Pre-market plummets 12%! Eli Lilly's Q2 revenue surged 38% and raised full-year guidance, but the effectiveness of the oral weight loss drug fell short of expectations

Eli Lilly delivered an impressive Q2 financial report, but at the same time, the announced weight-loss oral medication's effectiveness fell short of expectations, leading to a pre-market plunge of 12% in its stock price.

On Thursday, Eli Lilly announced its Q2 performance,

Specific financial performance:

• Q2 revenue of $15.56 billion, a year-on-year increase of 38%, exceeding market expectations of $14.7 billion, primarily driven by the sales growth of Zepbound and Mounjaro.
• Reported EPS of $6.29, a year-on-year increase of 92%; non-GAAP EPS of $6.31, up from $3.92 in the same period last year, a year-on-year increase of 61%.
• Gross margin of 84.3%, an increase of 3.5 percentage points year-on-year, benefiting from improved production costs and optimized product mix.
• Based on strong performance, the company raised its full-year revenue guidance to $60 billion - $62 billion, up from the previous expectation of $58 billion - $61 billion.

Core business progress:

• Mounjaro global revenue of $5.2 billion, a year-on-year increase of 68%; $3.3 billion in the U.S. market, $1.9 billion in overseas markets.
• Zepbound U.S. revenue of $3.38 billion, a year-on-year surge of 172%, strong demand but price pressure.
• Verzenio revenue of $1.49 billion, a year-on-year increase of 12%, maintaining stable growth.

However, Eli Lilly's experimental weight-loss pill orforglipron only helped patients lose about 11% of their weight in phase three clinical trials, below Wall Street expectations, causing disappointment among investors. This result is far inferior to Novo Nordisk's Wegovy injection, which has a weight loss effect of 14%-15%.

After the news was released, Eli Lilly's stock price plummeted over 12% in pre-market trading on Thursday in New York. If this decline continues into the opening, it would mark the largest single-day drop since a 29% plunge on August 9, 2000. In contrast, competitor Novo Nordisk's stock price surged 8.4% on the Copenhagen exchange, marking the largest increase in nearly four months.

Strong revenue growth, but price pressure emerges, full-year guidance raised

The quarterly revenue of $15.56 billion is indeed impressive, with a year-on-year growth of 38% primarily due to a 42% increase in sales. However, price factors dragged down the growth by 6 percentage points, with this price pressure being more pronounced in the U.S. market, where prices fell by 8 percentage points The decline in prices mainly comes from the company's two star products—Zepbound and Mounjaro. Although demand remains strong, insurance companies and government healthcare programs have clearly become tougher in price negotiations. This may indicate a subtle change in the competitive landscape of the GLP-1 drug market.

In terms of weight loss medication, Mounjaro performed relatively well, with global revenue of $5.2 billion, a growth of 68%. Notably, its explosive growth in overseas markets surged from $677 million in the same period last year to $1.9 billion, nearly tripling. This is mainly attributed to new market access and sales growth.

Zepbound, on the other hand, shows a typical new product growth curve, with revenue of $3.38 billion, a year-on-year increase of 172%. However, this growth is largely based on a low base and also faces price pressures. The two products combined contributed over $8.5 billion in revenue, accounting for 55% of total revenue.

It is worth mentioning that R&D expenses increased to $3.34 billion, a year-on-year growth of 23%, slightly above the expected $3.2 billion, indicating a continued high investment trend in pipeline development.

Additionally, the company raised its full-year revenue guidance for 2025 by $1.5 billion to a range of $60 billion to $62 billion, reflecting management's confidence in the business outlook. The EPS guidance was also raised to $20.85 to $22.10 under the reporting benchmark. However, the tax rate guidance was raised from 17% to 19%, reflecting the impact of changes in U.S. tax policy.

Eli Lilly's Weight Loss Pill Phase III Trial Results Fall Short of Expectations

Eli Lilly's experimental weight loss pill orforglipron helped patients lose about 11% of their weight in a key Phase III trial, falling short of Wall Street expectations and setting the tone for new competitors in the weight loss drug market next year.

According to Bloomberg, the trial results landed at the lower end of Wall Street expectations. Investors had hoped orforglipron could match the efficacy of Novo Nordisk's blockbuster weight loss injection Wegovy, which helped users lose 14%-15% in key trials.

However, obesity doctor Katherine Saunders stated that as long as the drug is safe and effective, doctors will prescribe it, regardless of whether it meets the weight loss benchmarks expected by investors. The drug is expected to be launched next year, providing a cheaper oral option for the weight loss drug market, which is projected to grow to $95 billion by 2030.

Eli Lilly plans to submit the 18-month trial results involving over 3,100 adults for regulatory approval by the end of the year. The company has made "significant investments" in anticipation of demand, including reserving pills and raw materials worth at least $600 million.

The most common side effects of orforglipron are nausea, vomiting, and diarrhea, with incidence rates similar to existing GLP-1 drugs. Notably, orforglipron did not cause liver issues, which is a concern with other weight loss pills in development. About 10% of patients withdrew from the trial due to side effects.

**The drug is easier to produce than Eli Lilly's Zepbound injection and is expected to provide a cheaper option for patients. In early trials of orforglipron, type 2 diabetes patients lost 7.6% of their weight over 40 weeks, and blood sugar levels also decreased **

Although Eli Lilly and Novo Nordisk's injectables have completely transformed the treatment of obesity, investors believe that pills are the key to reaching more patients, with the market expected to grow to $95 billion by 2030. However, the scientific research and development of oral weight loss drugs is fraught with challenges. Companies like Pfizer and AstraZeneca have encountered setbacks in their race to develop powerful pills