On the evening of Thursday, August 9, global pharmaceutical leader Eli Lilly and Company soared by more than 10% after the market opened, with a total market value exceeding US$800 billion. The primary reason for the stock price's rise is that Eli Lilly's second-quarter earnings report significantly exceeded expectations.

Source: uSMART SG

Eli Lilly and Company’s Second Quarter Financial Report Overview

According to financial report information, Eli Lilly's second-quarter revenue increased 36% year-on-year to US$11.3 billion, significantly exceeding market estimates of US$9.98 billion. If you exclude the $579 million in revenue from the sale of Baqsimi (glucagon nasal powder mist) interests in the second quarter of 2023, the year-on-year growth rate is 46%. Eli Lilly's second-quarter net profit increased 68% year-on-year to US$2.97 billion, with adjusted earnings per share (Non-GAAP) US$3.92, an increase of 86% from US$2.11 in the same period last year, and is expected to be US$2.6. The gross profit margin was 80.8%, an increase of 2.5 percentage points over the same period last year.

Eli Lilly and Company further cheered the market by adjusting its revenue guidance for the current fiscal year due to its stellar performance in the second quarter. Revenue guidance increased by US$3 billion at both ends to US$45.4-46.6 billion; full-year adjusted earnings per share were US$16.10-16.60, compared with the previous guidance of US$13.50-14.

Mizuho Securities U.S. health care industry analyst Jared Holz immediately interpreted that Eli Lilly's financial report should alleviate any concerns about the pace of its business. And it is very rare for a large pharmaceutical company like Eli Lilly to have such a great financial report.

Diet pills a major driver

Eli Lilly's revenue surge in the second quarter was mainly driven by weight loss drugs, including:

• After the weight-loss drug Zepbound received FDA approval for marketing in November last year, it contributed US$1.24 billion in revenue in the second quarter, exceeding market estimates of US$818.9 million.
• Mounjaro, a weight-loss drug that treats diabetes, achieved revenue of US$3.09 billion, which tripled from US$980 million in the same period last year and exceeded analysts’ expectations of US$2.3 billion.

In addition, Lilly’s second-quarter revenue for breast cancer drug Verzenio increased 44% year-on-year to US$1.33 billion. Data show that in the second quarter, the overall sales volume of Eli Lilly drugs increased by 27% year-on-year, and the average sales price of the product increased by 10%. The increase in selling price was mainly driven by Mounjaro.

Eli Lilly Chairman and CEO David A. Ricks said in the financial report: "Mounjaro, Zepbound and Verzenio led the company's strong financial performance in the second quarter as we advanced our expansion plans. Equally exciting, We're seeing growth globally for the company's medicines that treat cancer, neurological diseases and autoimmune diseases."

Eli Lilly's financial report pointed out that the sales growth of the company's weight loss drugs (glucagon drugs) was mainly due to the expansion of production capacity and the optimization of U.S. market channels. Although supply and demand are stabilizing, rising demand may trigger supply constraints for some products. To meet market demand, Eli Lilly plans to launch new 2.5 mg and 5 mg Zepbound single-dose vials in the U.S. market in the coming weeks.

Regarding future progress, Eli Lilly said that the company's Alzheimer's disease Kisunla has been approved in the United States, and Jaypirca has been approved in Japan for the treatment of relapsed or refractory mantle cell lymphoma.

The company has committed an additional $5.3 billion to a new facility in Indiana to increase active pharmaceutical ingredient (API) production for diabetes drug tirzepatide and pipeline drugs.

Why is the weight loss drug market so popular?

The weight-loss drug market has shown strong growth momentum in recent years, and its investment prospects are positively affected by many factors. According to the World Health Organization, obesity and overweight have become global health problems, affecting the lives of billions of people. This huge patient group provides a broad demand base for the weight loss drug market.

With the advancement of medical technology, new weight loss drugs such as GLP-1 receptor agonists are constantly emerging. Their weight loss effect and safety are significantly improved compared to traditional drugs, thus attracting the attention of more consumers. and use. Judging from the recent performance of the entire weight loss drug market, drugs such as Eli Lilly's tilpotide and Novo Nordisk's semaglutide have achieved great success in the market, and their better-than-expected performance also reflects the market High recognition of this type of innovative drugs.

At the same time, competition within the industry in the weight-loss drug market is also intensifying. More pharmaceutical companies are joining in the research and development and marketing of weight-loss drugs, and market competition will become more intense. In addition, changes in regulatory policies, drug safety issues, and individual differences in drug effects among patients may affect the market performance of weight loss drugs.

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