Executive Summary
Eli Lilly delivered 45% revenue growth to $65.2 billion in 2025, powered by Mounjaro and Zepbound, which together accounted for 56% of total revenue. Net income nearly doubled to $20.6 billion as gross margin expanded to 83.0%, though the company faces pricing pressures from Medicare negotiations and unprecedented reliance on cardiometabolic products.
What happened
Eli Lilly reported total revenue of $65.2 billion for 2025, a 45% increase from $45.0 billion in 2024. The revenue increase was driven by 50% volume growth, partially offset by 6% lower realized prices and a 1% favorable foreign exchange impact. U.S. revenue grew 43% to $43.5 billion, while international revenue increased 48% to $21.7 billion. Mounjaro revenue reached $23.0 billion, up 99% from $11.5 billion, driven by 53% growth in the U.S. from strong demand offset by lower realized prices, and substantial international expansion from $2.6 billion to $9.3 billion. Zepbound revenue totaled $13.5 billion, up 175% from $4.9 billion, primarily from increased U.S. demand partially offset by lower realized prices. Verzenio revenue grew 8% to $5.7 billion, with 1% U.S. growth and 20% international growth driven by volume. Net income increased 95% to $20.6 billion from $10.6 billion, and diluted earnings per share rose 96% to $22.95 from $11.71. Gross margin as a percentage of revenue expanded from 81.3% to 83.0%, driven by favorable product mix and improved cost of production, partially offset by lower realized prices. Research and development expenses increased 21% to $13.3 billion, reflecting continued investments in early and late-stage portfolio. Marketing, selling, and administrative expenses increased 29% to $11.1 billion, primarily from promotional efforts supporting ongoing and planned launches. Acquired in-process research and development charges totaled $2.9 billion in 2025, primarily related to acquisitions of Scorpion's PI3Kα inhibitor program and SiteOne, compared to $3.3 billion in 2024 primarily for Morphic. The effective tax rate was 19.8% in 2025 compared to 16.5% in 2024, primarily due to unfavorable jurisdictional mix of earnings and U.S. tax law changes. Operating cash flow increased to $16.8 billion in 2025 from $8.8 billion in 2024. Capital expenditures rose to $7.8 billion from $5.1 billion, reflecting significant investments in global manufacturing facilities to support existing and future product demand. Cash and cash equivalents increased to $7.3 billion from $3.3 billion. Total debt increased to $42.5 billion from $33.6 billion. The company paid $3.0 billion for acquired in-process R&D in 2025, primarily for Scorpion and SiteOne. Share repurchases totaled $4.1 billion under the $15.0 billion program authorized in December 2024, with $10.9 billion remaining. The quarterly dividend was increased to $1.73 per share effective first quarter 2026, for an indicated annual rate of $6.92 per share, compared to $6.00 per share paid in 2025.
Why it matters for investors
The results illustrate Eli Lilly's transformation into a company heavily dependent on incretin medicines, with Mounjaro and Zepbound alone accounting for 56% of total revenue and representing the primary engine of both top-line and bottom-line growth. This concentration creates both opportunity and risk. The 170-basis-point gross margin expansion to 83.0% demonstrates the high profitability of these products when volume dominates pricing dynamics, translating strong revenue growth into outsized earnings leverage (net income up 95% on 45% revenue growth). However, the business model faces structural pressures. The 6% realized price decline in 2025, despite 50% volume growth, signals intensifying pricing headwinds. The preliminary U.S. government pricing agreements announced in November 2025 commit the company to lower Medicaid prices and balanced international pricing for new launches, introducing uncertainty around future pricing power. The selection of Trulicity and Verzenio for Medicare price negotiation effective 2028, following Jardiance in 2026, will accelerate revenue erosion for established products and compress the window to capitalize on exclusivity periods. The 53% increase in capital expenditures to $7.8 billion reflects aggressive capacity expansion to meet incretin demand, but also heightens execution risk. The company has entered supply agreements requiring up to $10 billion in payments over up to 8 years if minimum purchase commitments are not met, creating fixed-cost exposure if demand moderates. Management noted near-term financial performance will depend on timing of orforglipron approval, U.S. Medicare access for Zepbound, and uptake pace in new channels. The sharp increase in operating expenses—R&D up 21% and marketing/selling up 29%—is necessary to support the pipeline and commercial expansion but reduces operating leverage. The company must sustain innovation to replace revenue from products losing exclusivity and to defend its incretin franchise against emerging competition, including oral GLP-1 competitors and new modalities.
Bullish points
Mounjaro and Zepbound delivered combined revenue of $36.5 billion, more than doubling from $16.5 billion in 2024, demonstrating exceptional market demand and successful dual-indication commercialization of tirzepatide across diabetes and obesity.
Gross margin expanded 170 basis points to 83.0% despite pricing pressure, indicating favorable product mix shift toward higher-margin incretin products and improved manufacturing efficiency, which should support profitability as volume scales.
