ELI LILLY & Co - Quarter Report: 2025 March (Form 10-Q)

See notes to consolidated condensed financial statements.

Consolidated Condensed Balance Sheets

ELI LILLY AND COMPANY

(Dollars in millions)


	March 31, 2025	December 31, 2024
Assets	(Unaudited)
Current Assets
Cash and cash equivalents (Note 6)	$	$
Short-term investments (Note 6)
Accounts receivable, net of allowances of $ (2025) and $ (2024)
Other receivables
Inventories (Note 5)
Prepaid expenses
Other current assets
Total current assets
Investments (Note 6)
Goodwill
Other intangibles, net
Deferred tax assets
Property and equipment, net of accumulated depreciation of $ (2025) and $ (2024)
Other noncurrent assets
Total assets	$	$
Liabilities and Equity
Current Liabilities
Short-term borrowings and current maturities of long-term debt	$	$
Accounts payable
Employee compensation
Sales rebates and discounts
Dividends payable
Short-term income taxes payable
Other current liabilities
Total current liabilities
Noncurrent Liabilities
Long-term debt
Accrued retirement benefits (Note 8)
Long-term income taxes payable
Other noncurrent liabilities
Total noncurrent liabilities
Commitments and Contingencies (Note 9)
Eli Lilly and Company Shareholders' Equity
Common stock
Additional paid-in capital
Retained earnings
Employee benefit trust	()	()
Accumulated other comprehensive loss (Note 10)	()	()
Cost of common stock in treasury	()	()
Total Eli Lilly and Company shareholders' equity
Noncontrolling interests
Total equity
Total liabilities and equity	$	$

See notes to consolidated condensed financial statements.

Consolidated Condensed Statements of Shareholders' Equity

(Unaudited)

ELI LILLY AND COMPANY

Equity of Eli Lilly and Company Shareholders

(Dollars in millions, except per-share data, and shares in thousands)

Common Stock

Additional
Paid-in
Capital

Retained
Earnings

Employee Benefit Trust

Accumulated Other Comprehensive Loss

Common Stock in Treasury(1)

Noncontrolling Interests

Amount

Balance at January 1, 2024

()

Net income (loss)

()

Other comprehensive income, net of tax

Issuance of stock under employee stock plans, net

()

Stock-based compensation

Other

()

Balance at March 31, 2024

()

Balance at January 1, 2025

()

Net income

Other comprehensive income, net of tax

Acquired in-process research and development

Other changes in operating assets and liabilities, net of acquisitions and divestitures

()

Other operating activities, net

Net Cash Provided by Operating Activities

Cash Flows from Investing Activities

Purchases of property and equipment

()

Proceeds from sales of and distributions from noncurrent investments

Purchases of noncurrent investments

()

Purchases of in-process research and development

()

Other investing activities, net

()

Net Cash Used for Investing Activities

()

Cash Flows from Financing Activities

Dividends paid

()

Net change in short-term borrowings

()

Proceeds from issuance of long-term debt

Purchases of common stock

()

Other financing activities, net

()

Net Cash Provided by (Used for) Financing Activities

()

Effect of exchange rate changes on cash and cash equivalents

()

Net decrease in cash and cash equivalents

()

Cash and cash equivalents at January 1

Cash and Cash Equivalents at March 31

See notes to consolidated condensed financial statements.

Notes to Consolidated Condensed Financial Statements

(Tables present dollars in millions, except per-share data, and numbers may not add due to rounding)

Note 1:

Note 2:

Collaboration and other revenue

Revenue$ $

We recognize revenue primarily from two different types of contracts, product sales to customers (net product revenue) and collaborations and other arrangements. Revenue recognized from collaborations and other arrangements includes our share of profits from the collaborations, as well as royalties, upfront, and milestone payments we receive under these types of contracts. See Note 4 for additional information related to our collaborations and other arrangements. Collaboration and other revenue disclosed above includes the revenue resulting from our collaboration with Boehringer Ingelheim discussed in Note 4, as well as the sale of product rights. Substantially all of the remainder of collaboration and other revenue is related to contracts accounted for as contracts with customers.

Adjustments to Revenue

Adjustments to revenue recognized as a result of changes in estimates for our most significant United States (U.S.) sales returns, rebates, and discounts liability balances for products shipped in previous periods were less than percent and approximately percent of U.S. revenue during the three months ended March 31, 2025 and 2024, respectively.

$ $ $ $ $ Zepbound Trulicity

Jardiance(1)

Other cardiometabolic health Total cardiometabolic health Oncology:Verzenio Other oncology Total oncology Immunology:Taltz Other immunology Total immunology Neuroscience Other Revenue$ $ $ $ $ $

(1) Jardiance revenue includes Glyxambi, Synjardy, and Trijardy XR.

