Update 1 - Eli Lilly raises revenue forecast due to strong sales of weight-loss drugs, but lowers profit forecast due to transaction-related expenses

Stock price information supplemented in paragraph 4

Patrick Wingrove

Reuters, October 29 - Eli Lilly (LLY.N) on Thursday raised its full-year revenue guidance and exceeded market expectations for third-quarter earnings. This performance was driven by surging demand for injectable weight-loss drugs, potentially alleviating investor concerns over price erosion from U.S. government healthcare programs.

The Indianapolis-based pharmaceutical company now expects full-year revenue to reach $91-$92 billion, highlighting its leading position over Danish rival Novo Nordisk (NOVOb.CO) in the multibillion-dollar GLP-1 market. This advantage pushed Lilly's market value to $1.2 trillion.

However, Lilly lowered its adjusted earnings per share guidance to $35.00-$36.00 due to $4.57 per share in research costs from recent acquisitions, which totally offset a $4.07 per share underlying profit improvement in the median forecast. Lilly said these expenses, booked in Q3, were mainly related to the acquisitions of AtaiBeckley and Curevo.

Before the opening bell, the company’s stock was up nearly 5%, at $1,350.

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Lilly had previously forecast revenue of $85-$87 billion and earnings per share of $35.50-$36.50.

According to London Stock Exchange Group (LSEG) data, Lilly’s Q3 revenue reached $24.4 billion, above analysts' average forecast of $22.61 billion; adjusted earnings per share were $7.48, also higher than the expected $6.26.

Revenue included about $900 million in gains, primarily comprising $410 million in milestone payments related to the diabetes drug Jardiance—which Lilly said will be its final expected payment of this kind—and a favorable adjustment on rebates and discount estimates.

According to LSEG data, diabetes drug Mounjaro posted Q3 sales of $10.72 billion, topping Wall Street's $10.16 billion expectation; related obesity injection Zepbound had sales of $5.35 billion, beating the $5.09 billion estimate.

Strong sales will help ease market concerns that the $50 monthly Medicare pricing for beneficiaries would cause severe price erosion, offsetting the benefit of volume-driven revenue growth. Analysts at Bernstein said data shows Lilly has captured about 70% market share among the 700,000 recent Medicare patients starting GLP-1 therapies.

Although a new U.S. pilot project unlocked reimbursement eligibility for millions of patients covered by government-run Medicare health plans for those aged 65 and over, the vast majority of Lilly’s historic non-reimbursed sales have come through its $449 per month out-of-pocket payment platform. This increases focus on how discounts will impact long-term profit margins.

Lilly’s newly launched weight-loss drug Foundayo generated $184 million in revenue, while analysts had forecast $216.86 million.

Investors are closely watching Foundayo’s launch, seeing it as a key test for whether Lilly can undermine Novo Nordisk’s first-mover advantage with oral Wegovy.

Although Foundayo’s initial prescription volume in the U.S. lags its Danish rival, some investors are unconcerned by this initial lag, expecting the Lilly drug to become a major growth driver as it launches in more international markets.

In two separate studies, oral Wegovy induced about 14% weight loss over 64 weeks, while Foundayo resulted in roughly 11% weight loss over 72 weeks.

Foundayo was launched earlier this year in the U.S. and UK, and is expected to begin sales in other European countries by year-end.

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Lilly's average selling price fell 15% in Q3, partially offsetting a 53% volume increase. U.S. market pricing dropped 7%, which Lilly attributed mainly to Zepbound, and said this decrease was partly offset by rebate and discount estimate adjustments. Outside the U.S., prices dropped 29%, mainly due to Mounjaro being included in China's National Reimbursement Drug List.

While Lilly’s obesity injections maintain commercial momentum, Wall Street’s focus is shifting to retatrutide, the company's next-generation weight loss candidate, for which it plans to file regulatory approval next year.

Mid-stage clinical studies show Retatrutide delivers an average 24% weight reduction, outperforming currently marketed drugs.

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