Market Data 
By Bhanvi Satija and Patrick Wingrove
(Reuters) -Sales of Eli Lilly (NYSE:)’s high profile weight-loss and diabetes drugs fell short of Wall Street sales estimates on Wednesday as wholesalers worked through their existing supply of the treatments instead of placing new orders, and its shares fell more than 10%.
Lilly has been posting strong earnings for several quarters on high demand for its weight-loss drug Zepbound and diabetes treatment Mounjaro. Drug wholesalers purchase medicines like Zepbound directly from manufacturers and sell them to hospitals, clinics, pharmacies and other healthcare providers.
The company delayed plans to advertise Zepbound and held back on international launches to focus on increasing inventory levels in the U.S., CEO David Ricks told CNBC.
“There is an excess supply… but we haven’t been stimulating demand the way we had originally planned,” Ricks said.
Sales of Mounjaro were $3.11 billion, while Zepbound brought in $1.26 billion, which Lilly said reflected continued strong demand.
Analysts were looking for sales of $4.20 billion for Mounjaro and $1.69 billion for Zepbound for the quarter, according to LSEG data. They expect the drugs to make a combined $19 billion this year.
Lilly’s shares are up 55% so far this year, making it the world’s most valuable healthcare company, as investors bet on the success of the weight-loss drug.
Mounjaro and Zepbound compete with Novo Nordisk (NYSE:)’s popular Ozempic and Wegovy. Novo, whose U.S. listed shares were also down by 3.4%, has been aggressively marketing Wegovy on U.S. television.
J.P. Morgan analyst Chris Schott (ETR:) said the results suggested wholesalers had utilized their existing inventories without placing additional new orders as analysts had expected.
The Indianapolis-based drugmaker also slashed its annual adjusted profit forecast to $13.02 to $13.52 per share, compared to prior view of $16.10 to $16.60, citing acquisition charges in the third quarter.
The previously disclosed $2.8 billion acquisition-related charge and higher manufacturing costs also contributed to the third-quarter profit miss.
Zepbound and Mounjaro were in short supply for much of this year due to soaring demand for the medicines that have been shown to help patients lose an average of 20% of their weight. Lilly said supply had started to catch up with demand last quarter, and it was able to backfill orders and increase stocks at U.S. wholesalers.
Lilly has since said its drugs were no longer in shortage. While the FDA also removed Lilly’s drugs from its shortage list in late September, the agency is currently reviewing that decision.
Lilly has invested billions of dollars to expand production of Mounjaro and Zepbound, both known chemically as tirzepatide, including about $7 billion in its Indiana site and facilities in Ireland. The drug is sold under the brand name Mounjaro for both diabetes and weight loss outside the U.S.
Lilly trimmed the upper end of its full-year sales forecast by $600 million to $46 billion. It maintained the lower end at $45.4 billion.
Lilly and Novo Nordisk are racing to increase capacity and meet unprecedented demand for a weight-loss market some analysts estimate could reach $150 billion in annual revenue by the next decade.
In August, Novo trimmed its full-year profit forecast and reported a rare miss on quarterly sales of Wegovy.
