Weight loss drugs are so hot that Eli Lilly is expecting $2 billion more in sales this year

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Eli Lilly stock jumped 5% during Tuesday morning trading to about $773 a share after the pharma giant reported better-than-expected sales of its weight loss drug Zepbound in the first quarter of 2024.

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"Lilly's first quarter performance reflects solid year-over-year revenue growth with strong sales of Mounjaro and Zepbound," said Eli Lilly CEO David A. Ricks in a press release.

The company's revenue grew 26% year over year driven by its diabetes and weight loss drugs Mounjaro and Zepbound. These drugs belong to the same class of medication as Ozempic and Wegovy, which are produced by the company's rival Novo Nordisk.

The market for these drugs, known as GLP-1 agonists or incretins, is expected to reach $105 billion by 2030, according to Morgan Stanley analysts.

In the first three months of 2024, Zepbound — which launched last fall — generated $517.4 million, outperforming Wall Street expectations of $373 million in sales, according to a consensus estimate by FactSet.

Sales of Mounjaro during the same period reached $1.8 billion.

Strong sales for the medications come as the U.S. Food and Drug Administration (FDA) said this month that most doses of the drugs will be in limited supply through the end of June, due to increased demand.

"As we continue to make pipeline investments that position us for future growth, we are rapidly expanding manufacturing capacity to make our incretin medicines available to more patients," Ricks said in a statement addressing the shortages.

Eli Lilly also raised its full-year revenue guidance for 2024 by $2 billion to between $42.4 billion to $43.6 billion, due to the strong performance of the medications and the expansion of the company's production capabilities.

Eli Lilly has invested at least $3 billion in new manufacturing facilities over the past two years.

Eli Lilly's first quarter, by the digits

67%: How much Eli Lilly's net income rose in the three months ending March 31, to $2.2 billion, from $1.3 billion in the same period last year.

26%: How much the company's total sales rose year over year in its first quarter, from $6.9 billion to $8.8 billion.

$2.58: Eli Lilly's's earnings per share, beating analysts' estimates of $2.47, according to FactSet.