- On Wednesday, Eli Lilly raised its revenue forecast for this year to at least $28 billion and announced estimates for next year that beat Wall Street expectations, hoisting shares of the Indianapolis drugmaker by more than 9%.
- Lilly now expects $28 billion to $28.3 billion worth of revenue in 2021, up from the prior estimate of $27.2 billion to $27.6 billion. The revised range factors in additional sales of the company's COVID-19 antibody drugs, known as bamlanivimab and etesevimab. Specifically, a recent purchase agreement with the U.S. government means revenue from those drugs should be in the ballpark of $2.1 billion this year, according to Lilly.
- For 2022, Lilly expects a roughly $1.7 billion decline in COVID-19 antibody revenue as newer, competing treatments come to market and vaccination rates increase. However, the company still envisions somewhere between $27.8 billion and $28.3 billion in overall revenue, due to continued growth of key products like the diabetes drugs Trulicity and Jardiance, the cancer therapies Verzenio and Cyramza, the migraine medication Emgality and the immune system regulator Taltz.
Investors were clearly pleased with Lilly's update, as the subsequent spike in share price added about $20 billion to the company's market value.
While the boost from bamlanivimab and etesevimab might be temporary, Lilly still believes next year's revenue will be close to the same as this year's. That's because the company plans to sell more of its top-performing products, a list which includes Trulicity, Jardiance and Verzenio, as well as the drugs Olumiant, for rheumatoid arthritis; Retevmo, for certain kinds of cancer; and Tyvyt, for hard-to-treat lymphoma.
Over the first nine months of 2021, Lilly recorded north of $20 billion in product revenue. Trulicity, which was responsible for more than a quarter of the total, had grown 29% compared to the same period in 2020. Jardiance, Taltz, Verzenio, Olumiant, Emgality and Tyvyt also experienced double-digit growth.
Lilly expects its key products list to expand, too, with the planned launch of five more medicines over the next two years.
Among those new medicines is tirzepatide, a potential treatment for Type 2 diabetes. Results from a late-stage study released early this year showed Lilly's drug was better at lowering blood sugar and triggering weight loss than Ozempic, a marketed diabetes treatment from Novo Nordisk. The Food and Drug Administration is currently reviewing tirzepatide.
Lilly and its investors are also closely watching donanemab, an experimental therapy for Alzheimer's disease that Wall Street analysts predict will earn billions of dollars in sales — provided it secures marketing approval. Lilly has already begun submitting the drug to regulators, and expects to wrap up its application to the FDA likely by the end of the first quarter.
Donanemab is designed to work similarly to Biogen's controversial Alzhimer's drug Aduhelm, and is supported by study data showing it eliminates toxic plaques in the brain, but not yet conclusive proof it significantly benefits patients.
Lilly is currently penciling in a U.S. approval next year and "very modest sales." While donanemab could offer competition, Biogen has struggled to convince doctors and insurers of Aduhelm's value. Sales totaled only $300,000 in the third quarter, falling well below expectations, and may not improve until Medicare finalizes coverage policies for Aduhelm and other Alzheimer's drugs like it.
Biogen is also spending a lot to market Aduhelm, and Lilly would have to do the same should donanemab win approval.
According to Vamil Divan, an analyst at Mizuho Securities, launching donanemab and tirzepatide have become concerning to some investors as related expenses could "blunt the operating margin progression that we have been seeing from Lilly over the past several years."
However, Divan argues that Wednesday's update should quell those fears, as Lilly's forecasts show only modest increases in certain operational costs. Marketing, selling and administrative expenses, for example, are expected to be in the range of $6.4 billion to $6.6 billion next year, up from the $6.2 billion to $6.4 billion pegged for this year.
Research and development expenses, meanwhile, should be $7 billion to $7.2 billion in 2022 versus the $6.9 billion to $7.1 billion estimate for 2021.