09 billion in the second. The same was true for Zepbound, which pulled in sales of $517 million in the first quarter and $1.24 billion in the second quarter.
With the report, Lilly’s stock tumbled by 8%. It's a reversal from the 55% price increase Lilly had enjoyed since the start of this year entering Wednesday, as noted by Third Bridge analyst Lee Brown.
With the lackluster results, the Indianapolis company chopped $600 million from the top end of its annual revenue projection, taking the figure to $46 billion. That's a turnaround from the second quarter, when Lilly jacked up its 2024 revenue projection by $3 billion. It also lifted guidance by $2 billion after the first quarter, citing booming demand for its tirzepatide products.
In making the latest adjustment, Lilly cited its "prudent" rollout as it works to boost manufacturing capacity for Mounjaro and Zepbound.
“(The company) has been balancing demand creation activities and launches into new markets with its production to support the continuity of care for patients. In Q3, the company continued to be prudent in scaling up demand generation activities,” Lilly wrote.
During a conference call, Lilly execs voiced little concern over the sales shortfall.
“The underlying market for both type 2 (diabetes) and obesity continues to grow," Lilly’s president of cardiometabolic health Patrik Jonsson explained. "We took a more prudent approach than we anticipated in Q3, pretty much driven by the need to deliver a good consumer experience."
Lilly is “investing heavily” in its direct-to-consumer effort to sell tirzepatide products, Jonsson said. Ilya Yuffa, the president of Lilly International, added that new launches in countries overseas will bear fruit in the fourth quarter. Of Lilly’s $3.11 billion in quarterly sales from Mounjaro, $2.4 billion came from the U.S.
Overall, the company reported a year-over-year revenue increase of 20%. While the tirzepatide sales shortfall will dominate the headlines, Lilly pointed out that its non-incretin products produced a revenue boost of 17%. Lilly's total sales for the quarter came in at $11.44 billion.