Like many other biopharma companies presenting at this year’s J.P. Morgan Healthcare Conference, Eli Lilly took a chance on Tuesday to share its preliminary sales results for 2024. Unfortunately for the company, however, the early glimpse at its fourth-quarter performance doesn’t seem to be going over well with investors.
All told, Lilly expects full-year 2024 revenues to clock in at around $45 billion, according to a Tuesday press release. While that projected sum would represent 32% growth over 2023, it’s $400 million below the low end of the revenue guidance range Lilly previously issued during its third-quarter earnings report in October.
The issue seems to come down to the fact that the market for incretin meds like Lilly’s Mounjaro and Zepbound is growing, but not nearly as fast as the company—or industry watchers—had expected.
"While the U.S. incretin market grew 45% compared to the same quarter last year, our previous guidance had anticipated even faster acceleration of growth for the quarter,” Lilly CEO David Ricks said in a statement.
In a presentation later in the day at JPM, Ricks explained that the diabetes/GLP-1 market reacted differently than it had in previous years, when there typically was an increase in demand in December relative to the rest of the quarter.
“This year that didn’t happen in GLP-1,” said Ricks, who speculated that changes in Medicare Part D and insurance edits have prevented patients from doubling up their prescriptions at the end of the year to avoid deductible costs early in the following year.
The projected sales miss seems to have spooked investors, with Lilly’s share price dropping about 6.5% in Tuesday trading.
Lilly has seen this situation play out before. Back in October, when the Indianapolis-based drugmaker reported that Mounjaro and Zepbound had fallen short of third-quarter sales expectations, Lilly’s stock tumbled about 8%, marking a partial reversal from the 55% share price increase the company had enjoyed since the start of 2024.
Ricks explained that since the obesity market is new, there is still much to be learned when predicting sales.
"The scale of this business and the way it's been growing, the consumer part of it, along with the stocking dynamics, it's just been a learning [experience] for us," Ricks said. "Our forecasters really nailed the rest of the portfolio. We don't have a problem with forecasting. It's just, this market is quite different."
There are many ways for the market to grow, Ricks added. Last month, Lilly gained approval for Zepbound to treat sleep apnea, the first of several indications that the company expects to gain by showing the multitude of health benefits that can be achieved through weight loss.
“Each one of the new indications should see a step up in access,” Ricks said.
Another source of growth that largely remains untapped are markets outside of the U.S. "We've barely launched internationally," Ricks added.
Looking ahead, Lilly says it expects to see revenues grow in 2025 thanks in part to new drugs such as cancer medication Jaypirca, atopic dermatitis treatment Ebglyss, ulcerative colitis med Omvoh and Alzheimer's disease therapy Kisunla. For the full year, Lilly predicts it can reel in 2025 sales between $58 billion and $61 billion, which would represent 32% growth at the midpoint, matching its increase from 2024.
During his Q&A session on Tuesday, Ricks reminded the audience of the company's prowess, aside from its diabetes and obesity products.
"The rest of the portfolio performed incredibly well," Ricks said. "If you stripped away incretins and GLP-1s from the pharma sector, the balance of Lilly would probably be the fastest-growing big company in the sector."