Eli Lilly Stock Drops 10% as Q3 Earnings Miss Estimates, Lowers Profit Outlook

Q3 Key Financials:

• Adjusted EPS: $1.18 vs. $1.47 expected

• Revenue: $11.44 billion, missing the $12.11 billion estimate

Eli Lilly stock tumbles 10% after missing estimates and slashing profit guidancehttps://t.co/Jix54vBEoy

— John (@FintechAlgo) October 30, 2024

Supply Chain Issues and Deferred Marketing Impact Drug Sales

Despite the FDA giving the green light for Zepbound and Mounjaro supplies, Eli Lilly CEO David Ricks said inventory reductions among wholesalers hurt Q3 sales. Zepbound generated $1.26 billion in sales, missing estimates by $0.50 billion and Mounjaro did $3.11 billion, missing estimates by $0.66 billion.

Ricks said Lilly delayed promotional campaigns for Zepbound because of customer service issues and that impacted sales. He said the company will ramp up marketing in November when service levels improve.

“When people go and they can’t get their medicine, they’re very frustrated… so we didn’t want to send more people to do that necessarily,” Ricks told CNBC.

Additional Q3 Highlights:

• Mounjaro Sales: $3.11 billion, up year-over-year but below expectations

• Zepbound Sales: $1.26 billion, missing analyst projections

• Production Outlook: Incretin drug manufacturing to increase by 50% in H2 2024

"Eli Lilly shares tumble as Q3 misses estimates, guidance lowered" $LLYhttps://t.co/Jg88eLANts

— TheTradingPhotographer (@Jenb_8675309) October 30, 2024

Regulatory Moves and Manufacturing Capacity

The FDA recently removed tirzepatide, the active ingredient in Zepbound and Mounjaro, from its shortage list. Compounding pharmacies, which make custom and often cheaper versions of branded drugs, opposed this move.

They argue the FDA’s decision limits consumer choice. Eli Lilly responded that compounded versions lack FDA oversight, which raises questions about safety and efficacy.

Lilly’s long term growth in incretin drugs like Mounjaro and Zepbound will depend on more manufacturing capacity. Ricks expects 50% more production by the end of 2024 vs 2023 and even more in 2025 to meet the demand.

Although the miss and lowered guidance caused the stock to drop, Lilly’s investments in manufacturing and regulatory are part of a broader plan to stabilize and grow in the weight loss and diabetes space.