Investors want to know whether Eli Lilly is seeing the same pricing pressures on its blockbuster weight loss drug Zepbound that Novo Nordisk experienced with its competing drug Wegovy in the second quarter. Novo Nordisk shocked investors on Wednesday when its latest results fell short of Wall Street’s expectations. Shares are reeling, down 8%, after the company lowered its forecast for 2024 operating profit growth. Eli Lilly is scheduled to report its second-quarter results before the market opens on Thursday. Analysts surveyed by LSEG expect the drugmaker to earn $2.60 per share on revenue of $9.92 billion. Helping to drive the nearly 19% expected revenue growth from the second quarter of 2023, is demand for Lilly’s GLP-1 drugs Mounjaro and Zepbound, also known as tirzepatide. But Novo’s results triggered some selling of Lilly’s stock on Wednesday, with shares down 3%. While Eli Lilly’s stock remains up about 32% year to date, concerns about increasing competition in the category have resulted in a nearly 16% decline for Lilly shares over the past month. The outlook for the obesity drugs will largely determine where shares head from here, analysts say. LLY YTD mountain Eli Lilly shares year to date Why the stocks are under pressure Novo Nordisk has been working hard to boost manufacturing capacity for its popular GLP-1 drugs and expand access to Medicaid patients. Management said both of these efforts will help its long-term growth, but they have hurt performance in the near term. Eli Lilly is making similar attempts with Zepbound, but its launch is at an earlier stage than Wegovy. Second-quarter sales of Ozempic, Novo’s diabetes treatment, rose 4% from the first quarter, while Wegovy revenue grew 24% quarter over quarter. However, Wells Fargo analyst Mohit Bansal noted that the number of prescriptions written for Ozempic in the second quarter was up 17%, while Wegovy scripts grew 58%, according to IQVIA, over the same time period. In part, Wegovy’s net price is declining due to efforts to expand access to Medicaid patients in 20 states. While patients enrolled in the federal health insurance program typically aren’t covered for weight loss medications, the Food and Drug Administration approved Wegovy to be used as a way to prevent heart attacks and strokes in people with cardiovascular disease who are overweight or obese. This ruling opened the door for expanded coverage. “Their [Novo Nordisk management’s] focus is on securing supply to address as many patients as possible, and noted that price typically declines with increasing volume,” Bansal wrote in a research note Wednesday. Barclays analyst Emily Field told clients in a research note that she would be a buyer of Novo Nordisk shares on the weakness. “Was this the picture perfect quarter we’d hoped for? Not necessarily,” she said. “But at the end of the day, obesity is going to be a volume driven market and the overwhelming message we got from the company this morning is that volume is…
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