Lilly says tirzepatide supply issues are resolving
![Eli Lilly worker holding Zepbound](/sites/default/files/styles/x_large/public/2024-08/Lilly_Manufacturing.jpg?itok=qgP4m8Qj)
Eli Lilly has raised its revenue guidance for 2024 by $3 billion, after reporting strong growth for tirzepatide in diabetes and obesity, fuelled by the end of supply constraints for starting doses.
The company reported a stellar 36% increase in second-quarter sales to $11.3 billion – $1.4 billion more than expectations – and now expects to bring in between $45.4 and $46.6 billion in total revenue this year.
Tirzepatide-based medicines Mounjaro for diabetes and Zepbound for obesity have led the charge, contributing $3.1 billion and $1.2 billion to Lilly's revenues for the period, respectively, with the latter making more than $1 billion in a quarter for the first time. The performance of both drugs was way ahead of forecasts.
"US demand for Mounjaro and Zepbound is strong and growing as access and supply continue to expand," said chief executive David Ricks on the company's results call. "While weekly prescription volume was volatile in the first half of the year due to challenges fulfilling high demand, our progress on supply gives us confidence in our outlook."
Meanwhile, interim chief financial officer Gordon Brooks said the improving supply is "reflected on the FDA shortage website, which currently shows all doses of Mounjaro and Zepbound listed as available."
There could still be periods of "supply tightness" ahead, but with the supply improving, the company now has greater clarity on international launches, he added. Shares in the company rose nearly 9.5% after the results were announced.
The strong growth for Lilly's tirzepatide products came after market leader Novo Nordisk reported the first signs of weaker growth for its rival semaglutide products – Ozempic for diabetes and Wegovy for obesity – for the first time. Shortages of those products are also being resolved, although Wegovy's lowest 0.25 mg dose remains in limited supply, according to the FDA.
Both Ozempic and Wegovy still posted strong double-digit growth – up 25% to $4.2 billion and 55% to $1.7 billion, respectively – but underperformed expectations and the company's share price dipped as a result. Now, it's clear that Lilly's products are closing the gap, although Novo Nordisk and analysts have both suggested the weaker second quarter was a blip.
Both companies are working hard to expand their production capacity in the face of massive demand for the GLP-1 agonist drugs. In its update, Ricks said a new facility at Concord in North Carolina – part of an $18 billion investment programme launched in 2020 – is being validated and should start shipping product next year.
Responding to an analyst question on a conference call, Ricks said he remains concerned about Novo Nordisk's $11 billion agreement to take over three manufacturing sites formerly operated by Catalent, which is a key part of the Danish drugmaker's efforts to build capacity.
"We do rely on one of the Catalent sites for GLP-1 and other diabetes production," he said. "It's…the oddity of your main competitor being also your contract manufacturer and how to resolve that situation."
Novo Nordisk said in its second-quarter update that it is still in negotiations with regulators over the deal but expects it to be completed before the end of the year.
Rocks stressed, however, that Lilly's primary production strategy is "self-run sites." He said: "We're quite comfortable building operating sites, and as the newest large sites have begun to come online, we know we can execute that drill and repeat it, and that's our base plan."