Eli Lilly Stock Plummets on Rare 'Big' Sales Miss for Diabetes, Weight-Loss Drugs
Wednesday, Oct 30, 2024 9:51 am ET
2min read Eli Lilly and Company (LLY) shares took a significant tumble on Wednesday, October 30, following a rare but substantial miss in sales for its popular diabetes and weight-loss drugs, Mounjaro and Zepbound. The company's stock price fell over 11% in premarket trading, poised to undercut its 200-day moving average and the lower edge of a flat base with a buy point at $972.53, according to MarketSurge. This article delves into the factors contributing to Eli Lilly's disappointing sales performance and assesses the potential impact on the company's long-term prospects.
Eli Lilly's third-quarter results revealed a significant shortfall in sales for Mounjaro and Zepbound, which rely on the same active ingredient, tirzepatide. Mounjaro's sales missed bullish forecasts by a wide margin, with $3.11 billion in revenue compared to the expected $3.77 billion. Similarly, Zepbound's sales of $1.26 billion fell short of the anticipated $1.73 billion. The company attributed the disappointing sales to inventory decreases in the wholesaler channel, which had a mid-single-digit percentage negative impact on sales.
The inventory management issues, combined with a $2.8 billion charge related to the acquisition of Morphic Holding, contributed to Eli Lilly's dismal earnings report. On an adjusted basis, the company earned $1.18 per share, far below analysts' expectations of $1.45. Despite the setback, Leerink Partners analyst David Risinger maintained a positive outlook on Eli Lilly, stating that the company's investment thesis remains unchanged as it continues to commercialize obesity products globally.
Competition in the diabetes and weight-loss drug market may have also played a role in Eli Lilly's sales miss. Rival Novo Nordisk's similar drugs, Ozempic and Wegovy, have been gaining traction, potentially siphoning market share from Eli Lilly's offerings. As both companies invest billions to increase manufacturing capacity for their respective drugs, the competition for market share in the injectable weight loss and diabetes drug segment is intensifying.
Eli Lilly's advertising and promotion plans for Zepbound may have also contributed to its sales performance. In an interview with CNBC, Eli Lilly CEO David Ricks revealed that the company pushed back plans to advertise and promote Zepbound due to customer service levels. The drugmaker will begin these efforts in November, indicating that the delay in advertising and promotion may have contributed to the sales miss. Ricks also mentioned that the company expects a 50% increase in incretin drug production in the second half of 2024 and even greater expansions in manufacturing capacity at the end of the year and 2025.
Despite the recent setback, Eli Lilly's long-term growth prospects remain intact. The company's innovative drug pipeline and global expansion strategy position it well to capitalize on the growing demand for diabetes and weight-loss treatments. Investors should consider the company's strong fundamentals and maintain a long-term perspective, as short-term challenges may present attractive entry points.
In conclusion, Eli Lilly's stock price plummeted following a rare but significant sales miss for its diabetes and weight-loss drugs. While inventory management issues and competition contributed to the disappointing results, the company's long-term growth prospects remain robust. Investors should evaluate Eli Lilly's performance in the context of its long-term track record and growth potential, as short-term challenges may present attractive investment opportunities.
Eli Lilly's third-quarter results revealed a significant shortfall in sales for Mounjaro and Zepbound, which rely on the same active ingredient, tirzepatide. Mounjaro's sales missed bullish forecasts by a wide margin, with $3.11 billion in revenue compared to the expected $3.77 billion. Similarly, Zepbound's sales of $1.26 billion fell short of the anticipated $1.73 billion. The company attributed the disappointing sales to inventory decreases in the wholesaler channel, which had a mid-single-digit percentage negative impact on sales.
The inventory management issues, combined with a $2.8 billion charge related to the acquisition of Morphic Holding, contributed to Eli Lilly's dismal earnings report. On an adjusted basis, the company earned $1.18 per share, far below analysts' expectations of $1.45. Despite the setback, Leerink Partners analyst David Risinger maintained a positive outlook on Eli Lilly, stating that the company's investment thesis remains unchanged as it continues to commercialize obesity products globally.
Competition in the diabetes and weight-loss drug market may have also played a role in Eli Lilly's sales miss. Rival Novo Nordisk's similar drugs, Ozempic and Wegovy, have been gaining traction, potentially siphoning market share from Eli Lilly's offerings. As both companies invest billions to increase manufacturing capacity for their respective drugs, the competition for market share in the injectable weight loss and diabetes drug segment is intensifying.
Eli Lilly's advertising and promotion plans for Zepbound may have also contributed to its sales performance. In an interview with CNBC, Eli Lilly CEO David Ricks revealed that the company pushed back plans to advertise and promote Zepbound due to customer service levels. The drugmaker will begin these efforts in November, indicating that the delay in advertising and promotion may have contributed to the sales miss. Ricks also mentioned that the company expects a 50% increase in incretin drug production in the second half of 2024 and even greater expansions in manufacturing capacity at the end of the year and 2025.
Despite the recent setback, Eli Lilly's long-term growth prospects remain intact. The company's innovative drug pipeline and global expansion strategy position it well to capitalize on the growing demand for diabetes and weight-loss treatments. Investors should consider the company's strong fundamentals and maintain a long-term perspective, as short-term challenges may present attractive entry points.
In conclusion, Eli Lilly's stock price plummeted following a rare but significant sales miss for its diabetes and weight-loss drugs. While inventory management issues and competition contributed to the disappointing results, the company's long-term growth prospects remain robust. Investors should evaluate Eli Lilly's performance in the context of its long-term track record and growth potential, as short-term challenges may present attractive investment opportunities.
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