Eli Lilly Cuts 4Q Sales Outlook After Sluggish Growth for Incretin Drugs

Eli Lilly and Company (NYSE: LLY) has announced a 6% cut to its fourth-quarter sales outlook, citing slower-than-expected growth for its incretin drugs, which include Mounjaro and Zepbound. The drugmaker's shares dropped about 6% in early trading Tuesday. Eli Lilly now expects full-year 2024 revenue of about $45 billion, lower than the $45.4 billion to $46 billion it anticipated in October. The new outlook would still mark a 32% jump in revenue from the prior year. For the fourth quarter, Eli Lilly expects $13.5 billion in revenue, including about $3.5 billion for Mounjaro and $1.9 billion for Zepbound.

The slower-than-expected growth of Eli Lilly's incretin drugs in the fourth quarter can be attributed to two main factors: lower-than-expected channel inventory at year-end and slower acceleration of growth in the U.S. incretin market. Channel inventory refers to the stock of goods held by intermediaries, such as wholesalers and distributors, between the manufacturer and the end-user. Lower-than-expected channel inventory at the end of the year may indicate that these intermediaries were not ordering as much product as anticipated, which could have slowed down the sales growth of Eli Lilly's incretin drugs. Additionally, the U.S. incretin market grew by 45% compared to the same quarter last year, but this growth was slower than what Eli Lilly had anticipated in its previous guidance.

To accelerate the growth of its incretin drugs in the future, Eli Lilly can employ several strategies. These include expanding manufacturing capacity, launching new indications and markets, developing a convenient and easy-to-manufacture obesity pill, strengthening the pipeline, addressing channel inventory dynamics, educating healthcare providers and patients, and collaborating with other companies. By implementing these strategies, Eli Lilly can work towards accelerating the growth of its incretin drugs and meeting its revenue targets.

In conclusion, Eli Lilly's 6% cut to its fourth-quarter sales outlook highlights the challenges faced by the drugmaker in the incretin market. However, by addressing these challenges and implementing strategic initiatives, Eli Lilly can work towards accelerating the growth of its incretin drugs and meeting its revenue targets. Investors should closely monitor the company's progress in this area and consider the potential impact on its stock price.