Lilly Stock Drops 13% on GLP-1 Trial Setback Despite Earnings Beat

Eli Lilly and Company (LLY) recently experienced significant stock price movements following its second-quarter earnings report, which surpassed Wall Street expectations. The company reported revenues of $15.56 billion, exceeding the anticipated $14.69 billion, with earnings per share at $6.31, compared to forecasts of $5.56. A substantial portion of this revenue originated from the U.S. market, generating $10.81 billion. This growth was largely attributed to a 46% increase in sales volume of its GLP-1 drugs, Mounjaro and Zepbound. However, this figure could have been higher as observed price declines tempered potential gains, with prices seeing an 8% reduction.

Despite this earnings beat, the stock faced significant downward pressure due to disappointing outcomes from trials of its oral GLP-1 pill, orforglipron. The stock saw a marked decline, with a 13% drop in early trading and an overall decrease of 18% for the year. The trials revealed a 25% patient dropout rate at the highest dose, raising concerns about the drug's future market potential. Nevertheless, Eli Lilly remains committed to advancing its pipeline, with plans to submit data for FDA approval within the year, targeting market availability by next year.

In the competitive landscape of GLP-1 drugs, Eli Lilly's weight-loss drug Zepbound has shown robust performance, outpacing Novo Nordisk’s Wegovy. Zepbound prescriptions surged by 225% year-on-year, with total weekly prescriptions surpassing 418,000 by the end of July. In comparison, Novo Nordisk's Wegovy saw a 35% growth, reaching 281,000 prescriptions. This performance illustrates Eli Lilly's competitive edge in the GLP-1 market, a detail highlighted by JPMorgan analysts who are monitoring these trends.

Eli Lilly's success in the GLP-1 sector is a bright spot amidst challenges, with CEO Dave Ricks emphasizing the strong performance and contribution of Zepbound and Mounjaro to the company's 38% year-over-year revenue growth. This growth trajectory is particularly noteworthy given the wider pressures facing the pharmaceutical industry, particularly from pricing dynamics and regulatory changes.

Conversely, Novo Nordisk has encountered setbacks, notably in its U.S. sales. The company's performance has been negatively impacted by competition from Eli Lilly and the presence of compounders in the market. In response to these pressures, Novo Nordisk has revised its 2025 outlook to account for slower sales trends, a move that underscores the competitive tension within the GLP-1 space.

Looking forward, Eli Lilly is set to report its second-quarter 2025 earnings on August 7, with consensus analyst estimates projecting $14.4 billion in revenue and $5.56 earnings per share. This outlook reflects a year-on-year increase of 30-42%. As Eli Lilly continues to navigate competitive pressures and evolving market dynamics, analysts maintain a vigilant stance on the company's ability to sustain its growth and capitalize on emerging opportunities.