The following table summarizes revenue by geographical area:


Revenue(1):
U.S.	$	$
Europe
China
Japan
Rest of world
Revenue	$	$

(1) Revenue is attributed to the countries based on the location of the customer or other party.

Note 3:

billion and $ million for the three months ended March 31, 2025 and 2024, respectively. The acquired IPR&D charges for the three months ended March 31, 2025 were primarily related to the acquisition of Scorpion Therapeutics, Inc.'s (Scorpion's) PI3Kα inhibitor program STX-478, currently being evaluated in a Phase 1/2 clinical trial for breast cancer and other advanced solid tumors.

Note 4:

In the first quarter of 2025, we and Boehringer Ingelheim amended our collaboration to adjust commercialization responsibilities for the Jardiance product family in certain markets, resulting in our recognition of a one-time benefit of $ million as Jardiance revenue. Resulting from recent amendments, we have the right to receive up to $ million in potential sales-based milestones related to the Jardiance product family in certain markets through December 31, 2026. No such sales-based milestones were recognized as of March 31, 2025.

Ebglyss

We have a license agreement with F. Hoffmann-La Roche Ltd and Genentech, Inc. (collectively, Roche), which provides us the worldwide development and commercialization rights to lebrikizumab, which is branded and trademarked as Ebglyss. Roche receives tiered royalty payments on worldwide net sales ranging in percentages from high single digits to high teens, which we recognize as cost of sales. As of March 31, 2025, Roche is eligible to receive additional payments from us, including up to $ billion in potential sales-based milestones. During the three months ended March 31, 2025 and 2024, milestone payments to Roche were not material.

We have a license agreement with Almirall, S.A. (Almirall), under which Almirall licensed the rights to develop and commercialize Ebglyss, for the treatment or prevention of dermatology indications, including, but not limited to, atopic dermatitis in Europe. We receive tiered royalty payments on net sales in Europe ranging in percentages from low double digits to low twenties, which we recognize as collaboration and other revenue. During the three months ended March 31, 2025 and 2024, collaboration and other revenue recognized under this license agreement was not material. As of March 31, 2025, we are eligible to receive additional payments up to $ billion in a series of sales-based milestones.

Orforglipron

We have a license agreement with Chugai Pharmaceutical Co., Ltd (Chugai), which provides us with the worldwide development and commercialization rights to orforglipron. Chugai has the right to receive tiered royalty payments on future worldwide net sales from mid-single digits to low teens if the product is successfully commercialized. As of March 31, 2025, Chugai is eligible to receive up to $ million contingent upon the achievement of success-based regulatory milestones and up to $ million in a series of sales-based milestones, contingent upon the commercial success of orforglipron. During the three months ended March 31, 2025 and 2024, milestone payments to Chugai were not material.

Note 5:

$ Work in process Raw materials and supplies Total (approximates replacement cost)

Increase to last-in, first-out (LIFO) cost

Inventories$ $

When we believe that future commercialization is probable and the future economic benefit is expected to be realized, we capitalize pre-launch inventory prior to regulatory approval. A number of factors are considered, including the current status in the regulatory approval process, potential impediments to the approval process such as safety or efficacy, viability of commercialization, and marketplace trends. Pre-launch inventories capitalized as of March 31, 2025 and December 31, 2024 were $ million and $ million, respectively, primarily related to orforglipron.

Note 6:

Adjustments recorded for the three months ended March 31, 2025 and 2024 were not material.

The net gains (losses) recognized in our consolidated condensed statements of operations for equity securities were $() million and $ million for the three months ended March 31, 2025 and 2024, respectively. The net gains (losses) recognized for the three months ended March 31, 2025 and 2024 on equity securities sold during the respective periods were not material.

As of March 31, 2025, we had approximately $ million of unfunded commitments to invest in venture capital funds, which we anticipate will be paid over a period of up to years.

Impairment and credit losses related to available-for-sale securities were not material for the three months ended March 31, 2025 and 2024.

$ $ $ $ $ Unrealized gross losses Fair value of securities in an unrealized gain position Fair value of securities in an unrealized loss position

As of March 31, 2025, the available-for-sale securities in an unrealized loss position include primarily fixed-rate debt securities of varying maturities, which are sensitive to changes in the yield curve and other market conditions. Substantially all of the fixed-rate debt securities in a loss position are investment-grade debt securities. As of March 31, 2025, we do not intend to sell, and it is not more likely than not that we will be required to sell, the securities in a loss position before the market values recover or the underlying cash flows have been received, and there is no indication of a material default on interest or principal payments for our debt securities.

