December 20, 2024
The FDA removed Eli Lilly ’s LLY tirzepatide injection products from the drug shortage list after determining that Lilly’s supply is currently meeting or exceeding demand and will continue to do so in the future. The regulatory body concluded that the shortage of tirzepatide medicines is now resolved. The stock is gaining in the pre-market hours in response to the encouraging news.
Lilly markets tirzepatide, a dual GIP and GLP-1 receptor agonist (GIP/GLP-1 RA), as Mounjaro for type II diabetes (T2D) and Zepbound for obesity. Per the regulatory body, a “shortage” is defined as a period of time when the demand or projected demand for the drug within the United States exceeds the supply of the drug.
The tirzepatide medicines were added to the FDA’s shortage list in 2022 due to Lilly’s supply shortage. In October 2024, the agency removed tirzepatide injection products from its shortage list after determining that the issue was resolved. However, the Outsourcing Facilities Association, a trade association representing compounding pharmacists and facilities filed a lawsuit claiming that the FDA’s decision to remove Lilly’s tirzepatide from its shortage list was “reckless and arbitrary” as tirzepatide was still in short supply.
As a result, the FDA announced a reevaluation of its decision to remove tirzepatide injection products from the drug shortage list in a court filing in October in response to the lawsuit filed. The regulatory body has now reevaluated its earlier decision and determined that the shortage is resolved.
In the past three months, shares of Lilly have lost 17.5% compared with the industry’s 15.3% decline.
The FDA’s decision to remove tirzepatide medicines from its shortage list, following the reevaluation, is backed by detailed data provided by Eli Lilly. This includes production and inventory reports, supply and demand quantities for 2024, projected future trends and wholesaler inventory levels. The data shows LLY’s current supply meets or exceeds demand for these products, with reserves of finished and semi-finished products and plans for increased production to sustain future needs.
The FDA also reviewed additional information from other stakeholders like patients, healthcare providers and other sources but found it had significant limitations. Ultimately, the evidence confirmed Lilly’s supply is sufficient to meet or exceed current and projected demand. However, the FDA shall continue to monitor supply and demand for these products.
This is a significant victory for Eli Lilly, as the FDA’s decision reinforces its existing patents for Mounjaro and Zepbound. It protects the company’s sales opportunities by preventing compounding pharmacies from selling copies of the approved drug to meet demand, which had been cutting into Lilly’s potential revenue.
Upon placement of a drug under the FDA’s shortage list, compounding pharmacies are allowed to produce copies of the approved drug to meet existing demand. Compounded drugs are, however, not approved by the FDA.
Eli Lilly and Company price-consensus-chart | Eli Lilly and Company Quote
Novo Nordisk ’s NVO semaglutide (GLP-1 agonist) medicines, marketed under the brand names, Rybelsus oral tablet and Ozempic injection for T2D and Wegovy injection for chronic weight management, compete directly with Lilly’s Zepbound and Mounjaro. NVO’s shares are down in the pre-market hours after the FDA removed Lilly's tirzepatide drugs from its shortage list. This shift suggests Lilly can now meet the demand for obesity medications, potentially capturing a larger U.S. market share and boosting its revenues, while Novo Nordisk’s Ozempic and Wegovy remain on the shortage list, limiting its sales opportunities.
Novo Nordisk recently announced that its parent company, Novo Holdings, has completed the acquisition of Catalent and sold three manufacturing sites to Novo Nordisk to enhance production capacity for Ozempic and Wegovy. While some analysts speculate that the increased production of Wegovy and Ozempic resulting from this acquisition could lead to these medicines being removed from the FDA’s drug shortage list, no timeline for such a decision has been provided.
Eli Lilly currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the sector are Castle Biosciences CSTL and Spero Therapeutics SPRO, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here .
In the past 60 days, 2024 estimates for Castle Biosciences have improved from a loss of 59 cents per share to earnings of 34 cents. During the same timeframe, loss per share estimates for 2025 have narrowed from $2.15 to $1.84. In the past three months, shares of Castle Biosciences have lost 9.6%.
CSTL’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 172.72%.
In the past 60 days, estimates for Spero Therapeutics’ 2024 loss per share have narrowed from $1.59 to $1.29. Estimates for 2025 loss per share have narrowed from $1.54 to 79 cents during the same timeframe. In the past three months, Spero’s shares have lost 23.2%.
SPRO’s earnings beat estimates in two of the trailing four quarters and missed the mark in the other two, delivering an average surprise of 94.42%.
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