The Impact of Weight-Loss Drugs on Eli Lilly’s Earnings

Key Takeaways:

• Eli Lilly is set to report earnings Tuesday as investors and analysts expect weight-loss drug demand to continue boosting the company’s revenue and profits.
• In its Q4 earnings report, Eli Lilly projected that its Zepbound and Mounjaro weight-loss drugs could boost its sales 20% or more in 2024.
• Investors will likely seek commentary around the production to meet increased demand and Eli Lilly’s partnership with Amazon to deliver some of its prescription medications.

Eli Lilly (LLY) is gearing up to report its earnings before the bell on Tuesday, with all eyes on how weight-loss drugs are driving the company’s growth. Analysts are optimistic about the drugmaker’s financial performance, especially with weight-loss drugs like Zepbound and Mounjaro expected to be significant contributors to both financials and stock price momentum, similar to the success seen with Novo Nordisk’s Ozempic and Wegovy.

Analysts are forecasting a 26% year-over-year increase in revenue for Eli Lilly, reaching $8.79 billion. Earnings are also expected to see a substantial jump to $2.15 billion, or $2.39 per share, compared to $1.34 billion and $1.49 per share for the same period last year.

Key Metric: New Products Revenue

The weight-loss drugs have emerged as the primary revenue driver for Eli Lilly, with Mounjaro accounting for $2.21 billion and Zepbound generating $175.8 million in its first quarter on the market. Combined, these two weight-loss drugs contributed over a quarter of Eli Lilly’s total fourth-quarter revenue of $9.35 billion.

The company anticipates that its 2024 revenue will be largely fueled by the New Products segment, including Zepbound. After a 28% surge in fourth-quarter revenue, Eli Lilly projects that sales could increase by more than 20% in 2024. New products revenue, which includes Zepbound, Mounjaro, Jaypirca for leukemia, Omvoh for ulcerative colitis, and Ebglyss for eczema, stood at $2.49 billion in the fourth quarter.

Business Spotlight: Weight-Loss Drugs, Amazon Partnership

Following FDA approval for Zepbound in November, Eli Lilly highlighted in its February earnings call that demand for the weight-loss drugs, along with Mounajro, could potentially outpace supply in 2024 as the company ramps up production to meet the increasing demand. The surge in demand has led to legal battles for Eli Lilly, as it sued several businesses last year for allegedly selling counterfeit versions of Mounjaro.

While the impact on earnings may be minimal, investors are eager for updates on Eli Lilly’s partnership with Amazon (AMZN), announced recently. The collaboration allows Eli Lilly’s drugs treating obesity, diabetes, migraines, and more to be shipped through Amazon’s digital pharmacy. Although the partnership was announced close to the end of the first quarter, executives may provide insights into the broader digital pharmacy efforts and the implications of the Amazon partnership.

The demand for weight-loss drugs has significantly boosted Eli Lilly’s stock price over the past year, nearly doubling it and closing at $733.51 on Friday.

In conclusion, Eli Lilly’s upcoming earnings report is highly anticipated by investors and analysts alike due to the substantial impact of weight-loss drugs on the company’s financial performance. With a strong focus on new products revenue and strategic partnerships like Amazon, Eli Lilly continues to navigate the evolving landscape of pharmaceuticals with promising growth prospects ahead.

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