A rare sales miss on Zepbound and Mounjaro knocks Lilly's shares

Eli Lilly reported third-quarter sales of Zepbound and Mounjaro that fell well short of Wall Street expectations on October 30, sending its shares down 8% and erasing nearly $70 billion in market value ^[1]. It was a rare stumble for two drugs that had struggled for more than a year to keep up with demand rather than exceed it.

Mounjaro, Lilly's tirzepatide drug for type 2 diabetes, brought in $3.11 billion in the quarter, compared with analyst estimates of $3.7 billion to $4.20 billion ^[1][2]. Zepbound, the same drug approved for weight loss, posted $1.26 billion in sales, missing forecasts that ranged from $1.69 billion to $1.76 billion ^[1][2]. Lilly also cut its full-year adjusted profit forecast to $13.02 to $13.52 per share, down from a prior range of $16.10 to $16.60, citing acquisition-related charges and higher manufacturing costs ^[1].

Lilly said the shortfall was not a sign of weakening patient demand. Instead, the company pointed to drug wholesalers, the distributors that buy medicines from manufacturers and resell them to pharmacies and clinics, drawing down inventory they had built up earlier in the year rather than placing new orders ^[1][2]. CEO David Ricks said wholesalers were making their own decisions about which of Lilly's twelve dosage forms to stock, shaped by financial pressures and cold-chain storage limits since the drugs require refrigeration ^[1][2]. "Is there a demand problem? No," Ricks said, describing instead "a lot of lumpiness in channel stocking" ^[2].

Actual prescription volume kept climbing. Lilly filled an average of about 140,000 Zepbound prescriptions per week in the third quarter, up from roughly 93,000 per week in the prior quarter, according to IQVIA data cited by an analyst ^[1]. Some analysts were skeptical that inventory swings explained the full gap. Barclays analyst Carter Gould estimated destocking accounted for only about 20% of the revenue miss, while Citi's Geoff Meacham said the inventory hit was "the primary culprit" and not weaker demand ^[1][2]. J.P. Morgan's Chris Schott said the results suggested wholesalers used existing stock instead of placing new orders as expected ^[1].

Ricks also said Lilly had not yet started advertising or promoting Zepbound and had delayed some international launches to prioritize building up U.S. supply, adding that "we haven't been stimulating demand the way we had originally planned" ^[1]. He said the company did not see a financial impact from compounded versions of tirzepatide competing with Lilly's branded products ^[2].

Why it matters for patients

For patients, the sales miss itself does not change anything about drug safety or effectiveness. But it matters because it shows how the supply chain for these injectable drugs, which must stay refrigerated from factory to pharmacy, can create gaps between how much wholesalers order and how many patients are actually getting prescriptions filled. Lilly said both Zepbound and Mounjaro are no longer in shortage nationally ^[1][2], though a trade group representing compounding pharmacies has disputed that tirzepatide supply is adequate and sued the FDA over its removal from the shortage list ^[2]. That dispute could affect whether compounded, often cheaper alternatives to Zepbound and Mounjaro remain legally available to patients who use them.

The episode also illustrates how sensitive Lilly's stock, and by extension investor and manufacturing decisions, have become to quarterly GLP-1 sales figures, even when the company says underlying patient demand is intact ^[1]. Lilly noted it planned to begin "demand-stimulating activities," including advertising and provider drug samples, in November, and was investing in its direct-to-consumer website for telehealth prescriptions and home delivery ^[1][2].

What happens next

Lilly said advertising and promotional efforts for Zepbound were set to begin in November 2024 ^[2]. The company trimmed the top end of its full-year sales forecast to $46 billion while keeping the lower end at $45.4 billion ^[1]. It is not yet known from these sources how the compounding pharmacy trade group's lawsuit over tirzepatide's shortage status will be resolved, or whether wholesaler ordering patterns will normalize in subsequent quarters.