Raphael Stevens

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Eli Lilly has more work it wants to do with the hard-won success from its weight loss and diabetes drugs, Zepbound and Mounjaro, outgoing CFO Anat Ashkenazi told CNBC.
The company is working to ramp up manufacturing, expand patient access to the treatments and change long-held misconceptions about obesity.
She will step in as the new chief financial officer of Alphabet, the parent company of Google, on July 31.

A pharmacist holds boxs of Eli Lilly & Co. Mounjaro brand tirzepatide medication arranged at a pharmacy in Provo, Utah, US, on Monday, Nov. 27, 2023. 
George Frey | Bloomberg | Getty Images

Skyrocketing demand for a class of weight loss and diabetes treatments has lifted Eli Lilly to new heights over the last year. But the drugmaker has much more work it wants to do with that hard-won success, outgoing Chief Financial Officer Anat Ashkenazi told CNBC. 
Ashkenazi, who will step in as the new CFO of Alphabet on July 31, has been key to managing the windfall in revenue and wave of investor optimism from Eli Lilly’s diabetes injection Mounjaro and recently launched obesity drug Zepbound. Ashkenazi took over as CFO at Eli Lilly in 2021 after roughly two decades with the pharmaceutical giant. She was included on CNBC’s inaugural Changemakers list earlier this year.

“You have to be a really good student of the business and understand it inside and out and understand the industry,” she told CNBC in an interview before her departure announcement. “Only when we understand the full system, can we navigate it well so that we bring value to it…That’s my role as CFO.”
Her tenure hasn’t come without challenges: Eli Lilly and rival Novo Nordisk have both struggled to manufacture enough supply of their treatments to meet unprecedented demand, causing nationwide shortages of those drugs. 
Their weekly injections are part of a class of drugs called GLP-1 agonists, which mimic certain hormones produced in the gut to suppress a person’s appetite and regulate their blood sugar. Some analysts expect the market for those drugs to be worth $100 billion by the end of the decade. 
Eli Lilly’s boom in revenue has allowed the company to invest heavily to scale up manufacturing, which will eventually get more medicine into patients’ hands, Ashkenazi said. 
“As we start selling product and we get the revenue in and cash flow associated with that sale,” the company wants to “funnel that cash flow back to the business to invest in those manufacturing facilities,” she said. 

Eli Lilly does not expect to match the pace of demand this year and maybe not even in 2025, Ashkenazi said at a conference in March. But the pharmaceutical giant has made encouraging progress so far. 

An Eli Lilly and Company pharmaceutical manufacturing plant is pictured in Branchburg, New Jersey, on March 5, 2021.
Mike Segar | Reuters

Ashkenazi said Eli Lilly has several manufacturing sites either under construction or “ramping up,” including two locations in North Carolina, two in Indiana, one in Ireland and one in Germany, along with a seventh site the company recently acquired from Nexus Pharmaceuticals. Eli Lilly late last month also said it would invest another $5.3 billion in its manufacturing plant in Lebanon, Indiana. 
Those facilities add to the company’s “existing, very large” manufacturing footprint across the U.S. and Europe, Ashkenazi said. Since 2020, Eli Lilly has spent more than $18 billion to build, expand and purchase manufacturing plants in those regions, the company said in May.
Ashkenazi noted that Eli Lilly is also tackling another barrier to patient access: limited insurance coverage for weight loss drugs in the U.S. 
Some employers and other health plans are still reluctant to cover GLP-1s for weight loss due to their hefty price tags, which they say could significantly strain their budgets. Insurers also have other questions, such as how long patients actually stay on the treatments. 
Still, Ashkenazi said coverage of Zepbound by U.S. commercial insurers is improving, with about 67% commercial coverage as of April 1. Eli Lilly is working to build that access for the remainder of the patients, she noted. 
“It’s not enough to have a highly efficacious, safe drug that can truly change people’s healthcare – but also make it accessible,” Ashkenazi said. 
She also hopes that patients enrolled in the federal Medicare program will eventually see increased coverage for weight loss drugs as Eli Lilly and other drugmakers demonstrate their ability to treat a wide range of obesity-related conditions. 
Eli Lilly is studying tirzepatide, the active ingredient in Zepbound and Mounjaro, in patients with obesity and fatty liver disease, obstructive sleep apnea, chronic kidney disease and heart failure, among other health conditions. 
Under new guidance issued in March, Medicare Part D plans can cover obesity treatments that receive regulatory approval for an additional health benefit. Medicare prescription drug plans administered by private insurers, known as Part D, currently cannot cover those drugs for weight loss alone.
A bigger issue at hand is a long-held misconception that obesity is a “lifestyle choice” rather than a chronic disease, according to Ashkenazi.
Eli Lilly is trying to change that. 
“Our goal is to ensure that society, the health-care system and patients themselves actually view this and understand that it is a chronic disease…and therefore should be treated as such,” Ashkenazi said.  More

