Eli Lilly has a serious problem with weight loss drugs Zepbound and Mounjaro

Eli Lilly, manufacturer of the popular weight loss drug Zepbound, said that Bloomberg Called its latest quarterly sales announcement a “shocking first failure”: Despite the bottomless hype, there simply aren’t enough people taking its new weight-loss drugs.

Shares fell nearly eight percent on Wednesday as sales of Zepbound and diabetes drug Mounjaro (the active ingredient in both drugs is the GLP-1 receptor agonist tirzepatide) missed Wall Street estimates by nearly $900 million.

This is despite the astronomical fanfare surrounding weight-loss drugs such as Zepbound and competitors such as Ozempic and Novo Nordisk’s Wegovy. The drugs have been a stunning success, both in terms of health effects and market penetration, but somehow this is not enough for the yawning expectations of capitalism.

Eli Lilly pointed the finger at inventory problems, an excuse that didn’t sit well with analysts.

“Few people expected such a miss,” said Jared Holtz of Mizuho Financial Group. Bloomberg.

“Because the demand for these drugs has increased so much, the decline in inventory has really come as a surprise,” he added, referring to a situation where wholesalers rely on previously purchased inventory rather than purchasing new inventory.

In other words, could this be a sign that the seemingly insatiable demand for popular weight-loss drugs is starting to wane?

Unsurprisingly, Eli Lilly Chief Financial Officer Lucas Montars tried to reassure investors by saying he doesn’t expect further “big swings” in inventory going forward.

The company’s competitors faced a similar problem. For example, Novo Nordisk was forced to cut its full-year profit forecasts back in August due to weaker-than-expected sales of its weight-loss drugs Ozempic and Wegovy, which use another GLP-1 agonist drug called semaglutide.

Eli Lilly CEO Dave Ricks told investors on a call after the announcement that there was no “demand issue” but said the company would begin selling Zepbound specifically directly to consumers, according to the report. Bloomberg.

Meanwhile, supply shortages of weight-loss drugs such as Zepbound and Ozempic have led to a surge in sales of counterfeit compounded drugs, especially online.

Naturally, Eli Lilly and Novo Nordisk have tried to discredit these companies, warning that their offerings contain impurities and are contaminated with bacteria.

However, despite the growing pains, the overall sales trajectory for GLP-1 drugs remains promising; Overall, Eli Lilly shares are up more than 50 percent year to date.

More about weight loss drugs: Research shows that patients taking Ozempic are 70 percent less likely to develop Alzheimer’s disease