Realized gains and losses on sales of available-for-sale investments are computed based upon specific identification of the initial cost adjusted for any other-than-temporary declines in fair value that were recorded in earnings and were not material for the three months ended March 31, 2025 and 2024. Proceeds from sales of available-for-sale investments were $ million and $ million for the three months ended March 31, 2025 and 2024, respectively.

$ $ $ $ $ Short-term investments:U.S. government and agency securities$ $ $ $ $ $ Corporate debt securities Asset-backed securities Other securities Short-term investments$ Noncurrent investments:U.S. government and agency securities$ $ $ $ $ $ Corporate debt securities Mortgage-backed securities Asset-backed securities Other securities Marketable equity securities

Equity investments without readily determinable fair values(3)

Equity method investments(3)

Noncurrent investments$ December 31, 2024

Cash equivalents(2)

$ $ $ $ $ $ Short-term investments:U.S. government and agency securities$ $ $ $ $ $ Corporate debt securities Asset-backed securities Other securities Short-term investments$ Noncurrent investments:U.S. government and agency securities$ $ $ $ $ $ Corporate debt securities Mortgage-backed securities Asset-backed securities Other securities Marketable equity securities

Equity investments without readily determinable fair values(3)

Equity method investments(3)

Noncurrent investments$

(1) For available-for-sale debt securities, amounts disclosed represent the securities' amortized cost.

(2) We consider all highly liquid investments with a maturity of three months or less from the date of purchase to be cash equivalents. The cost of these investments approximates fair value.

(3) Fair value disclosures are not applicable for equity method investments and investments accounted for under the measurement alternative for equity investments.

billion of percent fixed-rate notes due in 2028, $ billion of percent fixed-rate notes due in 2030, $ billion of percent fixed-rate notes due in 2032, $ billion of percent fixed-rate notes due in 2035, $ billion of percent fixed-rate notes due in 2055, and $ million of percent fixed-rate notes due in 2065, all with interest to be paid semi-annually. We used a portion of the net cash proceeds from this offering to fund the acquisition of Scorpion's PI3Kα inhibitor program STX-478 and related fees and expenses, with any remaining funds used for general business purposes, including the repayment of commercial paper.

During the three months ended March 31, 2024, we issued $ billion aggregate principal amount of notes. We used the net cash proceeds from this offering for general business purposes, including the repayment of commercial paper, and the repayment of then-current maturities of long-term debt.

Fair Value of Debt

$ $ $ $ December 31, 2024 Long-term debt, including current portionMarch 31, 2025 December 31, 2024

Risk Management and Related Financial Instruments

Financial instruments that potentially subject us to credit risk consist principally of trade receivables and interest-bearing investments. Wholesale distributors of our products account for a substantial portion of our trade receivables; collateral is generally not required. We seek to mitigate the risk associated with this concentration through our ongoing credit-review procedures and insurance. The majority of our cash is held by a few major financial institutions that have been identified as Global Systemically Important Banks (G-SIBs) by the Financial Stability Board. G-SIBs are subject to rigorous regulatory testing and oversight and must meet certain capital requirements. We monitor our exposures with these institutions and do not expect any of these institutions to fail to meet their obligations. In accordance with documented corporate risk-management policies, we monitor the amount of credit exposure to any one financial institution or corporate issuer based on credit rating of our counterparty. We are exposed to credit-related losses in the event of nonperformance by counterparties to risk-management instruments but do not expect significant counterparties to fail to meet their obligations given their investment grade credit ratings.

We have entered into accounts receivable factoring agreements with financial institutions to sell certain of our non-U.S. accounts receivable. These transactions are accounted for as sales and result in a reduction in accounts receivable because the agreements transfer effective control over, and risk related to, the receivables to the buyers. We derecognized $ million and $ million of accounts receivable as of March 31, 2025 and December 31, 2024, respectively, under these factoring arrangements. The costs of factoring such accounts receivable as well as estimated credit losses were not material for the three months ended March 31, 2025 and 2024.

billion and $ billion as of March 31, 2025 and December 31, 2024, respectively, of which $ billion and $ billion have been designated as, and are effective as, hedges of net investments in certain of our foreign operations as of March 31, 2025 and December 31, 2024, respectively. At March 31, 2025, we had outstanding cross-currency interest rate swaps with notional amounts of $ million swapping U.S. dollars to euro and million Swiss francs swapping Swiss francs to U.S. dollars, with settlement dates ranging through 2028. Our cross-currency interest rate swaps have been designated as, and are effective as, net investment and cash flow hedges, respectively. At March 31, 2025, we had outstanding foreign currency forward contracts to sell billion euro and to sell billion Chinese yuan with settlement dates ranging through 2025, which have been designated as, and are effective as, hedges of net investments.

