Eli Lilly's shares face a decline due to unmet quarterly profit estimates

October 30, 2024 04:17 AM PDT | By Team Kalkine Media

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Eli Lilly's shares face a decline due to unmet quarterly profit estimates — Image source: Shutterstock

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Highlights

Eli Lilly reported third-quarter profits that fell short of Wall Street estimates, primarily due to higher manufacturing costs and a substantial acquisition-related charge.

Sales of key products, Mounjaro and Zepbound, were lower than anticipated, attributed to reductions in wholesale inventory.

Significant investments have been made to expand production capabilities, totaling around $7 billion in facilities in Indiana and Ireland.

Eli Lilly's (NYSE:LLY) recent financial results revealed a shortfall in third-quarter profits, driven by increased manufacturing expenses and a significant charge of $2.8 billion related to acquisitions. As a result, shares of the pharmaceutical company experienced a premarket decline of over 10%.

Sales figures for two of Lilly's prominent drugs, Mounjaro and Zepbound, were below analysts' forecasts. Quarterly sales for Mounjaro, a medication for diabetes and weight loss, reached $3.11 billion, while Zepbound generated $1.26 billion in revenue. Analysts had estimated sales of approximately $4.20 billion for Mounjaro and $1.69 billion for Zepbound during this period. These drugs are projected to contribute a combined revenue of $19 billion over the current year.

The company has committed substantial resources to enhance its production capacity for these medications, particularly Mounjaro and Zepbound, both chemically known as tirzepatide. Investments of about $7 billion have been directed towards expanding manufacturing facilities in Indiana and Ireland to meet growing demand.

Despite the revenue shortfalls, Lilly remains focused on its long-term growth strategy and production enhancements. The reduced sales figures were attributed to a decrease in inventory levels within the wholesale channel, indicating a potential shift in market dynamics that could affect future sales performance.

Overall, the third-quarter results reflect a challenging environment for Eli Lilly, as the company navigates increased costs and competitive pressures while aiming to capitalize on the success of its key drug offerings.

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