Eli Lilly’s Zepbound and Mounjaro are no longer in short supply. Here’s Where Their Sales Still Fall short – NBC New York

• Sales of Eli Lilly’s blockbuster weight-loss drug Zepbound and diabetes treatment Mounjaro were below expectations in the third quarter, even as both drugs largely recovered from widespread shortages in the United States.
• The drug maker blamed the lapses on drug wholesalers, who cut stocks of Zepbound and Mounjaro.
• Eli Lilly executives insisted that underlying demand for the drugs remained strong and that the company had adequate supplies.

Sales of Eli Lilly’s blockbuster weight-loss Zepbound and diabetes treatment Mounjaro were below expectations in the third quarter, although shipments of both drugs have largely recovered from widespread shortages in the United States.

The reason, according to the company, is not a question of supply or demand.

Eli Lilly instead blamed disappointing sales on drug wholesalers that cut stock of Zepbound and Mounjaro. Wholesalers purchase drugs from manufacturers and sell them to hospitals, clinics, pharmacies and other health care providers.

Increased supply allowed Eli Lilly to fill backlogs of orders for wholesalers in the second quarter, which led to higher inventories of Zepbound and Mounjaro during the period, the pharmaceutical giant said.

But those wholesalers used some of their existing inventory in the third quarter instead of buying more from the company, reducing revenue from both treatments, Eli Lilly said.

StreetAccount estimates that Mounjaro had third-quarter sales of $3.11 billion, well below analysts’ expectations of $3.7 billion. Zepbound’s sales for the quarter were $1.26 billion, below analysts’ expectations of $1.76 billion.

“The primary culprit was the decline in Mounjaro and Zepbound inventories… rather than weakening demand,” Citi analyst Jeff Meacham wrote in a research note Wednesday.

Jared Holtz, health equity strategist at Mizuho, ​​wrote in an email that “destocking” — or selling existing drug supplies instead of stocking up on new ones — was a surprise, especially given the high level of demand for drugs.

But he said Eli Lilly has invested $10 billion to $15 billion this year alone to expand production capacity for its injection drugs, which should “help reverse some of the trends reported during this period.”

However, some analysts doubt that the inventory problem can account for what happened to Zepbound and Mounjaro’s sales in the third quarter. That factor likely explains “only a portion,” or about 20%, of lost drug revenue, Barclays analyst Carter Gould wrote Wednesday.

Over the past two years, demand for weight loss injections and diabetes injections has outstripped supply.

But Eli Lilly’s supply problems began to ease earlier this year when the Food and Drug Administration removed tirzepatide, the active ingredient in Mounjaro and Zepbound, from its shortage list.

Earlier this month, a trade group representing compounding pharmacies that make customized and often cheaper alternatives to scarce brand-name drugs sued the FDA. The group said tirzepatide remains in short supply and should therefore remain on the shortage list, prompting the agency to reconsider its decision.

At a news conference Wednesday, Eli Lilly executives insisted that underlying drug demand remains strong.

“Is there a demand problem? No,” said Eli Lilly CEO Dave Ricks, instead pointing to “large unevenness in channel supply.”

“I think we don’t really control it or try to control it, but the reality is that Lilly’s downstream customers, wholesalers and retailers, make their own decisions about which of the 12 different dosage forms they want to stock. what level,” Ricks said.

He noted that wholesalers face some restrictions, including financial pressure. They also have to deal with “cold chain” capacity limitations or maintain a temperature-controlled supply chain that ensures the quality of drugs from production to delivery.

Ricks said Eli Lilly has not yet begun what the company calls “demand promotion activities,” or advertising and promoting Zepbound. The drugmaker will begin those efforts in November, he said.

This will include providing drug samples to healthcare providers.

Eli Lilly is also investing heavily in its direct-to-consumer website, which offers telemedicine prescriptions and direct home delivery of certain medications to expand patient access, executives said during the call.

Ricks dismissed the idea that the quarter’s disappointing sales were due to competition from the composite versions of Mounjaro and Zepbound.

“We don’t really see the financial impact on Lilly from compounding,” Ricks said.