World Stock Watch

Eli Lilly’s Weight Loss and Diabetes Drugs See Weaker-than-Expected Sales

Despite recovering from widespread shortages in the US, Eli Lilly’s blockbuster weight loss drug Zepbound and diabetes treatment Mounjaro posted disappointing sales for the third quarter. The company attributed the weaker-than-expected sales to drug wholesalers cutting inventory of both medicines.

The Inventory Conundrum

Wholesalers, who purchase medicines from manufacturers and sell them to hospitals, clinics, pharmacies, and other healthcare providers, tapped into existing stock in the third quarter instead of buying more from Eli Lilly. This led to increased inventory of Zepbound and Mounjaro during the period, but ultimately dampened revenue from both treatments.

Sales Fall Short of Expectations

Mounjaro’s third-quarter sales of $3.11 billion fell short of the $3.7 billion analysts had expected, while sales of Zepbound were $1.26 billion, missing the $1.76 billion expected by analysts. Citi analyst Geoff Meacham noted that the primary culprit was an inventory hit to Mounjaro and Zepbound, rather than weaker demand.

Analysts Question the Inventory Explanation

Some analysts questioned whether the inventory issue could explain all of what happened with the sales of Zepbound and Mounjaro in the third quarter. Barclays analyst Carter Gould noted that the inventory factor likely explains only a fraction, or around 20%, of the drugs’ revenue misses.

Demand Remains Strong

Despite the disappointing sales, Eli Lilly executives insisted that underlying demand for the medicines remained strong. CEO Dave Ricks pointed to “a lot of lumpiness in channel stocking” and noted that wholesalers are dealing with financial pressures and cold chain capacity constraints.

Investing in Direct-to-Consumer Efforts

Eli Lilly is investing heavily in its direct-to-consumer website, which offers telehealth prescriptions and direct home delivery of certain drugs to expand patient access. The company will also begin demand-stimulating activities, including advertising and promoting, for Zepbound in November.

Competition from Compounded Versions

Ricks dismissed the idea that the disappointing sales were due to competition from compounded versions of Mounjaro and Zepbound, noting that the company doesn’t see a financial impact from compounding.