(Reuters) - Eli Lilly and Co LLY.N third-quarter sales missed Wall Street estimates on Wednesday as rebates limited revenue from its top-selling diabetes drug Trulicity, and its shares fell about 4%.

FILE PHOTO: The logo and ticker for Eli Lilly and Co. are displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 18, 2018. REUTERS/Brendan McDermid

The Indianapolis-based drugmaker has been banking on newer drugs such as Trulicity and psoriasis therapy Taltz as it faces competition from cheap generic versions of erectile dysfunction treatment Cialis and other older medicines.

Demand for Trulicity remained strong in the third quarter, but profits were crimped by high rebates or discounts that drugmakers pay to middlemen such as pharmacy benefit managers in order to make sure patients have access to their products.

Trulicity sales rose 24% to $1.01 billion, short of Wall Street expectations of $1.08 billion, according to Refinitiv data. It had a net price decline of about 5% during the quarter.

Citi analyst Andrew Baum said Trulicity sales were likely hurt by Lilly's efforts to defend its market share against the upcoming launch of a rival drug from Denmark's Novo Nordisk A/S NOVOb.CO.

Novo Nordisk, the world’s biggest insulin maker, recently won approval for its once-daily oral diabetes pill Rybelsus, which is expected to be embraced by patients with an aversion to needles used to deliver Trulicity and other diabetes treatments.

Lilly said it was well placed to defend its franchise against increased competition.

“When it comes to Trulicity (insurance) coverage, we have unprecedented access. And we are projecting that into next year,” said Enrique Conterno, president of Lilly’s diabetes unit who is set to retire at the end of the year.

Sales of Taltz rose nearly 29% to $340 million, but also missed analysts’ estimates of $395.7 million.

Prices of drugs sold in the United States were also hurt by increased discounts offered to offset coverage gaps in the government Medicare healthcare program. The company said it expects the impact to diminish in the fourth quarter.

Overall revenue rose 3.2% to $5.48 billion, just shy of expectation of $5.50 billion.

However, the company raised its 2019 adjusted earnings forecast to $5.75 to $5.85 per share, from the prior range of $5.67 to $5.77 after reporting higher-than-expected adjusted earnings.

Lilly reported adjusted profit for the quarter of $1.48 per share, beating Wall Street estimates by 7 cents, helped by a lower tax bill.

Eli Lilly shares were down 3.6% at $105.89 in late morning trading.