Eli Lilly shares hit record as Mounjaro sales drive 85% profit jump

Eli Lilly reported an 85% jump in second-quarter profit and raised its full-year forecasts, sending shares to a record high on August 8 as sales of its type 2 diabetes drug Mounjaro (tirzepatide) surged. The stock rose as much as 18% during the day ^[1] and closed nearly 15% higher ^[2].

Mounjaro posted $979.7 million in sales for the quarter, up 72.3% from the prior quarter and above the $743 million analysts had expected ^[1]. The drug was first approved in the U.S. in May 2022 and recorded $16 million in sales in the year-ago period ^[2]. Total revenue was $8.31 billion, up 28% from a year earlier and ahead of the $7.58 billion analysts expected. Adjusted earnings were $2.11 per share, beating estimates of $1.98 ^[1][2].

Net income was $1.76 billion, or $1.95 per share, compared with $952.5 million, or $1.05 per share, a year earlier ^[2]. Lilly raised its 2023 revenue forecast to $33.4 billion to $33.9 billion from $31.2 billion to $31.7 billion, and its adjusted earnings guidance to $9.70 to $9.90 per share from $8.65 to $8.85 ^[2]. Growth also came from breast cancer pill Verzenio, up 57% to $926.8 million, and diabetes tablet Jardiance, up 45% to $668.3 million ^[2].

BMO Capital Markets analyst Evan Seigerman said the Mounjaro sales beat reflects patients moving from a Lilly savings program, where the drug was provided at a reduced price, to commercial insurance plans that pay a higher reimbursement rate ^[1].

Supply is the constraint

Lilly said it "has experienced and continues to expect intermittent delays fulfilling orders of certain Mounjaro doses given significant demand" ^[2]. Chief financial officer Anat Ashkenazi said the company is ramping up capacity at a new manufacturing facility in North Carolina that produces Mounjaro and similar drugs, but that supply will "likely remain tight in the coming months and quarters" ^[2]. Lilly has not said which doses are affected or when the tightness is expected to ease ^[2].

Shares also got a lift from rival data. Novo Nordisk said its obesity treatment Wegovy (semaglutide) reduced the risk of a major cardiovascular event such as a heart attack or stroke by 20% in a late-stage trial, better than the 15% to 17% investors and analysts expected ^[1][2].

"Until now, these medicines were only weight-loss drugs but now they are much more than that," said Wells Fargo analyst Mohit Bansal ^[1]. Michael Mason, president of Lilly's diabetes division, said the results could "support access for any payers who are on the fence" about covering obesity medications, and should move the conversation "away from aesthetics and more towards the health benefits of people living with obesity" ^[2].

Why it matters for patients

Mounjaro is approved in the U.S. for type 2 diabetes, not for weight loss. Lilly filed in July 2023 for FDA approval of the injection for chronic weight management, and expects a U.S. decision on use in obesity patients later this year. Doctors are already prescribing it off-label as an obesity treatment ^[1][2].

For people already taking Mounjaro, the company's own wording points to a practical issue: intermittent order delays for certain doses, with supply expected to stay tight in the coming months and quarters ^[2]. Lilly has not disclosed how long individual patients might wait or which doses are short.

The insurance picture is also shifting. One analyst attributed part of the sales jump to patients moving off a reduced-price Lilly savings program onto commercial insurance ^[1], a change that can affect what a patient pays at the pharmacy. Separately, analysts said the Wegovy heart data could help obesity treatments win wider insurance coverage ^[1]. Whether and how quickly U.S. insurers change their coverage rules has not been reported.

What happens next

Lilly expects a U.S. decision on Mounjaro for obesity later this year ^[1]. The company has not given a date for when Mounjaro supply is expected to catch up with demand ^[2]. Analysts have not said when the Wegovy cardiovascular results might translate into coverage changes ^[1][2].

At a market value of roughly $495 billion, Lilly is the largest U.S.-based pharmaceutical company, with its shares up more than 42% for the year as of August 8 ^[2].