Eli Lilly Cuts Revenue Guidance, Shares Drop as Weight-Loss Drug Sales Disappoint

Eli Lilly & Co. (NYSE: LLY) shares fell 6.6% on Tuesday, marking their largest single-day decline since March 2021, after the company issued lower-than-expected revenue guidance at the JPMorgan Healthcare Conference. The sell-off pushed the stock below its 50-day moving average, reflecting growing investor concerns over the pharmaceutical giant's ability to meet lofty expectations for its weight-loss and diabetes drugs, Mounjaro and Zepbound.

Lowered Guidance and Disappointing Q4 Projections

Eli Lilly now expects Q4 2024 revenue of approximately $13.5 billion, below Wall Street’s consensus estimate of $13.94 billion. The revenue outlook includes $3.5 billion in sales for Mounjaro and $1.9 billion for Zepbound, both falling short of analyst expectations of $4.4 billion and $2.2 billion, respectively. For full-year 2024, Lilly projects revenue of $45 billion, also below the consensus forecast of $45.55 billion.

CEO Dave Ricks attributed the shortfall to slower-than-expected growth in the U.S. incretin market and lower-than-anticipated channel inventory at year-end. Despite the revised figures, the company anticipates a 32% revenue increase in 2025, with guidance ranging from $58 billion to $61 billion. Lilly also highlighted plans to ramp up manufacturing capacity, aiming to produce 60% more sellable doses of its incretin drugs in the first half of 2025 compared to the same period in 2024.

Market Reaction and Sector Impact

The disappointing guidance reverberated across the healthcare sector, with the XLV Healthcare ETF falling 0.9%, dragged down by Lilly’s sharp decline. Other makers of weight-loss drugs also faced pressure, with Novo Nordisk (NVO) and Altimmune (ALT) shares dropping 3% and 3.2%, respectively. This reflects broader concerns about the competitive landscape and market saturation in the booming obesity and diabetes treatment market.

Lilly’s guidance revision comes as the company races to meet soaring demand for its incretin drugs amid fierce competition from Novo Nordisk and smaller players. The firm has invested heavily in expanding its production capabilities, and the U.S. Food and Drug Administration recently declared the shortage of tirzepatide, the active ingredient in both Mounjaro and Zepbound, to be over. However, Lilly’s expectations for even faster market growth were not met, raising questions about the sustainability of demand.

Future Prospects and Strategic Moves

Looking ahead, Lilly is betting on the development of an experimental weight-loss pill, orforglipron, which CEO Ricks expects to gain approval by early 2026. Pills are seen as more convenient for patients and easier to manufacture at scale, potentially addressing the production bottlenecks that have plagued injectable treatments. Data on orforglipron is expected before mid-2025, setting the stage for regulatory clearance the following year.

Despite the setback, Ricks remained optimistic about the company’s growth trajectory, citing “tons of supply coming online” and confidence in the long-term potential of its incretin drugs. Lilly’s financial results for Q4 and full-year 2024, scheduled for release on February 6, will provide further clarity on its performance and outlook.

Conclusion

Eli Lilly’s lowered guidance and the resulting stock decline highlight the challenges of meeting high expectations in the competitive and rapidly growing weight-loss drug market. While the company’s long-term strategy, including the development of a weight-loss pill, offers significant potential, the near-term shortfall underscores execution risks. Investors will be closely monitoring upcoming earnings and updates on Lilly’s manufacturing capacity and product pipeline to assess its ability to regain momentum in 2025.