Eli Lilly results blow past estimates on strong Zepbound launch, surging Mounjaro revenue

• Eli Lilly reported fourth-quarter revenue and adjusted earnings that topped expectations on the strong launch of its new weight loss drug, Zepbound, and higher prices for its blockbuster diabetes treatment, Mounjaro.
• The quarterly results are the first to include sales of Zepbound, which won FDA approval in early November. 
• Eli Lilly will hold an earnings call with investors at 10 a.m. ET on Tuesday.

Eli Lilly on Tuesday reported fourth-quarter revenue and adjusted earnings that topped expectations on the strong launch of its new weight loss drug, Zepbound, and higher prices for its blockbuster diabetes treatment, Mounjaro.

Zepbound, which won approval from U.S. regulators in early November, raked in $175.8 million in sales for the fourth quarter.

The quarterly results are the first to include sales of Zepbound, which some analysts say could post more than a billion dollars in sales in its first year on the market and eventually, become the biggest drug of all time. 

Shares of Eli Lilly closed flat on Tuesday following the results. The stock jumped almost 60% last year as weight loss drugs skyrocketed in popularity despite hefty price tags, mixed insurance coverage, a handful of unpleasant side effects and supply shortages. With a market cap of roughly $673 billion, Eli Lilly is the largest pharmaceutical company based in the U.S. 

Here's what Eli Lilly reported for the fourth quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

• Earnings per share: $2.49 adjusted vs. $2.22 expected
• Revenue: $9.35 billion vs. $8.93 billion expected

Eli Lilly posted net income of $2.19 billion, or $2.42 a share, for the fourth quarter. That compares with a profit of $1.94 billion, or $2.14 a share, a year earlier. 

Excluding one-time items associated with the value of intangible assets, among other adjustments, the company posted a per-share profit of $2.49 for the fourth quarter of 2023.

The pharmaceutical giant booked fourth-quarter revenue of $9.35 billion, up 28% from the same period a year ago.

Eli Lilly also issued its full-year forecast for 2024, which was generally in line with expectations.

The company expects full-year adjusted earnings of $12.20 to $12.70 per share. Eli Lilly also forecast 2024 revenue of $40.4 billion to $41.6 billion.

Analysts surveyed by LSEG expected full-year adjusted earnings of $12.43 per share and sales of $39.38 billion.

Eli Lilly expects revenue growth to accelerate in the second half of the year, which will be consistent with the increased availability of incretin drug doses, the company's chief financial officer, Anat Ashkenazi, said during an earnings call Tuesday. Incretin drugs are treatments such as Mounjaro and Zepbound that mimic hormones produced in the gut to suppress appetite and regulate blood sugar.

Mounjaro sees higher demand, prices

Eli Lilly expects demand for its incretin drugs to outpace supply in 2024, according to Ashkenazi.

But Ashkenazi said the company achieved its goal of doubling capacity for producing incretin drugs by the end of 2023. She added that Eli Lilly's capacity expansion efforts will continue with "equal urgency," with the most significant production increases occurring in the second half of the year. 

By that point in the year, Ashkenazi said the company expects its production of sellable doses of incretin drugs to be at least 1.5 times the production of those doses in the second half of last year.

Among the company's efforts to expand production is a new manufacturing site in Concord, North Carolina. Ashkenazi said that the plant will initiate production of incretin drugs as early as the end of 2024, with products available to ship in 2025.

Higher prices for older drugs, particularly Mounjaro, helped drive up Eli Lilly's revenue, the company said. Mounjaro booked $2.21 billion in sales for the fourth quarter, up from just $279.2 million in the same period a year ago. 

Analysts had expected the drug to bring in $1.73 billion in worldwide sales, according to estimates compiled by FactSet.

That increase reflects heightened demand but also "higher realized prices" in the U.S. due to decreased use of Eli Lilly's savings card programs as access to the drug continued to expand during the quarter, the company said. The savings card programs aim to help lower the out-of-pocket costs for drugs like Mounjaro for patients.

Eli Lilly expects a high single-digit percentage price decline in 2024 for its core business of drugs, with a more significant decrease expected in the second half of the year.

Results from across the portfolio

Revenue growth was also driven by sales of Eli Lilly's breast cancer pill Verzenio, which rose 42% to $1.15 billion for the quarter due to increased demand and higher prices.

That result came in under analysts' expectations, however, which called for $1.18 billion in sales for the period. 

Sales of Jardiance, a tablet that lowers blood sugar in Type 2 diabetes patients, climbed 30% to $798.1 million for the fourth quarter. Analysts had expected $771.8 million in sales from Jardiance. 

Jardiance, which Eli Lilly shares with Boehringer Ingelheim, is among the first 10 drugs selected to face price negotiations with the federal Medicare program. Those price talks heated up last week after Medicare sent its initial price offers for each drug to the manufacturers. 

Meanwhile, Eli Lilly said higher prices were offset by lower prices of its other diabetes medicine Trulicity and insulin product Humalog.

Trulicity reported $1.67 billion in revenue, down 14% from the same period a year ago. Analysts had expected Trulicity to get $1.77 billion in sales for the quarter. 

Humalog saw $366.6 million in revenue for the quarter, down 33% from the year-ago period. Analysts had expected the medicine to book $438 million in sales, according to FactSet.

That decrease isn't a surprise: Last year, Eli Lilly said it would cut prices of Humalog and another commonly prescribed insulin by 70% and cap monthly out-of-pocket costs at $35 at certain retail pharmacies for people who have private insurance starting May 1, 2023.

During an earnings call, Eli Lilly reiterated that it expects an FDA's decision on Eli Lilly's experimental Alzheimer's drug, donanemab, in the first quarter of the year. That treatment significantly slowed the progression of the memory-robbing disease in patients at the early stages of it.

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