What to Expect From Eli Lilly's Upcoming Earnings Report

The upcoming earnings report for Eli Lilly will be closely scrutinized for sales figures of its FDA-approved tirzepatide medications, particularly the diabetes drug Mounjaro and the newly launched weight loss drug Zepbound. Zepbound hit the market in December after a November 2023 approval, while Mounjaro, released in May 2022 for type II diabetes, has already seen strong sales, with $2.96 billion in the first nine months of 2023. Expectations are for this growth trend to have persisted into the fourth quarter.

The performance of this major pharmaceutical company has been inconsistent, as it has fallen short of earnings expectations in one of the last four quarters but has surpassed them in the other three. On average, Lilly has achieved an earnings surprise of 59.86% over the last four quarters.

• Despite projected high sales volumes for Mounjaro, Eli Lilly has faced delays in shipping certain doses due to extraordinary demand, potentially impacting fourth-quarter volumes.

• Sales are also expected to be bolstered by increased demand and volume growth for Lilly's key drugs launched before 2022. However, sales for some drugs, such as Trulicity, may have been affected by lower realized prices. Trulicity's international volumes suffered from Eli Lilly's strategies to manage high demand against a constrained supply, with sales further impacted by lower prices and higher rebates. The fourth-quarter report will reveal whether these trends have continued or improved.

• The company encounters considerable regulatory and legal risks, including product approvals, patent challenges, and liability lawsuits.

• Lilly generates close to 60% of total sales from U.S. prescription drug sales (slightly higher relative to peers) so additional major pricing reforms could weigh on sales and margins.