Operating cash flow increased to $16.8 billion from $8.8 billion, providing substantial financial flexibility to fund $7.8 billion in capacity expansion, $4.1 billion in share repurchases, and $3.0 billion in business development, while maintaining strong balance sheet.
Orforglipron received a Commissioner's National Priority Voucher and was submitted to FDA, EU, and Japan for obesity indication, potentially providing an oral incretin option to defend market position and expand addressable patient population.
International revenue grew 48%, outpacing U.S. growth of 43%, with Mounjaro international sales reaching $9.3 billion from $2.6 billion, demonstrating successful global expansion and diversification of geographic revenue base.
Bearish points
Mounjaro and Zepbound account for 56% of total revenue, creating extreme concentration risk where competitive threats, safety concerns, or demand volatility for incretins could disproportionately impact overall financial performance.
Realized prices declined 6% in 2025 despite strong volume, and the company faces accelerating pricing pressure from Medicare negotiations (Trulicity and Verzenio selected for 2028, Jardiance already negotiated for 2026) and November 2025 voluntary U.S. government pricing agreements committing to lower Medicaid prices.
Capital expenditures surged to $7.8 billion from $5.1 billion, with executed supply agreements creating up to $10 billion in potential payment obligations over up to 8 years if minimum purchase commitments are not met, raising risk of stranded capacity if demand moderates or competition intensifies.
CVS Caremark removed Zepbound as a preferred obesity medicine on some insurance plans in July 2025, demonstrating vulnerability to payer formulary decisions that could restrict patient access and limit revenue potential in key commercial channels.
The company noted production, marketing, and sale of counterfeit, misbranded, adulterated, and mass-compounded incretins continue despite FDA confirmation that tirzepatide shortage ended in late 2024, creating patient safety concerns and potential market share erosion.
Key highlights
Eli Lilly reported record financial performance in 2025 with revenue of $65.2 billion (up 45%), net income of $20.6 billion (up 95%), and diluted EPS of $22.95 (up 96%). Mounjaro and Zepbound together generated $36.5 billion in revenue, representing 56% of total company revenue and driving the majority of growth. Gross margin expanded to 83.0% from 81.3% as favorable product mix and improved production costs more than offset pricing pressure. The company invested heavily in future growth, with R&D expenses up 21% to $13.3 billion, marketing and selling expenses up 29% to $11.1 billion, and capital expenditures up 53% to $7.8 billion for manufacturing capacity expansion. Operating cash flow reached $16.8 billion, supporting $4.1 billion in share repurchases and dividend increases. The company faces increasing pricing pressure from Medicare negotiations and voluntary U.S. government pricing agreements while managing extreme revenue concentration in incretin products.
Management commentary
Management highlighted in November 2025 that the company reached preliminary voluntary agreements with the U.S. government to lower Medicaid and certain other drug prices for U.S. patients and to launch new medicines with a more balanced pricing approach across developed nations, though management noted risks and uncertainty associated with negotiating definitive agreements, including potential delays and unfavorable terms related to pricing, access, and other key objectives. Management stated that near-term financial performance will be impacted by the timing of potential regulatory approvals for orforglipron and U.S. Medicare access for Zepbound, as well as demand and pace of uptake in new incretin channels and markets. Management acknowledged that incretin volume fluctuations due to channel dynamics or demand can have a disproportionate impact on results of operations in any given period. Management emphasized that longer-term durability of cardiometabolic health product offerings and sustainability of growth will depend on the company's ability to maintain or strengthen its competitive position as the therapeutic landscape evolves and to deliver further innovations that provide sufficient value to sustain growth momentum. Management noted that despite ongoing efforts to meet projected worldwide demand through additional internal and contracted manufacturing capacity, there can be no assurances that expected capacity increases will be realized or that the company will meet demand in launched markets in the future.
What to watch next
Investors should monitor:
Timing and terms of definitive agreements with the U.S. government related to the November 2025 preliminary voluntary pricing arrangements, including whether expanded Medicare and Medicaid access for obesity medicines generates sufficient revenue to offset pricing concessions.
Regulatory approval timeline and commercial uptake for orforglipron following submission to FDA, EU, and Japan, particularly whether the oral GLP-1 formulation can defend or expand market share against emerging competitive threats.
Impact of Medicare price negotiation on Trulicity and Verzenio revenue beginning in 2028, and whether additional major products are selected in future negotiation cycles, accelerating revenue erosion for established brands.
Execution on manufacturing capacity expansion, including whether $7.8 billion in annual capital expenditures and supply agreements requiring up to $10 billion in potential commitments translate into timely capacity additions or create stranded assets if demand moderates.
Competitive dynamics in the incretin market, including whether additional payers follow CVS Caremark in removing Zepbound from preferred formulary status, and the impact of oral GLP-1 competitors and new modalities entering the market.
This summary is based solely on excerpts from the company's Form 10-K filing.