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Eli Lilly walks diabetes tightrope as Novo Nordisk shortages drive demand for Trulicity and Mounjaro

Eli Lilly is in prime position with its new GIP/GLP-1 launch tirzepatide and its entrenched diabetes blockbuster Trulicity. Chalk it up to a temporary shortage of its chief rival Novo Nordisk’s competitor products Wegovy and Ozempic, which a Lilly exec said has helped spur “unprecedented demand” for the Indianapolis-based drugmaker’s incretin-based meds.

Still, the fact that so many patients are clamoring for Trulicity and tirzepatide—approved in Type 2 diabetes this summer as Mounjaro—could prove to be a double-edged sword for Lilly, whose executives on Tuesday warned of supply challenges ahead of a capacity-doubling manufacturing expansion planned for the end of 2023.

Trulicity and Mounjaro performed exceptionally well in the third quarter of 2022, bringing home $1.85 billion and $187.3 million in sales, with Mounjaro’s haul handily beating revenue estimates of $81 million.

Intense demand for the meds has been fueled, in part, by “limited availability of competitors’ GLP-1s,” Eli Lilly CFO Anat Ashkenazi said on the company’s third-quarter earnings call Tuesday.

Those would be Novo Nordisk’s respective rivals in weight loss and diabetes, Wegovy and Ozempic, which have been suffering from supply issues for the better part of a year.

Aside from Mounjaro’s recent Type 2 diabetes nod, the med is angling to compete with Novo’s Wegovy in obesity, where tirzepatide has snared an FDA Fast Track tag. Lilly’s current plan is to start a rolling submission in weight loss in 2022 and complete its filing shortly after phase 3 data from its SURMOUNT-2 trial rolls out around April of next year, the company said in a release.

But its rival’s supply woes have also challenged Lilly’s “ability to meet expanding demand [for Trulicity] in most international markets,” Ashkenazi explained.

In those places, the CFO says Lilly is “working hard to supply market demand” and will angle to “minimize” the impact on existing Trulicity patients. Part of that strategy revolves around pumping the brakes on new patient starts outside the U.S., Ashkenazi said.

Stateside, Trulicity prescription volume “remains robust,” though wholesalers may be hit by “intermittent restocking delays” of the drug as Lilly bolsters its incretin capacity, she added.

As for Mounjaro, “we intend to take actions designed to ensure access and supply for [Type 2 diabetes] patients,” Ashkenazi explained.

Without going into further detail, the CFO said those measures could “negatively impact prescription volumes but are not expected to impact net revenue.”

Michael Mason, EVP and president of Lilly Diabetes, added some additional color, noting that Lilly is “taking actions to maximize production supply for our current facilities while we ramp up our new manufacturing facilities.”

The patient response to Mounjaro has been overwhelmingly positive, the Lilly diabetes lead said, but he cautioned that the company finds itself in a “dynamic situation given the uncertainty of competitor GLP supply,” not to mention the fact that Mounjaro adherence, dose titration rates and more are still being ironed out in the wild.

“So given the dynamic nature of this, it’s reasonable to assume that weekly production forecasts [on Mounjaro] won’t perfectly align with demand each week,” he explained, cautioning this would “produce some intermittent delays in meeting wholesaler orders for some dosing strengths.”

If this happens as the company ramps up its supply chain, Lilly will “work hard to avoid or minimize any short-term impact for people living with Type 2 diabetes,” Mason added.

To compensate for high demand on Trulicity and Mounjaro—and to steal market share while Novo’s shortage rolls on—Lilly has plans to build “substantial” additional manufacturing capacity for its injectable incretin meds in 2023, Ashkenazi added on the call.

Alongside a site at North Carolina’s Research Triangle Park, Lilly expects “additional actions and extensions in other sites” to double the company’s incretin production capacity at the end of next year, she said.

The executive comments came as Lilly logged a 7% revenue increase at constant currencies to nearly $7 billion for the quarter. While Trulicity, Mounjaro, and the rest of Lilly’s new launch roster is largely soaring, the company’s momentum was eclipsed by a cut to Lilly’s overall revenue projection for the year. Aside from pressures piled on by a stronger U.S. dollar, the Indianapolis-based drugmaker is grappling with lower insulin prices, plus generic competition on its cancer med Alimta.

Trulicity and Mounjaro aside, Lilly’s arsenal of growth products—which also consists of Verzenio, Jardiance, Taltz, Emgality, Retevmo, Cyramza, Tyvyt and Olumiant—grew 19%, forming a whopping 70% Lilly’s revenue for the period after subtracting its COVID-19 antibodies from the mix. Lilly’s COVID meds chipped in $386.6 million for the period.

Even still, Lilly is tempering its sales expectations for the remainder of 2022. The company revised its revenue guidance for the year to a range from $28.5 billion to $29 billion. The company had previously expected to generate sales between $28.8 billion and $29.3 billion.