Authors: Bhave Satya and Patrick Wingrove

(Reuters) - Eli Lilly and Co shares fell 8% on Tuesday after the company forecast fourth-quarter sales of weight loss drug Zepbound below Wall Street expectations, the second sales disappointment since the drug was launched in late 2023.

The company's shares were trading at $739.23, on track for their worst one-day drop in nearly four years. Shares in Copenhagen-listed rival Novo Nordisk also fell 3.5%.

Eli Lilly's stock price surged in early 2023, doubling as investors bet on the drug's popularity. The stock fell last October amid disappointing sales from Zepbound and has been in the doldrums ever since.

The forecast "may not be a huge shock to investors, but it could still shake confidence in the demand for incretins," said BMO Capital Markets analyst Evan Seigerman, referring to the drug class to which Zepbound belongs.

Eli Lilly said on Tuesday it expects the incretin market to grow faster based on performance in previous quarters.

As supply normalizes, Eli Lilly and Company Chief Financial Officer Lucas Montarce said wholesalers will not add to their inventories of incretins, including Zepbound, by the end of the year as they have done in the past.

"This year, given all the doses being available ... that (trend) has not materialized. Our inventory levels in the channel are pretty much the same as in the third quarter."

Eli Lilly expects fourth-quarter sales of $3.5 billion for Mounjaro and $1.9 billion for Zepbound. Analysts had expected the two drugs to bring in revenue of $5.35 billion and $2.08 billion, respectively, according to data compiled by LSEG.

In October, Eli Lilly reported third-quarter sales for both drugs that fell short of analysts' estimates, citing physical and financial constraints at wholesalers and raising some concerns about cooling demand.

Bernstein analyst Courtney Breen said Tuesday's downbeat forecast suggested the company needed to take steps to stimulate further demand.

Eli Lilly also forecast 2025 sales of between $58 billion and $61 billion, with the midpoint higher than analysts' expectations of $58.52 billion, helped by the launch of Mounjaro in new markets.

Montarce said the drug's launch in patients with obesity and type 2 diabetes in China, India, Brazil and Mexico was on the company's "2025 to-do list" but did not provide further details on when the drug would be available in each country. . .

Eli Lilly's 12-month forward price-to-earnings ratio, a common benchmark for stock valuations, is 34.59, well above peers Merck & Co.'s 10.72 and Pfizer's 9.07.

(Reporting by Bhanvi Satija in Bengaluru and Patrick Wingrove in San Francisco; Editing by Shounak Dasgupta)