Disney and Pixar’s “Inside Out 2” debuted with an estimated $155 million domestically, the second-highest theatrical opening of an animated film.
It is the first film since Warner Bros.’ “Barbie” to top $100 million during its debut.
The film is expected to haul in $295 million globally for the weekend.

In Disney and Pixar’s “Inside Out 2,” Joy, Sadness, Anger, Fear and Disgust meet new emotions.
Disney | Pixar

Disney and Pixar brought a big dose of joy to the box office this weekend.
“Inside Out 2” debuted with an estimated $155 million domestically, the second-highest theatrical opening of an animated film and the first film since Warner Bros.’ “Barbie” to top $100 million during its debut.

Of note, Disney does not consider its 2019 live-action remake of “The Lion King,” which generated $191.7 million during its debut, an animation film.
“Inside Out 2” is expected to haul in $295 million globally for the weekend.
“Let’s issue a collective ‘welcome back’ to Disney, Pixar, and the summer box office,” said Shawn Robbins, founder and owner of Box Office Theory.”
Both Pixar and Walt Disney Animation struggled to regain a foothold at the box office after pandemic restrictions lessened and audiences returned to theaters. Disney had opted to debut a handful of animated features directly on Disney+ and so parents were trained to seek out new Disney titles on streaming, not in theaters, even when they did return to the big screen.
Compounding Disney’s woes, many audience members began to feel that the company’s content had grown overly existential and too concerned with social issues beyond the reach of children.

“Many narratives have been written about the two studios and moviegoing in recent times, so this powerful debut by ‘Inside Out 2’ is a breath of fresh air,” Robbins said.
The film is the fifth Pixar feature to surpass $100 million during its debut in North America and the second-biggest opening weekend ticket seller for the studio just behind 2018’s “The Incredibles 2,” which tallied $182.6 million. Around 12 million patrons flocked to cinemas to see the flick, according to data from EntTelligence.
“This is clearly a big win for theaters,” said Paul Dergarabedian, senior media analyst at Comscore. “It’s an even bigger win for Pixar.”
The theatrical industry has struggled this year with fewer titles, as production shutdowns from the pandemic were exacerbated by a dual labor strike that closed movie sets for nearly five months last year. The result has been a 26% decline in ticket sales compared to 2023 and a 42% drop from 2019 levels, according to data from Comscore. Heading into this weekend, the domestic box office stood at $2.8 billion.
While there have been some standout performances from films like Warner Bros. and Legendary Entertainment’s “Dune: Part Two,” Warner Bros. and Toho’s “Godzilla x Kong: The New Empire” and Universal’s “Kung Fu Panda 4,” the 2024 box office has struggled to hit a consistent pace of releases and ticket sales.
Missing from this year’s early summer slate for the first time since 2009 was a Marvel Cinematic Universe title. Typically, these films average $100 million to $200 million openings, with 2019’s “Avengers: Endgame” hitting a record $357.1 million. Instead, this year, Universal’s “The Fall Guy” opened to $28 million.
Fewer films and fewer blockbusters could push the summer box office down as much as $800 million compared with 2023, according to Comscore’s Dergarabedian, and have ripple effects for the whole year. After all, the key summer period, which runs from the first weekend in May through Labor Day, typically accounts for 40% of the total annual domestic box office.
“Inside Out 2” is a bright spot for the industry. It boasts the biggest domestic debut of 2024, surpassing “Dune: Part Two” and its $82.5 million in opening weekend ticket sales.
“Does this performance wipe away all concerns of evolving consumer behavior? Of course not, but it should stay the hand of those thinking Disney or Pixar had permanently lost their commercial gravitas after an overly aggressive streaming strategy and undercooked films which together eroded some of their audiences in the past few years,” Robbins said.
And some heavy hitters are coming to close out the summer and finish up the year.
“Deadpool and Wolverine,” Marvel’s first R-rated feature, is due in theaters in July and is expected to deliver a strong opening weekend as well as a steady stream of ticket sales throughout its run.
Then “Beetlejuice Beetlejuice” arrives in early September, “Joker: Folie a Deux” hits in October alongside “Venom: The Last Dance,” and November sees “Gladiator II,” “Moana 2” and “Wicked.” Additionally, December will have “Kraven the Hunter,” “Sonic the Hedgehog 3″ and “Mufasa: The Lion King.”
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. More

