A Zepbound injection pen from Eli Lilly & Co., March 28, 2024.
Bloomberg | Bloomberg |
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Good day! Novo Nordisk And Eli Lilly currently dominate the booming market for a class of drugs for weight loss and diabetes.
But Eli Lilly may gradually gain an advantage over its Danish competitor in the battle for growing demand for these treatments, also known as GLP-1.
This became clear last week after the two companies announced their respective second-quarter results.
“Lilly is pulling ahead in the metabolic duopoly,” Evan Seigerman, an analyst at BMO Capital Markets, said in a research note on Thursday.
On August 7, Novo Nordisk revised down its full-year earnings forecast after the company reported that quarterly sales of its weight-loss injectable Wegovy were well below Wall Street expectations. 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, executives said on a conference call last week.
Revenues from the successful diabetes drug Ozempic also fell short of expectations for this period. The company's shares plummeted.
Nevertheless, Novo Nordisk has slightly raised its forecast for sales growth for the full year.
Eli Lilly's quarterly report a day later was a very different story. The Indianapolis-based company's weight-loss drug Zepbound and diabetes drug Mounjaro beat second-quarter expectations.
Eli Lilly raised its 2024 revenue forecast by $3 billion and increased its full-year earnings forecast due to strong performance from Zepbound and Mounjaro, as well as “improved clarity” regarding the company’s manufacturing expansions for those drugs.
Unlike Novo Nordisk, Eli Lilly benefited from higher U.S. prices for Mounjaro in the quarter as use of savings card programs for the drug declined. Executives said they expect “stable pricing” for Mounjaro and Zepbound in the last two quarters of 2024.
Eli Lilly shares closed more than 9% higher on Thursday.
Boxes of Novo Nordisk's Ozempic and Wegovy are seen at a pharmacy in London, United Kingdom on March 8, 2024.
Hollie Adams | Reuters
Some analysts were particularly pleased with Eli Lilly's positive production numbers. Demand for weight-loss and diabetes drugs in the U.S. exceeds supply, so companies that can quickly deliver large quantities of a product to patients can gain an advantage in this area.
All doses of Mounjaro and Zepbound are now listed as available in the U.S. Food and Drug Administration's drug shortage database. Some doses of Wegovy are now only available in limited quantities as Novo Nordisk invests billions in expanding its own production.
In a research note Thursday, Bank of America analysts raised their combined revenue forecast for Mounjaro and Zepbound to $19.7 billion in 2024, $31 billion in 2025 and $38.5 billion in 2026 as they “have become more familiar with supply dynamics.”
The analysts said there could still be temporary supply shortages of Mounjaro and Zepbound in the near future “as access improves and physicians become more comfortable with product availability.” But they welcomed Eli Lilly's progress in expanding its manufacturing capacity and supply.
For example, Eli Lilly CEO David Ricks said in a conference call on Thursday that the company has built six manufacturing plants, some of which are already in operation, and hired thousands of workers to increase production. The company acquired another site earlier this year.
Eli Lilly expects production of incretin drugs – another term for weight loss and diabetes treatments – to be 50% higher in the second half of 2024 than in the same period last year, he added.
Ricks said Eli Lilly's ability to increase production of Zepbound and Mounjaro gives the company confidence to compete with new entrants in the weight loss and diabetes drug market that may not have the same capacity.
“I don’t know if it’s an obstacle, but it’s certainly work to scale production,” Ricks said.
“You're talking about making things on a billion-dollar scale, which takes time, is technically difficult and very capital intensive,” he continued. “So of course competitors will have to come. But there is still a long way to go for all these [other drugmakers] that the two leading companies have already gone large parts of it.”
Feel free to send tips, suggestions, story ideas and data to Annika at annikakim.constantino@nbcuni.com.
Latest technology in healthcare
Stryker acquires artificial intelligence startup Care.ai
Medical technology company Stryker announced on Monday that it has agreed to acquire Care.ai, another deal in the field of artificial intelligence in the healthcare sector.
Care.ai uses tools like AI-powered sensors to help doctors monitor patients and workflows in hospitals, nursing homes and assisted living facilities. The company raised $27 million from Crescent Cove Advisors in 2022.
Stryker offers medical and surgical devices, as well as a range of products in orthopedics and neurotechnology. The company said technologies like Care.ai's are “increasingly important” as healthcare organizations grapple with challenges such as nursing shortages, burnout, administrative burdens and workplace safety concerns, according to a press release Monday.
Terms of the transaction were not disclosed, and Stryker said the acquisition was subject to customary closing conditions.
Stryker shares were largely unchanged on Tuesday.
“Care.ai will help Stryker significantly advance our IT and digital vision in healthcare and provide our customers with intelligent and connected real-time decision support that improves the lives of caregivers and their patients,” said Andy Pierce, group president of MedSurg and Neurotechnology at Stryker, in the press release.
The technology offered by Care.ai will integrate “seamlessly” with Stryker's platforms and devices, the company added.
“Our commitment to simplifying and improving the lives of healthcare professionals and patients remains unwavering,” said Chakri Toleti, founder and CEO of Care.ai, in a post on LinkedIn on Monday. “Together, we are transforming healthcare and ensuring that the well-being of those who need care and those dedicated to caring for others always comes first for us.”
Stryker declined to comment. Care.ai did not immediately respond to CNBC's request for comment.
The full announcement can be found here.
Feel free to send tips, suggestions, story ideas and data to Ashley at ashley.capoot@nbcuni.com.
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