Weight-loss drug prompts Eli Lilly to raise 2024 sales forecast by $2 billion By Reuters

By Bhanvi Satija and Patrick Wingrove

(Reuters) -Explosive demand and increased manufacturing capacity for Eli Lilly's (NYSE:) weight-loss drug Zepbound led the company to raise its annual sales forecast by $2 billion on Tuesday, raising its shares almost 5%.

Lilly said it expects significant increases in production in the second half of the year of its obesity and related diabetes treatment drug, Mounjaro, for which most doses are in short supply due to high demand.

Rising demand for Mounjaro and Zepbound, both known chemically as tirzepatide, has driven the Indianapolis-based drugmaker's market value above $700 billion, surpassing that of Tesla (NASDAQ:) and Walmart (NYSE: :).

The company said sales growth will depend on the number of drugs it can produce and ship in the short and medium term.

“We have sites running 24/7. We are building overnight,” Chief Financial Officer Anat Ashkenazi said in a call to investors.

He added that the approval of Lilly's multi-dose Kwikpen for Mounjaro in Europe slightly exceeded the company's expectations, giving him additional confidence in its ability to launch it there.

Mounjaro is approved for both diabetes and weight loss in Europe.

The pharmaceutical company has six drug manufacturing plants. Lilly said it has broken ground on its $2.5 billion manufacturing plant in Germany and expects its Concord, North Carolina, plant to begin producing Zepbound and Mounjaro by the end of the year.

Lilly said last week it would acquire a manufacturing facility from privately held Nexus Pharmaceuticals to produce injectable drugs. Production at its seventh facility in Wisconsin is scheduled to begin in late 2025.

“While there is still some capacity to be built to meet that demand, they are further along than we thought in making that progress and that was a pleasant surprise,” said Edward Jones analyst John Boylan.

Ashkenazi added that despite the company's efforts, demand for the treatments will outstrip supply this year and potentially next.

'MUCH DEMAND'

The US Food and Drug Administration has said that most doses of Zepbound and Mounjaro are expected to be in short supply during the second quarter of this year.

Eli Lilly and Danish rival Novo Nordisk (NYSE:) are racing to ramp up production in a weight loss market estimated to reach at least $100 billion by the end of the decade. Both companies' obesity treatments belong to a class of drugs originally developed for diabetes known as GLP-1 agonists.

GLP-1 medications have been shown to help patients lose on average up to 20% of their weight, fueling unprecedented demand.

“There is a lot of demand for these…therapies, and I would say Lilly is doing a good job of trying to address the situation,” said David Song, investment partner at Tema ETF.

Lilly and Novo are also working to provide clinical evidence that their GLP-1 drugs have medical benefits beyond diabetes and weight loss, such as heart-protective properties that could expand insurance coverage.

A Lilly executive on the call said the company expects Zepbound to be covered for patients insured under the U.S. Medicare program once it is approved for obstructive sleep apnea, following positive late-stage data of April.

Zepbound generated first-quarter sales of $517.4 million, above analyst expectations of $418.20 million, according to LSEG data.

Mounjaro's sales rose to $1.81 billion from $568.5 million last year, but still below Wall Street estimates of $2.08 billion, which analysts attributed to limited supply.

Despite a strong start, total prescriptions for Lilly's Zepbound are lagging behind those of Novo's popular weight-loss drug Wegovy.

In the United States, an average of nearly 63,000 Zepbound prescriptions have been issued each week in 2024 through April 19, compared with 110,000 for Wegovy, according to IQVIA data seen by Reuters.

This equates to a total of more than 1 million Zepbound recipes, and about 1.75 million Wegovy, written in the United States since the beginning of 2024.

Eli Lilly raised both ends of its 2024 revenue forecast by $2 billion and now expects between $42.4 billion and $43.6 billion for the year. The drugmaker also raised its annual earnings forecast by $1.30 per share to $13.50 to $14 per share.

The company reported adjusted earnings of $2.58 per share, beating analysts' expectations by 12 cents.

Lilly shares, which are up 26% so far this year, rose another 4.6% to $771.44.