The trajectories of the weight loss drug duopoly have diverged! Strong sales fuel Eli Lilly's (LLY.US) Q2 performance that exceeded expectations.

Eli Lilly (LLY.US) reported better-than-expected second-quarter results in pre-market trading on Wednesday, largely due to strong sales of its injectable GLP-1 drugs and the newly launched oral weight loss drug Foundayo. As of the time of writing, the company's stock was up 5%. Competitor Novo Nordisk A/S Sponsored ADR Class B (NVO.US) also delivered a better-than-expected quarterly report and raised its full-year guidance on Tuesday, but its stock still closed down, as the much-watched oral weight loss drug sales fell short of Wall Street expectations. Based in Indiana, Eli Lilly achieved a revenue of $23 billion in the second quarter, an increase of approximately 48% year-over-year, exceeding market consensus by $2.3 billion. On the profit side, adjusted earnings per share rose approximately 33% year-over-year to $8.38; gross margin improved by 130 basis points year-over-year to 86.3%, mainly attributable to decreased sales costs and product portfolio optimization. Looking at product performance, the injectable weight loss drug Zepbound contributed $4.9 billion in revenue, while the diabetes treatment drug Mounjaro contributed $9.9 billion, both exceeding analysts' expectations of $4.6 billion and $8.8 billion, respectively. The newly launched oral weight loss drug Foundayo recorded $98 million in sales, also surpassing the expected $92 million. Behind the strong performance, Eli Lilly has been actively advancing mergers and acquisitions in the second quarter, completing acquisitions of Orna Therapeutics, Ajax Therapeutics, Centessa Pharmaceuticals, and Kelonia Therapeutics. Following the quarterly report, the company also agreed to acquire clinical-stage company AtaiBeckley for approximately $2.8 billion in upfront payments; AtaiBeckley focuses on developing psychedelic therapies for the treatment of refractory depression and other mental health conditions. Eli Lilly also announced the completion of three additional acquisitions to build its infectious disease product portfolio. Regarding pipeline progress, Eli Lilly stated that positive Phase III data for the next-generation weight loss candidate retatrutide is now sufficient to support global registration filings, covering indications such as obesity, obstructive sleep apnea, and knee osteoarthritis pain. The company plans to submit a Biologics License Application (BLA) to the FDA in the first quarter of 2027. Looking ahead, Eli Lilly has raised its full-year performance guidance, expecting revenue to be in the range of $85 billion to $87 billion, with a midpoint of $85.4 billion that is slightly lower than the market consensus estimate of $85.4 billion (essentially flat); the adjusted earnings per share is expected to be between $35.50 and $36.50, exceeding the analyst forecast of $34.54, although it should be noted that second-quarter business development activities had a negative impact of approximately $3.03 per share. Edmund Ingham, head of Haggerston BioHealth, commented that Eli Lilly's revenue for the whole year in 2020 was only $24 billion, while in the first half of 2026, the company's revenue has already exceeded $42 billion. He noted, "The growth driven by Eli Lilly's weight loss/Type 2 diabetes drugs Zepbound/Mounjaro is nothing short of remarkable." He added that the company's next-generation weight loss drug retatrutide announced three positive key study results in the second quarter, making the approval of the third "super blockbuster" drug now seem almost a foregone conclusion.