Fat Bubble Popped: Lilly Shares Dive On Disappointing Weight-Loss Drug Sales

Shares of Eli Lilly & Co tumbled in premarket trading after third-quarter sales of its blockbuster weight-loss drug fell short of Wall Street’s expectations, with the company citing ‘inventory issues’ as the reason. In reality, it seems Lilly channeled stuffed GLP1s to cash in on the anti-obesity drug craze, only to discover demand fizzled in the quarter—likely because these drugs are expensive and insurance coverage is limited.

Lilly reported third-quarter revenue from all products of about $11.4 billion, +20% yoy, yet missed the Bloomberg Consensus of $12.18. Notably, the drug Mounjaro generated $3.11 billion in revenue, while weight-loss drug Zepbound brought in $1.26 billion. Bloomberg analysts expected $3.62 billion and $1.63 billion. 

Here’s a snapshot of the third-quarter earnings report (courtesy of Bloomberg): 

• Adjusted EPS $1.18 vs. 10c y/y

• Revenue $11.44 billion, +20% y/y, estimate $12.18 billion (Bloomberg Consensus)

• Trulicity revenue $1.30 billion, -22% y/y, estimate $1.21 billion

• Mounjaro revenue $3.11 billion, estimate $3.62 billion

• Zepbound revenue $1.26 billion, +1.2% q/q, estimate $1.63 billion

• Humalog revenue $534.6 million, +35% y/y, estimate $423.6 million

• Taltz revenue $879.6 million, +18% y/y, estimate $839.4 million

• Jardiance revenue $686.4 million, -2.1% y/y, estimate $823.7 million

• Verzenio rev. $1.37 billion, +32% y/y, estimate $1.39 billion

Lilly now anticipates full-year sales between $45.4 and $46 billion, lowering the top end of earlier guidance from $46.6 billion. It raised its full-year guidance twice this year… 

• Sees revenue $45.4 billion to $46.0 billion, saw $45.4 billion to $46.6 billion, estimate $46.21 billion

• Sees adjusted EPS $13.02 to $13.52, saw $16.10 to $16.60

More from the pharma giant:

“Following higher wholesaler inventory levels at the end of Q2, Mounjaro and Zepbound sales in Q3 were negatively impacted by inventory decreases in the wholesaler channel.” 

Perhaps channel-stuffing GLP1s wasn’t the best move by management as demand dries up, mainly because the drugs are super expensive and insurance coverage is limited. 

The unwinding of the fat bubble was visible for months.

Eli Lilly & Co. is now selling vials of its blockbuster weight-loss drug Zepbound to patients for as little as $399 a month: BBG

the fatty bubble popped

— zerohedge (@zerohedge) August 27, 2024

FDA said Eli Lilly’s weight-loss drugs are no longer considered to be in shortage in the US,

The Fat bubble has officially popped

— zerohedge (@zerohedge) October 3, 2024

In premarket trading, Lilly shares have dropped about 10.25%. If losses surpass the 10.51% plunge seen on December 16, 2016, this will mark Lilly’s largest single-day drop since October 2008.

Fat bubble implodes.