Lilly blames slower-than-expected growth for 2024 sales miss

Dive Brief:

• Eli Lilly on Tuesday said the company’s revenue in 2024 totaled about $45 billion, a 32% jump on 2023’s total but less than what it had estimated in October.
• Third quarter sales of Mounjaro and Zepbound, its GLP-1 drugs for diabetes and obesity, were below Wall Street analysts’ expectations at $3.5 billion and $1.9 billion, respectively. CEO David Ricks said GLP-1 market growth was slower than the company anticipated.
• Shares of the Indianapolis-based company fell by as much as 8% in morning trading, shaving tens of billions of dollars from its market valuation. Since hitting a high of $960 apiece in late August, shares have tumbled in value by about one-fifth as Zepbound sales have fallen short of forecasts.

Dive Insight:

Lilly should be in position to dominate the market for so-called “incretin” drugs that treat diabetes, obesity and metabolic disease. Zepbound beat its immediate rival, Novo Nordisk’s Wegovy, in a head-to-head trial, and Novo’s closest follow-up drug missed expectations in a Phase 3 trial.

But Lilly’s struggles to boost supply quickly enough to meet demand, along with uncertainty about the long-term market as some data show most people stop taking the drugs within a year, have overshadowed its successes. Zepbound’s miss was predicted by Jefferies analyst Akash Tewari, who in a Jan. 3 note to clients pointed to sliding prescription totals in late December.

Lilly had estimated annual revenue would fall between $45.4 billion and $46 billion when it reported third quarter earnings in late October. The eventual $400 million shortfall came in the fourth quarter, the company said. Still, full-year revenue was $4 billion above what Lilly anticipated in February 2024.

The announcement came hours before Ricks was scheduled to appear at the J.P. Morgan Healthcare Conference. Investors are likely to want to hear greater detail about Lilly’s views on the obesity market and how it will grow moving forward.

For 2025, Lilly forecast revenue growth of 32%, equal to 2024’s growth rate, with sales reaching between $58 billion and $61 billion.

“Sales of Mounjaro and Zepbound posted robust sales growth in Q4, and we expect a continuation of that trend into 2025,” said Ricks in a statement. “We’ll also bring additional manufacturing capacity online and expect to produce at least 60% more salable doses of [GLP-1s] in the first half of the year compared to the first half of 2024.”

Leerink Partners analyst David Risinger, who has an “outperform” rating on Lilly stock, acknowledged it was the second straight quarter the company delivered disappointing results. However, he wrote in a Tuesday note to clients that he expects better results in 2025. Additional pipeline drugs, including a follow-on oral GLP-1 for obesity, should provide sales growth for future years, he added.

Lilly’s guidance weighed on shares of other companies developing GLP-1 drugs, including Viking Therapeutics, which fell by more than 10%, and Novo Nordisk, which dropped 5%.

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