Eli Lilly's Revenue Skyrocketed Last Quarter And The Pharma Giant Is Eyeing For More
Yesterday, pharmaceutical giant Eli Lilly announced its fourth-quarter financial results. Thanks to the strong debut of its new weight loss drug, Zepbound, and the price increase of its top-selling diabetes therapy, Mounjaro, the company's revenue and adjusted earnings data exceeded market expectations in the last quarter.
Revenue, Profit to Increase Fivefold This Year?
Specifically, in the last quarter, Eli Lilly's global revenue was $9.35 billion, a year-on-year increase of 28%, and higher than the market expectation of $8.93 billion. The revenue from the U.S. market amounted to $6.46 billion, a year-on-year increase of 39%, while revenues from markets outside the U.S. were $2.90 billion, a year-on-year increase of 10%.
Gross margin was $7.57 billion, up 31% year-on-year. Under non-GAAP, gross margin could reach $7.69 billion, with the year-on-year growth also at 31%. Eli Lilly's net income in the last quarter was $2.19 billion, a 10% increase compared to the same period last year. After being diluted down to per share, the earnings per share (EPS) stands at $2.42.
Although the stock price did not fluctuate significantly after the release of the financial results, Eli Lilly's market value now stands at $669.3 billion, thanks to the stock price surge last year caused by the popularity of its weight loss drug.
Eli Lilly is now the largest pharmaceutical manufacturer in the U.S., even surpassing Tesla, one of the so-called Mag Seven American stocks.
In addition, Eli Lilly also released the company's guidance for the full year of 2024, which is basically in line with market expectations. The company expects its 2024 revenue to soar to between $40.4 billion to $41.6 billion, and under high revenue, its full-year adjusted earnings will also reach $12.20 to $12.70 per share—five times the current EPS level.
The reason for Eli Lilly's confidence in its performance this year is the company's two key money printers—the weight loss drugs Mounjaro and Zepbound.
Eli Lilly's Products Are Flourishing
In fact, in the last quarter alone, Zepbound, which just received approval from U.S. regulators at the beginning of November, brought in sales of $175.8 million. This debut is only the beginning of Zepbound's contribution to Eli Lilly's quarterly performance.
It's worth noting that Tirzepatide, the main ingredient in Zepbound, showed positive results in treating a disorder called Metabolic Dysfunction Related Hepatic Fatty Hepatitis (MASH) in phase two trials, as mentioned in the financial report.
Therefore, analysts predict that in the coming year, sales of this drug on the market could exceed one billion dollars and eventually may become the most money-making drug in history.
Mounjaro, as a GLP-1 (glucagon-like peptide-1) drug, was the main player in driving Eli Lilly's revenue growth last quarter. This diabetes drug had sales of $2.21 billion in the fourth quarter, a significant increase from the $279.2 million in sales a year ago.
Analysts say the nearly tenfold increase in Mounjaro sales not only shows a strong market demand, but more importantly, reflects the drug's higher actual price in the United States.
This year, analysts expect full-year global sales for Mounjaro to hit $1.73 billion. Although the figure may not be as impressive as last year, it is still quite substantial.
Additionally, the sales of Eli Lilly's breast cancer drug Verzenio also significantly contributed to the company's revenue growth last quarter. In the last quarter, sales of this drug increased by 42%, reaching $1.15 billion.
However, this result did not meet analysts' expectations, as they forecasted sales of $1.18 billion for the drug during this period.
Apart from that, sales of the glucose-lowering drug Jardiance rose by 30%, reaching $798.1 million in the fourth quarter. Currently, Jardiance is also one of the top 10 drugs for which Eli Lilly is negotiating prices with the Federal Medicare Program.
Sales of another diabetes drug from Eli Lilly, Trulicity, stood at $1.67 billion, down 14% from a year ago, lower than analysts' forecast of $1.77 billion for the quarter. Meanwhile, sales of the insulin product Humalog were $366.6 million, down 33% from a year ago, and significantly below the analyst expectation of $438 million.
This decrease comes as no surprise: last year, Eli Lilly announced that it would decrease the price of Humalog and another regular insulin by 70% starting from May 1 this year. At the same time, for patients with private medical insurance, monthly out-of-pocket costs would be reduced to under $35 at certain retail pharmacies.
In Eli Lilly's view, Trulicity and Humalog can offset the prices of other products and provide more affordable options for patients.
During the financial statement conference call, Eli Lilly once again emphasized that it expects the U.S. Food and Drug Administration (FDA) to make a final decision on its experimental Alzheimer's drug, donanemab, in the first quarter of this year. This drug is said to significantly slow the progression of memory decline in patients in the early stages of the disease.
Production Burst Is On The Way!
According to the company's CFO, Anat Ashkenazi, despite achieving the goal of doubling drug production by the end of 2023, many of its medications, including Mounjaro, will still face shortages in 2024.
However, Ashkenazi stated that the company will continue to expand related capacities with an emergency mindset. By the latter half of this year, Eli Lilly aims to have the production volume of available enteral hormone drug doses at least 1.5 times that of the production volume of the latter half of last year.
Furthermore, Eli Lilly's new pharmaceutical factory in Concord, North Carolina, is set to begin operations at the end of 2024 and start shipping in 2025.
After heavy increases in production, Eli Lilly expects the prices of its core business drugs to decline by high single-digit percentage points in 2024. This decline will become even more tangible in the second half of the year, once production capacity has been further increased.