Behind the Surge in Pfizer and AbbVie’s Performance: Key Drug Sales Skyrocket, but Major Drug Revenues Decline, Market Expectations Adjusted Upward

Eli Lilly (LLY), Merck (MRK), Pfizer (PFE), AbbVie ABBV (ABBV), and Novartis (Novartis) are among the big names reporting third-quarter financial results this week. Eli Lilly's financial performance fell short of market expectations in the quarter, with earnings and sales falling short of expectations, and the company lowered its financial forecast for the full year. Sales of key drugs such as Mounjaro, Zepbound, Jardiance and Verzenio also fell short of expectations.

Lilly's revenue reached $11.44 billion, up 20 percent from a year earlier. The company cited disappointing sales of its popular tisiparatide, diabetes drug Mounjaro and weight loss drug Zepbound due to inventory issues. Mounjaro generated sales of $3.11 billion in the quarter, up slightly from $3.09 billion in the prior quarter. Zepbound sales were $1.26 billion, up from $1.24 billion in the previous quarter.

Lilly lowered the upper end of its previous revenue guidance and slashed its earnings forecast. Total revenue guidance was revised to a range of $45.4 billion to $46 billion from $45.4 billion to $46.6 billion. After accounting for intellectual property and development expenses, earnings per share estimates were lowered to $13.02 to $13.52 from $16.10 to $16.60.

Merck beat market expectations on earnings and sales. While earnings were down 23 per cent year-over-year, excluding currency movements, revenues were up 7 per cent. Merck's cancer drug Keytruda increased sales by 17 percent due to rapid uptake in early indications and continued strong performance in metastatic indications. However, sales of HPV vaccines, Gardasil and Gardasil 9, declined by 10 percent due to lower demand in China. Sales of diabetes drugs fell 38 percent in January/January from a year earlier.

Merck revised its 2024 sales guidance range to $63.6 billion to $64.1 billion from $63.4 billion to $64.4 billion. Adjusted earnings per share expectations were lowered to $7.72- $7.77 from $7.94- $8.04.

Merck and partner Moderna have initiated a second pivotal Phase III study of a personalized mRNA therapeutic cancer vaccine (V940/ MRNA-4157) in combination with Keytruda in assisted lung cancer.

The interpath009 study was designed to evaluate V940 in combination with Keytruda in patients with resectable stage II, IIIA, or IIIB (N2) non-small cell lung cancer (NSCLC) who did not achieve pathologically complete response (pCR) after receiving neoadjuvant Keytruda plus platinum-based chemotherapy.

Global recruitment for the study has begun and the first patients have been recruited in Canada. The companies are already conducting pivotal Phase III studies of V940 in combination with Keytruda in early stage NSCLC, adjuvant melanoma, and phase II studies in other cancers.

Pfizer had a strong third quarter, beating earnings and sales expectations. Operating income increased 32% due to higher sales of key non-CoVID products such as Vyndaqel and Eliquis, new product launches, and the newly acquired Seagen product. Demand for Paxlovid increased during the recent COVID-19 wave, and COVID-19 products also contributed to revenue growth in the quarter.

Seagen Pharmaceuticals had revenue of $854 million in the third quarter. Following a strong performance in the first half of the year, revenue from Pfizer's non-CoVID products increased 14 percent in the third quarter. Sales of key drugs Xeljanz and Ibrance declined in the quarter.

The company also raised its 2024 earnings and revenue forecast for the second time this year. Adjusted earnings estimates were raised to $2.65 per share from $2.45, in a range of $2.75 to $2.95. Total revenue guidance was raised to a range of $61 billion to $64 billion from $59.5 billion to $62.5 billion.

Abbvie's earnings and sales beat market expectations. Sales were up 4.9% year-over-year thanks to higher sales of key medicines such as Rinvoq, Skyrizi, Venclexta and Vraylar. Sales of two important immunotherapy drugs, Rinvoq and Skyrizi, increased 47.4% and 51.5% on an operating basis, respectively, driven by the expansion of drug labeling to new patient populations. Abbvie in turn raised its forecast for 2024 earnings per share, expecting adjusted earnings per share to be in the range of $10.90 to $10.94, up from its previous guidance range of $10.67 to $10.87.

Abbvie announced that it will complete the acquisition of privately held biotech company Aliada for $1.4 billion in cash. Aliada uses its unique blood-brain barrier crossing technology to develop neuroscience drugs. Aliada's lead drug candidate, ALIA-1758, an anti-pyroglutamate-amyloid beta antibody for Alzheimer's disease, is currently in Phase I clinical studies. The transaction is expected to close in the fourth quarter.

In addition, AbbVie announced a collaboration and licensing option agreement with EvolveImmune Therapeutics to develop the next generation of cancer biotherapeutics using EvolveImmune's proprietary platform. Under the agreement, AbbVie will pay EvolveImmune an upfront payment of $65 million, and EvolveImmune is entitled to receive up to $1.4 billion in total option fees, milestone payments, and potential royalties.

Novartis also beat market expectations on earnings and sales in the third quarter. Driven by continued strong performance of Entresto, Kesimpta, Kisqali, Cosentyx, Pluvicto and Leqvio, sales increased 10% in constant currency.

Core operating income increased 123% year-over-year, and it raised its guidance for 2024 revenue and operating income growth. Novartis expects net sales to grow in the low double-digit range in 2024, compared with its previous guidance of growth in the high to low double-digit range. Core operating income is expected to grow in the mid-teens, up from the mid-teens previously expected.

The U.S. Food and Drug Administration (FDA) has accelerated approval of Novartis' drug Scemblix, expanding its indication for the chronic phase (Ph+ ML-CP) of first-line Philadelphia chromosome-positive chronic myelogenous leukemia. The approval is based on the ASC4FIRST Phase III study. Scemblix has been approved for CML for prior treatment. Novartis believes that expanding first-line use will increase the number of eligible patients for the drug by nearly four times.

The NYSE ARCA Pharmaceutical Index has fallen 2.34 percent over the past five trading days.

Here's an overview of how eight major stocks have performed over the past five trading days. Over the past five trading days, AbbVie has seen the biggest gain (7.5%), while Lilly has seen the biggest decline (7.2%). Over the past six months, Lilly has risen the most (28.6 percent), while Merck has fallen the most (20.2 percent). Next week, we'll be looking at NVO's third-quarter earnings update, as well as regular pipeline and regulatory updates.

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