Eli Lilly Shares Plummet Over 11% as Q3 Earnings Disappoint Market Expectations

On October 30, Eli Lilly & Co. witnessed a significant drop, with their shares declining by over 11% following the release of disappointing third-quarter earnings. This marks the company's largest single-day decrease since 2008. The pharmaceutical giant attributed its underwhelming performance to weaker-than-anticipated sales of its popular diabetes and weight-loss medications, Mounjaro and Zepbound.

The company's Q3 revenue amounted to $114.4 billion, which fell short of market expectations set at $121.8 billion. The net profit reported was $9.7 billion, translating into earnings of $1.18 per share, a figure that almost halved the previously anticipated $1.47 per share. This shortfall prompted Eli Lilly to lower its full-year revenue forecast to between $454 billion and $460 billion, down from the earlier ceiling of $466 billion.

Mounjaro and Zepbound's performance was central to the downturn, as their sales figures did not meet market projections. In the third quarter, Mounjaro's sales reached $31.1 billion, and Zepbound brought in $12.6 billion, both missing expectations that were significantly higher. The company explained that reduced inventory levels in wholesale channels were a major factor impacting the sales of these two products. Despite earlier claims of addressing supply issues, full availability of the medications remains unattainable for some patients.

Eli Lilly announced plans to increase the production of its GLP-1 receptor agonists, with expectations for 2024 seeing a 50% rise in production from the previous year. The company also highlighted its continued expansion efforts, having invested billions to enhance production capacities, including facilities in Indiana and Ireland.

Moreover, while the company continues to focus on its GLP-1 range, it's also advancing in developing treatments for Alzheimer's disease. Its candidate drug, Donanemab, is in the pipeline with potential regulatory submissions, indicating Eli Lilly's strategic diversification beyond just the obesity market.

Sector analysts remain optimistic about the long-term prospects of Eli Lilly's weight-loss treatments despite recent setbacks. The global market for obesity treatments continues to be one of the fastest-growing segments in the pharmaceutical industry, projected to reach a value of $150 billion in the coming years. Eli Lilly's leadership in this field is positioned as a key driver in maintaining its trajectory, with potential to become the first healthcare company valued at $1 trillion.