Obesity, diabetes drugs push Novo Nordisk and Eli Lilly to front of pharma's growth pack in Q2

As the coronavirus surged and subsided, several biopharma companies experienced exaggerated revenue spikes and troughs.

These days, as pharma sales have become more stable, the only drugmakers showing significant revenue spurts are those producing next-gen obesity and diabetes treatments. As companies have reported their second-quarter financial results over the last few weeks, gains by Novo Nordisk and Eli Lilly have drawn the most attention.

Of the industry’s top 20 firms by sales in the period, Novo (32%) and Lilly (28%) posted the largest increases in year-over-year revenue growth. And third place wasn’t even close. No other company delivered a sales increase of more than 11%.

Novo’s Ozempic—a diabetes drug that's been commonly prescribed off-label for obesity—generated revenue of $3.2 billion, up from $2.1 billion during the prior year. Meanwhile, Novo’s approved obesity treatments Wegovy and Saxenda more than tripled their combined sales to $1.6 billion.

While the year-over-year increase was dramatic, Novo’s overall sales of $7.9 billion came up short of analyst expectations of $8.4 billion, according to Zacks Investment Research. Expect more of the same in the next few quarters as Novo recently said it will limit Wegovy supplies into 2024 as the company anticipates to continue struggling to meet demand.

Supply has not been as big a problem for Lilly. Mounjaro, which was approved for diabetes midway through the second quarter of 2022, bolstered Lilly with $980 million in sales in the quarter. The drug jumped 72% from the first quarter of this year, "highlighting (its) tremendous demand and growth trajectory,” Third Bridge analyst Lee Brown noted. Mounjaro could win a lucrative obesity approval as soon as this year.

Also contributing to Lilly’s surge were sales of breast cancer drug Verzenio, which were up 57% to $927 million. Sales from diabetes and heart therapy Jardiance jumped 45% to $668 million, as well.

Lilly’s promise for growth is reflected in its move to the industry’s top spot in market cap at more than $500 billion, topping longtime leader Johnson & Johnson ($452 billion). Similarly, Novo ($411 billion) also has surged in the pharma market cap rankings to No. 3.

Hard fall for COVID players

Among the top 20 biopharma companies by revenue, only six saw their year-over-year sales fall in the most recent quarter. Just three had sequential sales drops.

Pfizer (-54%) was the only top 20 company with a double-digit decrease year over year. Sales of COVID products, of course, have skewed Pfizer’s figures since 2021. Remove COVID vaccine Comirnaty and oral antiviral Paxlovid from the equation and Pfizer posted a 5% increase in sales during the last quarter.

Still, the company was disappointed by the quarterly performance of its COVID products, so it reduced the top end of its 2023 revenue projection by $1 billion and said it was considering cost-cutting measures.

Similarly, Pfizer’s COVID vaccine partner, BioNTech (-95%) saw a massive slide as it registered sales of just $168 million euros ($184 million) during the quarter. Moderna (-93%) realized the same fate with revenue falling from $4.7 during last year's second quarter to $334 million this year.

Both were top 20 revenue companies in the industry at the start of last year but have tumbled out of the rankings.

It will be interesting to see the performance of COVID vaccine sellers in the second half of 2023 with transition to a commercial model in the U.S. The companies aren’t sure how to gauge it. After generating COVID vaccine sales of $2.2 billion in the first half, Moderna is projecting a broad window—$6 billion to $8 billion—for the full year.

Other decliners

Just five of the top 20 companies posted single-digit declines in the quarter. Those are Roche (-7%), Bristol Myers Squibb (-6%), AbbVie (-5%), Viatris (-5%) and Bayer (-4%).

The only firm that could chalk its loss up to a decline in sales of COVID products was Roche. But there was a silver lining for the Swiss drugmaker, as its top five medicines grew sales by at least 40%.

Leading the surge was macular degeneration drug Vabysmo, which has already become a blockbuster, with $1.1 billion in sales in the first half.

Bristol Myers’ decline came as aging blockbusters Revlimid, Opdivo and Eliquis failed to reach expectations, prompting the company to adjust its annual revenue projection from a 2% increase to a slight decline. Most telling was BMS slicing its 2023 guidance for Revlimid from $6.5 billion to $5.5 billion on the heels of it accounting for $10 billion in sales in 2022.

Like Bristol's Revlimid, AbbVie's powerhouse Humira has lost its patent protection and this was reflected in the company’s second-quarter revenue decline. Despite the drop, the company raised its annual revenue projection as it was buoyed by the continued upward trajectory of Skyrizi and Rinvoq, which jumped 50% and 55% during the second quarter, respectively.

Bayer, which is considering structural changes under new CEO Bill Anderson, dropped its revenue guidance window for 2023 by 2.5 billion euros on both ends. The company reported disappointing sales from both its agricultural and pharma units, which posted year-over-year declines of 14% and 5%, respectively.

Other risers in Q2

Aside from Novo Nordisk and Eli Lilly, the only other company with a double-digit revenue increase in the quarter was Regeneron (11%). But while its year-over-year numbers were strong, Regeneron’s revenue was flat sequentially as sales of macular degeneration drug Eylea have stagnated because of competition from Roche’s longer-acting Vabysmo.

Also posting year-over-year revenue gains were Takeda (9%), Novartis (7%), AstraZeneca (6%), J&J (6%), Amgen (6%), Gilead Sciences (5%) and Teva (4%).

The strong performance by Novartis prompted the company to bump up its 2023 revenue projection for the second time this year. Stalwart Entresto and new drugs Kesimpta (multiple sclerosis) and Pluvicto (prostate cancer) surged in the quarter.

AstraZeneca’s revenue increase came despite zero sales in the quarter of its COVID vaccine—which was the company’s No. 2 product in 2021 with sales of $4 billion. The bump came thanks to solid growth (PDF) for several drugs in the company’s deep portfolio, including blockbusters Ultomiris (64%), Imfinzi (55%), Farxiga (36%) and Calquence (34%).

A successful quarter for J&J prompted the company to lift the window of its 2023 revenue by nearly $1 billion on both ends. Amgen and Gilead also lifted their annual guidance after strong sales performances in the period.

Teva’s year-over-year increase was a noteworthy turnaround for a company that has labored through five straight years of declining revenue.

“These generics companies, their portfolios are seeing a lot of pressure. That’s from consolidation of buyers. That’s from an FDA focus on approving more generics, which of course is great for consumer, but if you’re producing them, that does mean it’s a little bit harder to continue to get gains in those areas,” Ann-Hunter van Kirk, a senior biopharmaceutical analyst with Bloomberg Intelligence, said in an interview with Fierce Pharma.