Lilly(US:LLY)2024-08-08 20:15Financial Performance - Revenue grew 36% in Q2 2024, with new products contributing nearly $3.5 billion compared to the same period last year [8][16] - Excluding the sale of rights to Baqsimi last year, revenue growth was 46% [16] - Gross margin increased from 79.8% in Q2 2023 to 82% in Q2 2024, benefiting from favorable product mix and higher realized prices [16] - Operating income increased by 90% in Q2, driven by higher revenue from new products [17] - Earnings per share reached $3.92, an 86% increase compared to the prior year [17] Business Line Performance - Mounjaro sales in Q2 were $3.1 billion globally, with $2.4 billion in the U.S. [22] - Zepbound achieved sales of over $1.2 billion in Q2, with approximately 86% access in the commercial segment [23] - Trulicity revenue declined 31% globally, primarily due to competitive dynamics and supply constraints [22] - Verzenio sales increased 44% worldwide, driven by the early breast cancer indication [21] Market Performance - U.S. revenue increased 42% in Q2, with volume growth of 27% driven by Zepbound, Mounjaro, and Verzenio [17] - Revenue in Europe grew 20% in constant currency, primarily driven by Mounjaro uptake [20] - Japan saw a 15% revenue growth in constant currency, with volume growth of 21% [20] - Revenue in China increased 1% in constant currency, driven by Olumiant and Taltz [20] Company Strategy and Industry Competition - The company is focused on expanding its manufacturing capabilities, with a $5.3 billion investment in Indiana [12] - Lilly aims to comprehensively address obesity with 11 new molecules in clinical trials across multiple indications [10] - The company is well-positioned to compete in the obesity market, with significant access for Mounjaro and Zepbound [55] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory, expecting momentum to accelerate through the year [8] - The company anticipates production of salable doses of incretin medicines in the second half of 2024 to be at least 1.5 times that of the first half [24] - Management highlighted the importance of expanding access to Zepbound and improving supply chain dynamics [19] Other Important Information - The company announced the FDA approval of Kisunla for Alzheimer's disease and positive results from the tirzepatide heart failure trial [27][29] - Management noted the resignation of the CFO and the appointment of an interim CFO [14][15] Q&A Session Summary Question: Average Selling Price Movements - The company noted stable pricing across quarters in 2024, with initial favorability driven by Mounjaro [44][46] Question: Manufacturing Guidance - Management reiterated that the 1.5-fold increase in sellable doses includes the new Zepbound vials, with production ramping up [48][49] Question: Competition in Obesity Market - Management emphasized barriers to entry for new competitors and highlighted the company's strong market position with multiple Phase 3 assets [52][54] Question: Compounded GLP-1s - The company is monitoring the impact of compounded formulations on patient health and is considering legal actions against mass production practices [60][61] Question: Operating Leverage - Management discussed expectations for operating margins to remain in the upper 30% range, with promotional spending increasing in the second half of the year [64][68] Question: International Sales for Incretins - The company reported strong progress with Mounjaro's launch outside the U.S., achieving leading market shares in early launch countries [70][72] Question: NASH Development - The company is working on developing non-invasive biomarkers for NASH trials and is excited about the potential of tirzepatide in this indication [76][78]