Cocoa prices have been soaring this year, hitting record highs and causing headaches for candy companies.
While hedging contracts protect the likes of Hershey and Mondelez for now, high cocoa prices could change how they think about innovation.
Food companies will likely be reluctant to raise prices given current consumer pushback on the last two years’ price hikes.

Dried cocoa beans at the Somos Cacao farm and production facility in Ragonvalia, Norte de Santader department, Colombia, on Friday, March 22, 2024. 
Ferley Ospina | Bloomberg | Getty Images

There’s pricing pressure taking hold of a specific corner of global agriculture — and it’s bittersweet.
Prices of cocoa have more than tripled over the last year, creating a big headache for candy makers and other food companies that use the ingredient to make chocolate.

In recent years, the price of cocoa had hovered at around $2,500 per metric ton. But reports of a weaker-than-expected crop set off concerns about supply, sparking the commodity’s run-up in recent months. Cocoa hit an all-time high of more than $11,000 per metric ton in April. The price surge has since eased off slightly, but the crop is still commanding well above what food companies are used to paying.
For now, many of the largest candy companies — Hershey, M&M’s maker Mars, Kinder owner Ferrero and Cadbury parent Mondelez — are likely protected from higher cocoa costs, thanks to long-term contracts that lock in the prices they pay for key commodities to protect them from events just like this. That gives them some lead time to grapple with the issue. But come 2025, they’ll likely end up paying much more for their cocoa.
“This is absolutely impacting the ways in which these companies are managing their businesses, just because the cost impact is so incredibly significant,” said Steve Rosenstock, the consumer products lead at Clarkston Consulting, which advises clients on how to deal with problems such as the soaring cost of cocoa.
Mars declined to participate for this story. Mondelez, Ferrero and Hershey did not respond to CNBC’s requests for comment.

Costly cocoa

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West Africa, which grows the majority of the world’s cocoa supply, has been hit by crop disease and lower prices paid to farmers at the point of sale, called farmgate pricing, that push them to grow more lucrative crops such as rubber instead of cocoa. This season’s cocoa crop is expected to experience the largest deficit in at least six decades, according to a Rabobank report from May.

Reuters reported Wednesday that Ghana, the second-largest cocoa producer, is looking to delay a delivery of up to 350,000 tons of beans to next season, sending prices higher again.

A worker picks cocoa fruit at the Somos Cacao farm in Ragonvalia, Norte de Santader department, Colombia, on Friday, March 22, 2024. 
Ferley Ospina | Bloomberg | Getty Images

On recent earnings calls, executives from Mondelez and Hershey said they believe market speculation is driving at least some of the surge in cocoa. Prices could come down in September, once more information about the new crop is available — but that doesn’t mean that they’ll return to normal.
The commodity’s climbing cost comes at a tough time for many food companies. Over the last two years, many have raised prices to deal with inflation that touched on a broader array of commodities. As a result, shoppers have become choosier about what they buy and more dissatisfied with the prices they see at grocery stores. Consumers’ focus on value leaves candy companies with little leeway when it comes to pricing to cope with cocoa’s higher cost.
And then there’s shrinkflation, a buzz word that has entered the layperson’s lexicon over the last two years. Companies will cut a product’s quantity or weight while the price stays the same.  But consumers have gotten wise to the trick. A YouGov survey conducted in October found that 72% of U.S. respondents had noticed shrinkflation in food products.

