USA — Eli Lilly, a multinational pharmaceutical company, has recently exceeded its first-quarter sales estimates and consequently raised its annual revenue and profit forecasts.

The success can be attributed to its diabetes drug, Mounjaro, which has shown promising results in a second late-stage study for use as a treatment for obesity.

Mounjaro, also known as tirzepatide, has been proven to help patients with type 2 diabetes who are also overweight or obese lose nearly 16% of their body weight.

Eli Lilly plans to complete a rolling submission to the US Food and Drug Administration for the use of tirzepatide in obesity patients in the coming weeks, and the company anticipates regulatory action as early as late 2023.

Investors have been closely monitoring the demand and reimbursement for this potentially blockbuster drug, which generated US$568.5 million in sales in the first quarter, surpassing estimates of US$422.5 million.

The company has been relying on Mounjaro, which was approved for diabetes treatment in May 2020, to offset sales declines from price cuts for its insulin products and competition for cancer therapy Alimta.

The positive news surrounding tirzepatide has led Eli Lilly to raise its annual revenue forecast to a range of US$31.2 billion to US$31.7 billion, up from its prior range of US$30.3 billion to US$30.8 billion.

Moreover, the company expects adjusted earnings of US$8.65 to US$8.85 per share in 2023, compared to its previous forecast of US$8.35 to US$8.55 per share.

However, the company’s earnings per share for the first quarter came in lower than expected at $1.62, compared to estimates of US$1.73. Despite this, Eli Lilly’s overall revenue of US$6.96 billion exceeded estimates of US$6.86 billion.

The drug was approved by the US Food and Drug Administration last May to treat type-2 diabetes under the brand name Mounjaro, but Lilly aims to tap into the fast-growing market for weight loss treatments by getting the green light to market the drug to treat obesity.

A new class of obesity and diabetes drugs that, in some cases, can produce weight loss equivalent to bariatric surgery, is driving patient demand and investor excitement in the sector.

Demand for these treatments has been fueled by endorsements on social media by Hollywood stars and celebrities, including Elon Musk.

Pharmaceutical companies are rushing to develop a new generation of drugs to tackle a growing crisis in the US, where two in five people suffer from obesity, according to data published by the Centers for Disease Control and Prevention.

The World Health Organization estimates about 650 million people suffer from obesity worldwide. Lilly’s Tirzepatide is administered once a week by injection and acts to suppress a person’s appetite and increase energy expenditure.

Despite the potential of these drugs, Eli Lilly and other companies still face a battle to convince public and private insurers to fund their obesity drugs.

They argue that obesity causes complications that can be more expensive down the line, but may face some pushback from insurers as the market is so large.

Also making impressive gains was breast cancer treatment Verzenio, which generated US$751 million in sales, a 60% increase.

Further, diabetes drug Jardiance delivered a 38% revenue increase to US$577 million for the quarter.

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