As Eli Lilly ends the year with Zepbound in good supply, TD Cowen analyst Steve Scalia asked CEO David Ricks if the company has taken the GLP-1 supply chain too far.
Eli Lilly has faced constant cries of “more more more” since the launch of Zepbound in weight loss: More supply. More patients. More prescriptions. The company ended 2024 with 1.5 times the amount of saleable doses available in the second half of the year than in the same period in 2023. There were no wholesaler backorders as they closed out 2024 with drug products flowing to pharmacies as needed.
But CEO David Ricks was thrown a completely different question on Lilly’s fourth quarter earnings call: Have they taken it too far now?
TD Cowen analyst Steve Scalia—who issued an apology in advance of his question—ticked off a list of challenges Lilly has faced in trying to meet demand for its weight loss product Zepound, then asked: “Can you state that there has not been any conversations within Lilly questioning whether we are all significantly over our skis on this market, and that the manufacturing build out may simply be too aggressive?”
Ricks admitted he understood why Scalia was asking, as Lilly tries to ramp up to meet an unprecedented and massive market. He also noted that Scalia had been calling into earnings calls for most of his career and had never issued an apology for a question in advance.
“There’s turbulence,” the CEO admitted. “We always seek to put projections out that we can hit with confidence, but that are also within the range of possibilities. And you know, in the back half of last year, we fell short of that.”
The company has a good reason to ensure that it can keep up with the insatiable demand, Ricks added. “People love taking these drugs. We know that, because when we run out, which we did last year, they get very angry with us.”
To put things into perspective, Lilly’s revenue rose 45% to $13.53 billion in the fourth quarter thanks to sales of GLP-1 products Mounjaro and Zepbound. The latter product easily cleared blockbuster status for the first time this year—its first full year on the market after its November 2023 approval—with $1.9 billion in sales for the fourth quarter and $4.9 billion for the full year. Lilly forecasts its 2025 revenue will be in the range of $58 billion to $61 billion.
In December 2024, the company added an FDA nod in sleep apnea for Zepbound and expanded access around the world. Lilly has also submitted an application for approval in heart failure and is operating a wide-ranging clinical program that includes Phase III tests for cardiovascular and more obesity-related outcomes and a Phase II trial in metabolic dysfunction-associated steatohepatitis.
“This is a market with hundreds of millions of people globally,” Ricks said. “There is a unique thing here in that we can both prevent a large portion of chronic disease with obesity drugs, and last year, we saw proof points on that from Lilly and our competitor that it’s not just weight loss; it translates into chronic disease outcomes.”
Lilly’s competitor, of course, is Novo Nordisk, which markets semaglutide as Wegovy for weight loss and Ozempic for diabetes. The Danish rival has already received a nod for reducing cardiovascular risks.
Ricks admitted that there’s more to do to ensure Lilly can meet the global demand. Oral medicines, such as Lilly’s pipeline asset orforglipron, could help usher in the new wave of obesity products. The drug is currently being tested in Phase III trials for obesity, diabetes and obstructive sleep apnea.
“We’re getting close to a relief valve on that, which is the idea that you could have an oral which is scalable in a way that injectable systems just aren’t,” Ricks said. The introduction of orals will actually show what the real demand is for the obesity market.
Meanwhile, Lilly is carefully “gating” launches and country additions, Ricks noted.
“We’re building facilities as fast as we can to match up those two things—what we can make and what we can sell—and although we’re supplying the U.S. market well right now, we’ll need to do more, and I’m pretty confident in that.”
