Eli Lilly's Obesity Drug Sales Miss Expectations Amid Inventory Issues and Competition

Eli Lilly & Co. (LLY) shares took a hit on Tuesday after the company reported slower-than-expected sales growth for its popular weight-loss drugs, Zepbound and Mounjaro, in the fourth quarter. The drugmaker's stock fell about 6% in early trading as investors reacted to the news. 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. For the fourth quarter, the company expects $13.5 billion in revenue, including about $3.5 billion for Mounjaro and $1.9 billion for Zepbound.



The slower-than-expected demand for Lilly's obesity shots can be attributed to a few factors. First, wholesalers had higher inventory of Zepbound and Mounjaro in the last quarter, which dragged on sales. This led to a mid-single-digit percentage negative impact on sales in the U.S. Second, the U.S. incretin market grew 45% compared to the same quarter last year, but it did not meet Eli Lilly's lofty expectations for growth. Lastly, competition from other pharmaceutical companies, such as Novo Nordisk, may have contributed to the slower demand for Lilly's obesity shots.

Eli Lilly's CEO, David Ricks, acknowledged the slower growth in the U.S. incretin market and the impact of inventory issues on sales. He also noted that the company is developing an obesity pill that would be more convenient for patients and easier to manufacture, and he expects it to be approved as soon as early next year. This new product could help Lilly regain its competitive edge in the obesity drug market.

The drugmaker also expects sales of $58 billion to $61 billion in fiscal 2025, reflecting its continued confidence in the growth potential of its incretin drugs. However, investors will be watching closely to see if Lilly can address the inventory issues and maintain growth in the face of intense competition.

In the long term, Eli Lilly's stock price and market capitalization will depend on its ability to manage inventory, maintain growth in its incretin drugs, and successfully launch new products. If Lilly can effectively address these challenges, the stock price and market capitalization may recover and potentially even increase. However, if the company faces persistent issues with inventory management, competition from rivals like Novo Nordisk, or regulatory challenges, the stock price and market capitalization could remain under pressure.

As Eli Lilly works to address these challenges and capitalize on the growing demand for obesity treatments, investors will be closely monitoring the company's progress and the broader market trends in the obesity drug space.