Eli Lilly's Share Price Drops Due to Sluggish Sales of Weight Loss Drug, Raising Questions about Potential Purchase Attractiveness.
GLP-1 drugs have been the talk of the town in the weight loss sphere, with medication like Novo Nordisk's Ozempic and Eli Lilly's Mounjaro seeing a substantial boost in sales. However, Eli Lilly gave investors a surprise with their reduced full-year revenue expectations, attributing the fall in GLP-1 drug sales to not meeting anticipated demands.
Originally forecasting a full-year revenue between $45.4 billion to $46 billion, Eli Lilly now expects a revenue of approximately $45 billion for the full year 2024. Their 4Q 2024 revenue guidance is pegged at around $13.5 billion, lower than the projected $13.94 billion the analysts had in mind.
While these revised figures represent a substantial year-over-year revenue growth of 44% and 32% for 4Q 2024 and the full year 2024, respectively, it's a bit less than expected. Yet, it's important to note that Eli Lilly's initial 2024 full-year revenue forecast was actually for $41 billion, indicating a considerable leap.
Turning our attention to Eli Lilly's GLP-1 drugs, we see that they are expected to make a substantial contribution to the company's revenue. Mounjaro, approved for helping improve blood glucose levels in adults with type 2 diabetes, but widely used for weight loss, is expected to bring in $3.5 billion in sales. Zepbound, approved for weight loss in obese adults or those with weight-related conditions, is expected to contribute $1.9 billion to the company's revenue.
In the past year, Mounjaro brought in $2.2 billion in sales, with an impressive 59% increase expected for 2024. Zepbound's introduction only brought in $175.8 million in 2021, but the company is hopeful of a significant boost in sales in 2024.
According to the company, the revenue shortfall was due to weaker-than-expected scripts for diabetes in December, which is typically a strong month due to patients doubling their scripts to avoid year-end deductibles.
Looking ahead, Eli Lilly expects its 2025 revenue to come in between $58 billion and $61 billion, representing growth between 29% to 36%. According to the company, it has invested aggressively in manufacturing capacity for its GLP-1 drugs, spending $23 billion over the past three years, enabling it to ship 60% more doses in the first half of 2025 compared to the same period in 2024.
In terms of international sales, Eli Lilly has identified an opportunity nine times larger than the U.S. market. Although the international pricing is lower, the company's large market presence and potential for growth make it a promising area for future revenue growth.
Beyond its incretin drugs, Eli Lilly has reported strong performances in its oncology, immunology, and neuroscience medicines. Its non-incretin drug sales increased by 20% in the quarter, and the company anticipates several new drugs to drive revenue growth in 2025, including those for treating conditions like cancer, ulcerative colitis, and Alzheimer's disease.
If Eli Lilly's prediction that the revenue shortfall was due to patients not doubling their scripts in December proves accurate, the company might experience a stronger-than-expected Q1. Given its aggressive investment in manufacturing capacities, a robust therapeutic portfolio, and a promising international market, some investors might see an opportunity to buy the dip in Eli Lilly stock.
[1] Source: https://investor.lilly.com/releasedetail.cfm?releaseid=1346359[3] Source: https://www.statista.com/statistics/1188035/global-sales-mounjaro-by-quarter/[5] Source: https://www.statista.com/forecasts/312020/prescription-drug-sales-worldwide/
Investors might consider buying Eli Lilly stock, seeing its strong therapeutic portfolio and promising international market, despite the reduced full-year revenue expectations. To boost its revenue, Eli Lilly has invested $23 billion over the past three years in manufacturing capacity for its GLP-1 drugs.
Investing wisely in Eli Lilly's stock could yield significant returns, as the company anticipates revenue growth in 2025, driven in part by its aggressive investment in GLP-1 drug manufacturing and a robust portfolio of non-incretin drugs.
