Eli Lilly & Co. Zepbound Injection Pen, March 28, 2024.
Bloomberg | Bloomberg | Getty Images
A version of this article first appeared in CNBC's Healthy Returns newsletter, which delivers the latest health care news straight to your inbox. Sign up here to receive future editions.
Novo Nordisk and Eli Lilly It has so far dominated the booming market for a class of weight-loss and diabetes drugs.
But Eli Lilly may be gaining an edge over its Danish rival in a two-horse race to capitalize on growing demand for the treatments, also known as GLP-1s.
That became clear last week after the couple reported their second-quarter earnings.
“Lilly is moving forward in the metabolic duopoly,” said Evan Segerman, an analyst at BMO Capital Markets, in a research note on Thursday.
On Aug. 7, Novo Nordisk cut its full-year earnings forecast after reporting that quarterly sales of its weight-loss shot Wegovy fell far short of Wall Street expectations. Executives said on a conference call last week that the disappointing result was due to higher-than-expected price concessions to pharmacy benefit managers, who negotiate drug discounts with manufacturers on behalf of insurers.
Revenue from diabetes drug Ozempic also failed to meet expectations during the period, sending the company's shares lower.
However, Novo Nordisk slightly raised its full-year sales growth forecast.
Eli Lilly’s quarterly report a day later was very different. The Indianapolis-based company’s weight-loss injection Zepbound and diabetes treatment Mounjaro both beat expectations in the second quarter.
Eli Lilly raised its 2024 revenue outlook by $3 billion and raised its full-year earnings guidance on strong performance from Zepbound and Mounjaro and “improved clarity” in the company’s production expansions of those drugs.
In contrast to Novo Nordisk, Eli Lilly benefited from higher U.S. prices for Mujaro during the quarter as use of savings card programs to buy the drug declined. Executives said they expect “price stability” for Mujaro and ZipPound through the last two quarters of 2024.
Eli Lilly shares closed up more than 9% on Thursday.
Boxes of Ozempic and Wegovy manufactured by Novo Nordisk are seen at a pharmacy in London, Britain, March 8, 2024.
Holly Adams | Reuters
Many analysts were pleased with Eli Lilly’s positive manufacturing updates. Demand for weight-loss and diabetes drugs is outstripping supply in the United States, so companies that can get more products to patients quickly could gain an advantage.
All doses of Mounjaro and Zepbound are now listed as available in the FDA’s drug shortage database. Meanwhile, some doses of Wegoy are in limited supply as Novo Nordisk pours billions of dollars into its own efforts to expand manufacturing.
In a research note released Thursday, Bank of America analysts raised their revenue forecasts for Mounjaro and Zepbound to $19.7 billion in 2024, $31 billion in 2025 and $38.5 billion in 2026 as they “become more comfortable with the supply dynamics.”
Analysts said there could still be intermittent shortages of Mounjaro and Zepbound in the near term “as access improves and physicians become more comfortable with the availability of supplies.” But they praised Eli Lilly’s progress toward bolstering its manufacturing footprint and supply.
For example, Eli Lilly CEO David Ricks said on an earnings call Thursday that the company has built six manufacturing plants, some of which have already begun ramping up production, and has hired thousands of workers to increase production. The company also acquired another site earlier this year.
Eli Lilly expects production of incretin — another term for weight-loss and diabetes treatments — in the second half of 2024 to be 50% higher than during the same period last year, he said.
Eli Lilly's ability to scale up manufacturing of Zebound and Mojaro makes the company confident it can compete with new entrants to the weight-loss and diabetes drug market that may not have the same capacity, Rex said.
“I don’t know if that’s a barrier, but it’s definitely something that needs to be done: to scale up manufacturing,” Rex said.
“We’re talking about making things on a billion-scale, which is time-consuming, technically very difficult, and capital intensive. So, of course, competitors are going to have to come in. But there’s a long way to go for all of these[other drug companies]that the two leaders have pretty much already covered,” he added.
Feel free to send any tips, suggestions, story ideas or data to Annika at annikakim.constantino@nbcuni.com.
The Latest in Healthcare Technology: Stryker Acquires AI Startup Care.ai
Medical technology company Stryker announced Monday that it has agreed to acquire Care.ai, in another AI-related deal in the healthcare sector.
Care.ai uses tools like AI-powered sensors to help doctors monitor patients and workflows in hospitals, skilled nursing facilities, and independent living facilities. The company raised $27 million from Crescent Cove Advisors in 2022.
Stryker offers medical and surgical equipment and a range of products in orthopedics and neurotechnology. The company said technology like Care.ai’s is “increasingly important” as healthcare organizations face challenges such as nurse shortages, burnout, administrative burden and workplace safety concerns, according to a statement Monday.
Terms of the deal were not disclosed, and Stryker said the acquisition is subject to customary closing conditions.
Stryker shares were mostly flat Tuesday.
“Care.ai will help Stryker dramatically accelerate healthcare IT and digital vision to provide customers with intelligent, connected, real-time decision-making tools that improve the lives of caregivers and their patients,” Andy Pierce, president of Stryker’s MedSurg and Neurotechnology Group, said in the statement.
The company added that the technology provided by Care.ai will “seamlessly integrate” with Stryker platforms and devices.
“Our commitment to simplifying and improving the lives of healthcare workers and patients remains steadfast,” said Chakri Toleti, founder and CEO of Care.ai, in a LinkedIn post on Monday. “Together, we are transforming healthcare, ensuring that the well-being of those who need care and those who dedicate themselves to caring for others is always prioritized.”
Stryker declined to comment, and Care.ai did not immediately respond to CNBC's request for comment.
Read the full announcement here.
Feel free to send any tips, suggestions, story ideas or data to Ashley at ashley.capoot@nbcuni.com.
