Lilly's Mounjaro sales miss forecasts as shares fall 6%
Lilly's tirzepatide sales came in below Wall Street's target as insurance coverage grew slowly, leaving the expected obesity approval as the factor most likely to change how widely the drug is used and paid for.
Eli Lilly's fourth-quarter sales of its type 2 diabetes drug Mounjaro fell short of what Wall Street expected, and the company's shares fell about 6% on Feb. 2, 2023, even though Lilly's 2023 profit forecast came in above analysts' estimates [1][2].
Mounjaro, whose molecule name is tirzepatide, recorded $279.2 million in sales for the quarter [1]. Analysts polled by Refinitiv had expected $319.3 million [1]; Reuters reported the estimate as $319 million [2]. Sales of Lilly's older diabetes drug Trulicity also missed expectations, at $1.94 billion for the quarter [2]. Total quarterly revenue was $7.30 billion, below the $7.33 billion analysts expected [2]. Breast cancer drug Verzenio was a bright spot, doubling from a year earlier to $808 million [2].
Lilly's guidance for 2023 adjusted profit of $8.35 to $8.55 per share was above the $8.28 analysts expected, helped by the potential for a lower tax rate than previously thought [2]. Chief Executive David Ricks called 2023 the "year of investment in future growth" [2].
Insurance access was a central concern. Lilly said slightly more than 50% of commercial and Part D subscribers had access to Mounjaro through their plans, up only slightly from 45% in the third quarter [1]. Reuters described the figure as just over 50% of commercial and Medicare plans having favorable terms for patient access, up from 45% [2]. "We would have expected somewhat more of an uptick," SVB Securities analyst David Risinger said in a research note [1][2].
Some doctors had been prescribing Mounjaro off-label for weight loss. Lilly cracked down on that "nonindicated use" in the fourth quarter, verifying that patients using its patient access program had a type 2 diabetes diagnosis, Ricks said [1]. "Our commitment is really to patients who need the medicine for what it's for right now and can get insurance coverage and who have already started the drug," he told CNBC [1]. Those extra prescriptions may also have inflated the sales expectations analysts had for the drug [1].
Why it matters for patients
At the time of these results, Mounjaro was approved only for type 2 diabetes; use for obesity and overweight was off-label and not covered by insurance on that basis [1][2]. Lilly was hoping for U.S. approval for weight loss later in 2023 [2]. As of the report, that decision had not been made and no specific date had been disclosed [1][2].
Coverage rules shape what patients pay. By law, Medicare plans are banned from paying for weight loss medications, so legislation would be needed before Medicare could cover Mounjaro for obesity and overweight [1]. Novo Nordisk, whose obesity drug Wegovy is also based on a GLP-1 hormone, had gained access to more than 80% of insurance company formularies for that product, CNBC reported [1]. Mounjaro is tirzepatide and acts on two incretin hormones, GLP-1 and GIP; Wegovy contains semaglutide and targets GLP-1 [1]. Clinical trials have shown Mounjaro producing higher rates of weight loss, according to the report [1].
Supply was another limit. Lilly said manufacturing issues hurt sales and that it was investing to expand capacity. Ricks said the company should exit 2023 with 50% more capacity than it started with, with additional capacity coming online in 2024 and 2025 [1].
What happens next
The event both investors and patients were waiting on was the obesity approval decision, expected later in 2023, though no date had been disclosed [1][2]. Lilly's experimental Alzheimer's disease drug was in clinical trials, with results expected in mid-2023 that could be used to apply for regulatory approval [2].
Novo Nordisk's fourth-quarter results showed GLP-1 product sales up 42% on a coupon-equivalent rate, with Wegovy, Rybelsus and Victoza all beating expectations, according to Bank of America analyst Geoff Meacham [1]. Novo ended the quarter with 55% of the GLP-1 market, down from 56% in the third quarter [1]. Even after the sell-off, Lilly shares were up nearly 32% over the past year and Novo's up 23% [1].
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