Lilly hit as PBM drops Zepbound, but retains Wegovy

Shares in Eli Lilly have weakened after CVS Health, one of the largest pharmacy benefit managers (PBMs) in the US, said it would no longer cover its obesity therapy Zepbound.

The shares closed down nearly 12% after CVS Health's revelation and Lilly's announcement that, despite a 45% surge in first-quarter revenues driven by Zepbound (tirzepatide) and diabetes stablemate Mounjaro, it was not raising its full-year revenue forecasts and was slightly reducing its profit prediction.

Adding to the pressure is that CVS Health has retained coverage of Zepbound's arch rival Wegovy (semaglutide), sold by Novo Nordisk, after negotiating a price cut with the company, along with Novo Nordisk's newly forged alliances with three leading telehealth companies to drive self-pay sales of its weight loss drug.

Zepbound growth has outpaced Wegovy in recent months, and sales quadrupled to $2.31 billion in the first three months of this year compared to the same period of 2024, while Mounjaro more than doubled to $3.84 billion. Novo Nordisk is scheduled to reveal its first-quarter figures on 7th May.

On a conference call, Lilly chief executive David Ricks said he was "not surprised" by the CVS Health development, given Zepbound is "gaining a lot of market share," but played down the significance and added: "We're not interested at all in one of one deals [...] reducing access and choice for doctors and patients."

Ricks also suggested that most of the businesses affected by the PBM's decision would be smaller employers, which don't tend to cover obesity treatments. "We'll work through it," he said. "Our job will be to continue to drive share and preference for our brand."

The stock fall-off suggests investors were not wholly convinced by the CEO's comments, although, Lilly's stock had regained a couple of points in value in after-hours trading at the time of writing.

IQVIA figures on prescriptions for Zepbound and Wegovy, reported by Reuters, suggest that there were nearly 339,000 scrips for Lilly's product in the week ending 18th April, overtaking Novo Nordisk's drug by 127,000. In a head-to-head trial, Zepbound was shown to be more effective than Wegovy at helping people shed weight.

Ricks also highlighted Lilly's once-daily, oral follow-up to Zepbound, orforglipron, which should have data from three of seven phase 3 trials and see its first filings for regulatory approval by the end of this year, saying he is "excited by the possibility of an oral that could be more widely distributed around the world."