Eli Lilly's stock took a sharp downturn on Tuesday after the pharmaceutical giant announced a disappointing sales forecast for the fourth quarter of 2024. The company, known for its weight-loss and diabetes drugs Mounjaro and Zepbound, projected revenue of approximately $13.5 billion for the quarter, falling short of Wall Street's consensus estimate of $13.93 billion. This shortfall was primarily attributed to slower-than-expected growth in the market for incretin-based therapies, which include Mounjaro and Zepbound.

The anticipated sales for Mounjaro were set at $3.5 billion, significantly below the expected $4.4 billion, while Zepbound's sales were forecasted at $1.9 billion, missing the consensus of $2.14 billion. The underperformance in these key drugs led to a more than 8% drop in Eli Lilly's shares, marking one of the company's worst trading days in nearly four years.

Despite the immediate setback, Eli Lilly remains optimistic about its long-term prospects. The company's guidance for 2025 projects sales between $58 billion and $61 billion, which is slightly above the consensus estimate of $58.5 billion. This forecast suggests a 32% year-over-year growth rate, indicating confidence in the company's ability to overcome current challenges.

Eli Lilly's CEO, David Ricks, emphasized the company's efforts to ramp up manufacturing capacity to meet the soaring demand for its incretin drugs. Ricks noted that the company expects to increase the production of sellable doses by at least 60% in the first half of 2025 compared to the same period in 2024. This expansion is seen as a critical step in addressing the supply constraints that have hampered the company's ability to capitalize on the high demand for Mounjaro and Zepbound.

The market for incretin therapies has been growing rapidly, with a 45% increase in the U.S. compared to the previous year. However, Eli Lilly had anticipated even faster growth, which contributed to the disappointing fourth-quarter results. The company also faced challenges with lower-than-expected channel inventory at the end of the year, further impacting its performance.

Eli Lilly is not alone in facing supply issues; its rival, Novo Nordisk, has also been struggling to meet demand for its weight-loss drug Wegovy. Both companies are investing heavily in expanding their manufacturing capabilities to keep pace with the market's needs.

Analysts have mixed views on Eli Lilly's situation. Some see the current dip as a buying opportunity, citing the company's strong long-term growth potential and its leadership position in the incretin therapy market. Others express concerns about the near-term revenue growth and the company's ability to resolve supply shortages quickly enough to maintain its market share.

Eli Lilly is set to release its full quarterly results on February 6, 2025, which will provide further insight into the company's financial health and its strategies for addressing the challenges it faces. Investors will be closely watching for updates on the company's manufacturing capacity expansion and its ability to meet the growing demand for its blockbuster drugs.