By Bhanvi Satija and Sriparna Roy
(Reuters) -Increased manufacturing capacity for Eli Lilly’s highly sought after weight-loss drug Zepbound drove the company to raise its annual sales forecast by $3 billion on Thursday, and its shares jumped nearly 12% ahead of regular trading.
The Indianapolis-based drugmaker, already the world’s most valuable healthcare company primarily due to demand for its obesity treatments, was on track to add nearly $90 billion in market value if the gains hold through the day.
Lilly also raised its 2024 profit forecast and said sales of Zepbound crossed $1 billion for the first time in a quarter since its launch in late 2023.
The Zepbound milestone comes a day after Danish rival Novo Nordisk reported a rare miss on quarterly sales of its weight-loss drug Wegovy and trimmed its full-year profit forecast.
Lilly and Novo are racing to increase manufacturing capacity to meet unprecedented demand for their popular drugs that have been shown to help patients lose as much as 20% of their weight on average.
As Lilly’s supply for both Mounjaro and Zepbound increased during the quarter, the company said it was able to backfill orders and increase stocks at wholesalers. Mounjaro, which has the same active ingredient as Zepbound – tirzepatide – is sold for diabetes in the U.S. and weight loss elsewhere.
Lilly said stocking by wholesalers accounted for up to mid-20% of the sales for the quarter.
“We’re just seeing unbelievable demand, and we’re not even trying that hard to promote this drug,” CEO David Ricks said in a CNBC interview. Ricks said that pricing for Zepbound was “pretty stable” during the quarter.
“What you’re seeing is consumer organic demand here, as we shipped more products and bringing more supply in the United States,” he said.
Mounjaro had sales of $3.09 billion in the quarter, while Zepbound took in $1.24 billion. Combined, the two tirzepatide products exceeded analysts’ forecasts by more than $750 million.
They expect the drugs to make a combined $15 billion this year.
Lilly said that as of July 1 Zepbound was available on about 86% of the commercial insurance coverage lists in the U.S. and that it believes over 50% of employers have offered that option.
Novo, whose Wegovy had a stronger position than Lilly for commercial insurance coverage at the beginning of the year, said on Wednesday that it had provided price concessions to retain its coverage profile.
Lilly has said it expects manufacturing in its new production lines to start over 2024 and for a new plant in Concord, North Carolina, to begin operations toward the end of the year.
It invested an additional $5.3 billion in May on a manufacturing site in Indiana for production of tirzepatide.
Lilly said on Thursday it plans to launch 2.5 milligrams and 5 mg single-dose vials of Zepbound in the U.S. in the coming weeks.
Both Wegovy and Zepbound have been in shortage this year, according to the U.S. FDA’s website. Although the agency recently said all doses of Zepbound were now available, it did not remove the treatment from the shortage list.
While supply and demand have come into better balance, Lilly said expected increases in demand could result in periodic supply tightness.
Analysts have said the companies will likely split the U.S. market roughly 50-50 by the end of 2024, as Lilly bolsters its manufacturing capacity and closes the gap with Novo.
The drugmaker now expects 2024 adjusted profit of $16.10 to $16.60 per share, compared with its prior forecast of $13.50 to $14.
Lilly forecast overall revenue to be $45.4 billion to $46.6 billion, compared with its earlier view of $42.4 billion to $43.6 billion.
The company said it had improved clarity into the timing and pace of its production expansions and planned Mounjaro launches outside the U.S.
(Reporting by Bhanvi Satija and Sriparna Roy in Bengaluru and Patrick Wingrove in New York; Editing by Sriraj Kalluvila and Bill Berkrot)
Comments