Eli Lilly and Co said on Thursday that the U.S. Food and Drug Administration (FDA) had declined to approve its drug to treat a type of chronic inflammatory bowel disease in adults.

The agency's decision puts Lilly further behind in its quest to enter the nearly $20 billion market, which already has drugs for the disease from rivals such as Abbvie Inc, Pfizer Inc and Johnson & Johnson.

The health regulator cited issues related to the proposed manufacturing of the drug, mirikizumab, although it did not express concerns about the clinical data package, safety, or label for the medicine, Lilly said.

The company also said it was confident in the late-stage data of the drug, which was pegged among Lilly's potential growth drivers for this decade, and was working with the FDA to address the issue.

"The setback is fairly minor from the context of what a great portfolio Eli Lilly has and even within the drug itself, it sounds like it's manufacturing issues, so I don't think that's going to be overly problematic," Morningstar analyst Damien Conover told Reuters.

Eli Lilly was seeking approval for the drug as a treatment for ulcerative colitis, which is a condition where abnormal reactions of the immune system cause inflammation and ulcers on the inner lining of the colon, possibly leading to diarrhea, passing of blood with stool and abdominal pain.

"There is still possibility this product can exceed $2 billion peak sales," Wells Fargo analyst Mohit Bansal said in a note.

Earlier this year, the health regulator had declined an accelerated nod for Lilly's Alzheimer's disease drug, donanemab, potentially preventing the company from expediting the launch.

The drugmaker's other anticipated launches in 2023 include tirzepatide for obesity, lebrikizumab for atopic dermatitis or eczema, and cancer drug pirtobrutinib.