Mounjaro and Zepbound Sales Disappoint, Eli Lilly’s Stock Takes Major Hit
Shares of Eli Lilly & Co. are experiencing a steep decline, signaling what could be the company’s most significant selloff in four years. This downturn comes on the heels of disappointing revenue forecasts for the fourth quarter, linked to slower-than-anticipated growth in sales of its diabetes and weight-loss medications, Mounjaro and Zepbound. The stock plummeted 8.2% during morning trading, making it the worst performer on the S&P 500 index, and it is on track to post its biggest one-day decline since March 2021.
Incretin Market Growth and Expectations
Despite the U.S. incretin market showing impressive growth of 45% compared to the same quarter last year, Eli Lilly’s Chief Executive David Ricks conveyed that this figure fell short of their expectations. Incretins, including glucagon-like peptide-1 (GLP-1), play a critical role in medications aimed at managing diabetes and obesity.
The company’s downwardly revised outlook includes anticipated revenue of approximately $13.5 billion for the quarter ending December, which fails to meet the consensus estimate of $13.93 billion among analysts surveyed by FactSet. This figure integrates projected sales of Mounjaro at $3.5 billion—significantly below the $4.4 billion consensus estimate—and Zepbound at $1.9 billion, falling short of the $2.14 billion forecast.
Factors Contributing to Underperformance
A key factor in Eli Lilly’s disappointing performance appears to be lower-than-expected supplies late in the year. In the previous earnings report for Q3, the firm had already reported subdued sales of both Mounjaro and Zepbound, attributed to wholesalers reducing inventory after ramping it up in the preceding quarter.
However, Eli Lilly reported ongoing efforts to enhance its manufacturing capabilities, which it claims will improve the supply levels of Mounjaro. Ricks expressed confidence in the long-term growth trajectory, projecting “robust” sales increases in 2025 and boosted production capacity for incretin drugs by at least 60% in the first half of the coming year.
A Competitive Landscape
Alongside Eli Lilly’s challenges, its competitor Novo Nordisk A/S—recognized for its diabetes and weight-loss drugs such as Ozempic and Wegovy—saw a 3.6% decline in its U.S.-listed shares. This raises questions about overall market dynamics and whether other pharmaceutical companies are experiencing similar challenges in meeting growth expectations.
Market Performance and Future Outlook
Currently, Eli Lilly’s stock has fallen 21.3% over the past three months. In contrast, the Health Care Select Sector SPDR exchange-traded fund is down 9.7%, with the broader S&P 500 index showing a minor slip of 0.3%. This disparity highlights the impact of Eli Lilly’s internal challenges in an otherwise strong market environment.
Conclusion
As Eli Lilly prepares for the future, it remains to be seen if they will achieve the anticipated sales growth and bolster their manufacturing capabilities sufficiently to satisfy market demands. Investors will closely watch their performance in the upcoming quarters, hoping for a rebound from the setbacks experienced in late 2023.