Near-term workarounds

As a result, many companies will have to become more creative. 
J&J Snack Foods CEO Daniel Fachner has been keeping an eye on cocoa and chocolate prices. The company owns brands including Dippin’ Dots, SuperPretzel and Hola Churros and manufactures products for other companies, such as Subway’s footlong churro. Chocolate is a common flavor in its portfolio, which includes treats such as a chocolate-filled churro.
“It won’t stop us from using chocolate, but it will cause us to think about and say, ‘Now, if we do this innovation with that new pricing, is it sellable?’ And then when we sell it, ‘Is it at a low enough cost that customer could sell it and still make a good margin?'” Fachner told CNBC in May.
One hypothetical solution, proposed by Fachner, could involve cutting back the number of chocolate chips from 12 to nine in a certain product. He also said J&J is looking for any possible substitutes that could work for some of its recipes.

Chocolates are displayed on a shelf at Celine’s Sweets in Novato, California, March 22, 2024.
Justin Sullivan | Getty Images

RBC Capital Markets analyst Nik Modi cited Hershey’s new Jumbo Reese’s Cup as one creative workaround.
“This one has extra peanut butter, so it’s a nice way of trying to get innovation into the market at a premium price, let the consumer feel like they’re getting value, but just changing the product itself to lower the reliance on chocolate,” he said.
For food companies that don’t primarily deal in chocolate, they might start avoiding the flavor, especially when it comes to new products.
“I think more or less, people will try to stay away from chocolate at this point,” Modi said.

The long tail of the cocoa crisis

While this year’s spike in cocoa prices has been historic, it likely won’t be the last time food companies find themselves paying more for the commodity. Analysts are already predicting another cocoa shortfall next year, although it would likely be less dramatic than this season’s.
However, systemic issues, such as government-controlled farmgate pricing, and climate change will likely keep hurting the beans’ crop. Plus, the use of child labor and slavery in West African cocoa farms has led to lawsuits and scandal for candy companies.
In the long term, that means many companies will have to look for more permanent solutions. In some cases, that may mean alternatives to cocoa.
“There are examples where companies are increasing the amount of non-cocoa additives, like sugar, more economical things like cocoa butter equivalents, shea butter, palm oil, coconut oil, those types of things,” Rosenstock said.

Justin Sullivan | Getty Images

Recipe reformulation takes about nine months on average, according to a research note published Thursday from Bank of America Securities analyst Antoine Prevot. He said he thinks fast-moving consumer goods companies have been looking at changing their formulas since the beginning of this year, which means the new candy could start trickling out as soon as August.
There are more extreme substitutes, too. Startups such as Voyage Foods and Win-Win have made cocoa-free chocolate using alternatives such as grape seeds and legumes.
At least one candy company isn’t planning any major changes to its formulas.
“We will do some cost tightening, but we’re not going to change recipes or do things that are not necessarily the right thing for the business in the long run,” Mondelez CFO Luca Zaramella said June 4 at a Deutsche Bank conference.
There’s also the potential for diversification with other kinds of snacks. When Kraft spun out Mondelez more than a decade ago, it already had Triscuit, Sour Patch Kids and Wheat Thins snacks in its portfolio, in addition to chocolate products Milka, Oreo, Toblerone and Chips Ahoy.
Other candy companies have followed its lead, adding more salty snacks to their lineups to drive more growth. For example, Hershey bought Amplify Snack Brands in 2017, adding SkinnyPop to its portfolio, and Dot’s Homestyle Pretzels in 2021.
“I don’t think they did it to be less dependent on cocoa — they did it to more easily react to the ups and downs of consumer trends and to be able to really diversify their portfolio,” Rosenstock said. “But the ability to lean on some of the non-chocolate categories, whether it’s salty snacks, jelly beans or gummy products, I think that’s a good way to combat the cocoa crisis.” More