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Lilly hikes revenue forecast by $2B as GLP-1 drug sales climb

Dive Brief:

  • Eli Lilly raised its revenue forecast for the year by $2 billion as sales of its GLP-1 medicines for diabetes and obesity continue to climb rapidly amid surging demand.
  • The Indianapolis drugmaker currently can’t make its drugs Mounjaro and Zepbound fast enough, indicating in an earnings statement Tuesday that sales growth will “primarily be a function of the quantity the company can produce and ship.”
  • Lilly is expanding manufacturing and expects greater capacity in the second half of the year. Revenue from Mounjaro, which is sold for diabetes, totaled $1.8 billion in the first quarter, while Zepbound revenue hit $517 million in its first full quarter on the U.S. market as an obesity treatment.

Dive Insight:

The obesity drug boom has made Lilly the most valuable pharmaceutical company in the world, higher than even rival Novo Nordisk, which sells the competing GLP-1 drugs Ozempic and Wegovy.

Lilly’s first quarter numbers help show why, giving a window into what the drugmaker described as “exceptionally strong demand” for Mounjaro and Zepbound.

But it also reveals the manufacturing challenges that both Lilly and Novo are grappling with as they try to square the long lead times required for bringing new drug factories online with the immediate burst in demand.

Lilly noted that its so-called “incretin medicines” — a group that also includes its earlier diabetes treatment Trulicity — were back ordered at the wholesalers that sell and distribute drugs to pharmacies, hospitals and physician offices.

Certain doses of both Mounjaro and Zepbound are currently in shortage on a database maintained by the Food and Drug Administration, as are certain doses of Wegovy.

The company is building a new injectable drug factory in Germany and recently agreed to buy another facility in Wisconsin from Nexus Pharmaceuticals. Expansions are also underway at Lilly sites in Indiana and North Carolina.

On the whole, sales of Lilly’s incretin medicines came in below analyst forecasts for the quarter due to softer-than-anticipated performance from Trulicity and Mounjaro.

Umer Raffat, an analyst at Evercore ISI, wrote in a client note that the below-forecast numbers may have been due to a larger difference between gross and net sales. The gap is typically due to rebates or discounts offered by manufacturers. Raffat noted he expects that difference to narrow as the year progresses, however.

The $2 billion hike to Lilly’s revenue guidance also suggests an improvement, although the expected expansion in manufacturing capacity may also be driving the higher estimates.

Jefferies analyst Akash Tewari described the guidance raise in an investor note as a “critical vote of confidence” for the company’s supply outlook.

Lilly now forecasts overall company revenue will be between $42.4 billion and $43.6 billion for the year, up from a range of $40.4 billion to $41.6 billion. The company also raised its reported earnings per share estimate to between $13.05 and $13.55 apiece, from $11.80 and $12.30 previously.

Lilly shares were up 5% in morning trading Tuesday. Novo reports first quarter earnings on Thursday.

Editor’s note: This story has been updated with analyst commentary and Lilly’s stock price movement.