The demand is there, but so are the hurdles. Eli Lilly investors got a reality check on Thursday, as the stock tumbled more than 6%. Hopes have been running high for the company’s recently launched Mounjaro. Right now, the drug has been approved to treat type 2 diabetes, but many expect sales to really take off once it is approved to treat obesity and overweight, which could happen later this year. But investors are now growing concerned as insurance companies have been slow to hop on board. Lilly said slightly more than 50% of commercial and Part D subscribers have access to the drug via their insurance plans. That’s only up slightly from 45% in the third quarter. “We would have expected somewhat more of an uptick,” said SVB Securities analyst David Risinger in a research note Thursday. The trend contributed to disappointing fourth-quarter sales of the drug . Mounjaro tallied $279.2 million in sales, below the $319.3 million analysts were expecting, according to a Refinitiv poll. The slow adoption is concerning when one considers this was expected to be the easier battle. LLY 1D mountain LLY falls as questions around Mounjaro linger There has long been a stigma around weight loss medications , as many consider their use to be driven by vanity more than medical necessity. But new classes of weight loss medications are helping to change this mindset. This is partly due to these drugs being more effective and to the light they are shedding on mechanisms in the body that help patients lose weight. Still, legislation will be necessary to get coverage of Mounjaro for obesity and overweight treatment by Medicare plans. By law, these plans are banned from paying for weight loss medications. Manufacturing issues are also hurting sales, and Lilly is investing to expand capacity, the company said. In an interview with CNBC on Thursday, CEO David Ricks said Lilly should exit this year with 50% more capacity than it started with. He added that additional capacity will come online in 2024 and 2025. Inflated expectations The increased bandwidth will be needed when the drug is granted approval to treat obesity. That is already clear as patients, hopeful of Mounjaro’s potential for weight loss treatment, snagged prescriptions for the drug from their doctors and were using the company’s patient access program for treatment. In the fourth quarter, Lilly cracked down on this “nonindicated use,” Ricks said. The company went through a process of verifying that patients accessing the program had a type 2 diabetes diagnosis. “Our commitment is really to patients who need the medicine for what it’s for right now and can get insurance coverage and who have already started the drug,” he told CNBC. These prescriptions also may have inflated the expectations analysts had for the drug’s sales this quarter. Over the long haul, however, Lilly expects these motivated consumers to be helpful in winning over insurance companies. Management even mentioned this on their conference call Thursday. “I’ve seen the power of consumer interest in helping to improve access for medication, and what we’ve seen over the last year is that people who live with obesity are highly engaged and willing to do much to access effective treatments,” said Michael Mason, an executive vice president at Lilly. “They will have an important voice with employers and their insurers for access. … I’m more encouraged than ever by our potential to unlock the obesity market and help a lot of people.” Wegovy and Mounjaro One encouraging sign: Lilly competitor Novo Nordisk has gained access to more than 80% of insurance company formularies for their obesity treatment, Wegovy. Wegovy is similar to Mounjaro in that both treatments are based on incretin hormones called glucagon-like peptide-1, or GLP-1. Mounjaro, or tirzepatide, also has a second incretin, glucose-dependent insulinotropic polypeptide, or GIP. While Wegovy is first to market, Lilly’s entry may have an edge when the drugs go head-to-head, as clinical trials have shown Mounjaro to yield higher rates of weight loss. Novo’s fourth-quarter earnings this week showed big gains in GLP-1 sales. This was across its portfolio, which includes type 2 diabetes treatments, Rybelsus and Victoza, as well. And no doubt these results were also tempered by Novo’s own supply issues. “GLP-1 products increased 42% [coupon equivalent rate], with Wegovy (+18% beat), Rybelsus (+8% beat) and Victoza (+3% beat) beating in 2022,” wrote Geoff Meacham, an analyst at Bank of America, in a research note. “Novo ended 4Q with 55% share of the GLP-1 market (from 56% in 3Q22); which we’d attribute to Mounjaro’s continued expansion in the T2D space. That said, we expect both players to continue to grow volumes as utilization of the GLP-1 class expands into earlier treatment lines, with the GLP-1 class offering superior HbA1c and weight loss versus other classes.” HbA1c, or a hemoglobin A1C test, is a blood test commonly used to monitor blood sugar levels over the past 3 months by patients with prediabetes and diabetes. Both Novo and Lilly shares have had strong runs over the past year due to the buzz around these drugs. Even with Thursday’s sell-off, Lilly shares are up nearly 32% over the past year, while Novo’s stock has gained 23%. In an interview, Meacham said he expects some of the stock’s weakness can be attributed to some sector rotation that is going on in the market. Large-cap pharmaceutical stocks were particularly strong last year, and there has been a movement back to tech stocks in the wake of strong earnings this week. He also expects the Mounjaro revenue picture to improve in the coming quarters as the use of coupons declines and more insurance companies add coverage. Meacham noted that Mounjaro has many other benefits for patients with diabetes, such as a reduction in lipid levels, improvements in blood pressure and weight loss, and its price is not out of line with comparable treatments. — CNBC’s Michael Bloom contributed reporting.