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Eli Lilly and Company Common Stock
Our verdict on Eli Lilly and Company Common Stock isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
Management has raised the full-year effective tax rate guidance to 19.8% for the first nine months of 2025, up from the previously guided 19%, primarily due to the unfavorable tax impacts of non-deductible acquired IPR&D charges and the enactment of the OBBBA. (1 revised across 1 tracked commitment)
“The effective tax rates were 22.8 percent and 19.8 percent for the three and nine months ended September 30, 2025, respectively... As a result of the OBBBA, the effective tax rates for the three and nine months ended September 30, 2025 were unfavorably impacted by incremental tax expense recognized in these periods.”
The potential liability for contract manufacturing and supply agreements has increased to approximately $9 billion, up from the previously reported $8 billion. (1 revised across 1 tracked commitment)
“Executed agreements related to our medicines in development could, under certain circumstances, require us to pay up to approximately $8 billion if we do not purchase specified amounts of goods or services over the durations of the agreements, which are generally up to 8 years.”
The company has entered into acquisition agreements with potential payments of up to $12 billion at closing. — target: $12 billion
“As part of our business development activities in 2026, we have entered into acquisition agreements, subject to closing conditions. Potential amounts payable at closing for these pending acquisitions would be up to approximately $12 billion.”
The company expects to receive a share of net sales for the Jardiance product family through the end of 2028 based on product performance. — target: Share of net sales (+2 more commitments)
“For the Jardiance product family in the most significant markets, which remains in the collaboration through December 31, 2028, we receive a share of net sales depending on performance of the product”
Management intends to adopt the new expense disaggregation accounting standard for the fiscal year ending December 31, 2027. — target: Adoption of ASU 2024-03 (+4 more commitments)
“We intend to adopt this standard in our Annual Report on Form 10-K for the year ending December 31, 2027.”
See the full cited Management analysis of Eli Lilly and Company Common Stock
How durable is the business?
Cardiometabolic Health revenue grew 73% year-over-year for the six months ended June 30, 2025, driven by massive volume growth in Mounjaro and Zepbound, though partially offset by lower realized prices. (5 expanding across 3 engines)
“Total cardiometabolic health: 2026 Total $15,760; 2025 Total $9,208”
The moat is strengthening through clinical pipeline expansion, including Phase 3 initiations for tirzepatide in type 1 diabetes and positive Phase 3 results for orforglipron in obesity. (4 expanding)
“Mounjaro and Zepbound accounted for 65 percent of our total revenue for the three months ended March 31, 2026, and we expect cardiometabolic health products will continue to represent a significant and growing portion of our business”
The U.S. market remains the dominant revenue source, growing 43% due to high demand for obesity and diabetes treatments, despite pricing pressures. (2 expanding)
“We operate as a single operating segment engaged in the discovery, development, manufacturing, marketing, and sales of pharmaceutical products worldwide.”
The company utilized its balance sheet for significant M&A, acquiring NexPharm in May 2024 and announcing the $1.0 billion acquisition of Verve Therapeutics in July 2025. (3 shifted, 1 expanding)
“Potential amounts payable at closing for these pending acquisitions would be up to approximately $12 billion... we had a total of $10.1 billion of unused committed bank credit facilities”
International markets (Outside U.S.) are growing rapidly, with revenue increasing 81% year-over-year, largely due to the expansion of Mounjaro into China and other major markets.
“Outside U.S. $7,680; Revenue $19,799; Percent Change 81”
See the full cited Business Model analysis of Eli Lilly and Company Common Stock
Where does growth come from?
Lilly is significantly increasing its capital investment to address demand-supply imbalances for incretins. Expenditures for long-lived assets increased 43% year-over-year, and management explicitly stated that additional capacity is expected to be operational over the next several years to resolve periodic unavailability. (2 accelerating, 3 steady across 5 signals, 2 leading indicators)
“To support anticipated demand for our current and prospective products, we have undertaken significant manufacturing expansion initiatives. Additional capacity is expected to become operational over the next several years.”
Revenue growth for the incretin portfolio is accelerating significantly, driven by the massive scale-up of Mounjaro and the successful launch of Zepbound. Mounjaro revenue grew from $979.7 million in Q2 2023 to $3.09 billion in Q2 2024, while Zepbound contributed $1.24 billion in its first full year of launch. (5 accelerating across 5 signals, 1 leading indicator)
“Mounjaro and Zepbound accounted for 65 percent of our total revenue for the three months ended March 31, 2026”
Lilly acquired Ventyx Biosciences for $1.1 billion to gain access to new oral therapies for inflammatory diseases, strengthening its future product lineup.
“In March 2026, we acquired all shares of Ventyx Biosciences, Inc. (Ventyx) for a purchase price of $14.00 per share in cash (or an aggregate of $1.1 billion, net of cash acquired).”
R&D investment is accelerating to support a late-stage pipeline of ~50 candidates. YTD R&D spending rose 18% to nearly $8 billion, reflecting a strategic shift toward long-term portfolio durability over short-term margin expansion. (2 accelerating, 1 steady across 3 signals)
“Research and development expenses increased 28 percent for the three months ended March 31, 2026, driven by continued investments in our early and late-stage portfolio.”
While the Inflation Reduction Act (IRA) creates long-term pricing pressure, the company is navigating new market structures. Specifically, the selection of Jardiance for Medicare price negotiations starting in 2026 represents a new regulatory trend that will impact customer access and net pricing. (4 new trend across 4 signals)
“Under the Medicare GLP-1 Bridge program (Bridge Program), Medicare beneficiaries will have access to discounted Lilly obesity medicines by July 1, 2026 through December 31, 2027”
See the full cited Future Growth analysis of Eli Lilly and Company Common Stock
What could break the thesis?
The risk is stable as the company continues to aggressively expand capacity to meet demand that previously exceeded production in 2024. Capital expenditures for long-lived assets reached $3.5 billion for the first half of 2025. (2 stable, 2 intensifying)
“To support anticipated demand for our current and prospective products, we have undertaken significant manufacturing expansion initiatives. Additional capacity is expected to become operational over the next several years.”
The risk is stable; management continues to monitor the sale of counterfeit and compounded incretins and is pursuing legal action where appropriate. (4 stable)
“We continue to see the production, marketing, and sale of counterfeit, misbranded, adulterated, and mass-compounded incretins. These practices may impact patient safety and undermine regulatory drug approval processes.”
Balance sheet risk is intensifying as total debt increased by $8.86 billion since year-end 2024 to $42.51 billion, primarily to fund acquisitions like Morphic and Scorpion. (1 intensifying, 1 easing, 1 stable)
“As of September 30, 2025, total debt was $42.51 billion, an increase of $8.86 billion compared with $33.64 billion as of December 31, 2024.”
The risk remains stable but significant; U.S. realized prices fell by 8% in the first half of 2025, primarily driven by Mounjaro and Zepbound, despite massive volume growth. (1 stable)
“In the U.S. for the three and six months ended June 30, 2025, the volume increase and the lower realized prices were driven by Zepbound and Mounjaro. ... Price (8)% [for U.S. 2025 vs 2024].”
Pricing pressure is stable but significant. U.S. realized prices dropped by 10% in 2025, primarily driven by Mounjaro and Zepbound rebates. (1 stable)
“In the U.S., the volume increase and the lower realized prices in 2025 were primarily driven by Mounjaro and Zepbound... Price (10)% [in the U.S.].”
See the full cited Risk analysis of Eli Lilly and Company Common Stock
Eli Lilly and Company Common Stock analysis by filing period
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