Forward contracts generally have maturities not exceeding months. days:

U.S. dollarsU.S. dollarsEuroU.S. dollarsBritish poundsU.S. dollarsJapanese yen

At March 31, 2025, all of our total long-term debt is at a fixed rate. We have converted approximately percent of our long-term fixed-rate notes to floating rates through the use of interest rate swaps.

The Effect of Risk-Management Instruments on the Consolidated Condensed Statements of Operations

$()Effect from interest rate contracts() Cash flow hedges:Effective portion of losses on interest rate contracts reclassified from accumulated other comprehensive loss Cross-currency interest rate swaps() Net losses on foreign currency exchange contracts not designated as hedging instruments Total$ $

During the three months ended March 31, 2025 and 2024, the amortization of losses related to the portion of our risk management hedging instruments, fair value hedges, and cash flow hedges that was excluded from the assessment of effectiveness was not material.

The Effect of Risk-Management Instruments on Other Comprehensive Income (Loss)

)$ Cross-currency interest rate swaps() Foreign currency forward contracts() Cash flow hedges:Forward-starting interest rate swaps() Cross-currency interest rate swaps()

Note 7:

percent for the three months ended March 31, 2025 compared to percent for the three months ended March 31, 2024, primarily driven by the unfavorable tax impact of a non-deductible acquired IPR&D charge in 2025. The 2025 and 2024 effective tax rates were impacted by net discrete tax benefits in each period.

The U.S. examination of tax years 2019-2021 remains ongoing. For tax years 2016-2018, we are pursuing competent authority assistance through the Mutual Agreement Procedure process for the pricing of certain intercompany transactions. The resolution of both audit periods will likely extend beyond the next 12 months.

Note 8:

$ Interest cost Expected return on plan assets()()Amortization of prior service cost Recognized actuarial loss Net periodic cost$ $


	2025		2024
Components of net periodic benefit:
Service cost	$		$
Interest cost
Expected return on plan assets	()		()
Amortization of prior service benefit	()		()
Recognized actuarial gain	()		()
Net periodic benefit	$	()	$	()

() ()) ()

$()Net unrealized gains/losses on available-for-sale securities() Retirement benefit plans() Net unrealized gains/losses on cash flow hedges ()Benefit (expense) for income taxes allocated to other comprehensive income (loss)$ $()20252024

Note 11:

$ Interest income()()Net investment (gains) losses on equity securities (Note 6) ()Retirement benefit plans()()Other (income) expense ()Other–net, (income) expense$ $()

Note 12:

$ Less:Cost of sales

Early-stage research and development(1)

Late-stage research and development(1)

Marketing, selling, and administrative Acquired in-process research and development

Other segment items(2)

Net income$ $

(1) Early-stage research and development primarily includes costs incurred from discovery through Phase 2 clinical trials. Late-stage research and development primarily includes costs incurred from Phase 3 clinical trials.

(2) Other segment items primarily include income taxes and asset impairment, restructuring, and other special charges.

The following tables summarize additional segment information:


	Three Months Ended March 31,
	2025	2024
Interest expense	$	$
Interest income
Depreciation and amortization
Asset impairment, restructuring, and other special charges
Earnings (loss) in equity method investments	()
Income taxes
Expenditures for long-lived assets(1)

(1) Includes expenditures for property and equipment and computer software costs.


	March 31, 2025	December 31, 2024
Total assets	$	$
Equity method investments

Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition

(Tables present dollars in millions, except per-share data, and numbers may not add due to rounding)

General

Management's discussion and analysis of results of operations and financial condition is intended to assist the reader in understanding and assessing significant changes and trends related to our results of operations and financial position. This discussion and analysis should be read in conjunction with the consolidated condensed financial statements and accompanying footnotes in Part I, Item 1 of this Quarterly Report on Form 10-Q. Certain statements in this Part I, Item 2 of this Quarterly Report on Form 10-Q constitute forward-looking statements. Various risks and uncertainties, including those discussed in "Forward-Looking Statements" in this Quarterly Report on Form 10-Q and "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024, may cause our actual results, financial position, and cash generated from operations to differ from these forward-looking statements.

EXECUTIVE OVERVIEW

This section provides an overview of our financial results, updates to our clinical development pipeline, and other matters affecting our company and industry.

Financial Results

The following table summarizes certain financial information:


	Three Months Ended March 31,				Percent Change
	2025		2024
Revenue	$	12,728.5	$	8,768.0	45
Net income	2,759.3		2,242.9		23
Earnings per share - diluted	3.06		2.48		23

Revenue increased for the three months ended March 31, 2025 driven by increased volume, partially offset by lower realized prices and unfavorable impact of foreign exchange rates. The increase in revenue during the three months ended March 31, 2025 was primarily driven by Mounjaro and Zepbound.

Net income and earnings per share for the three months ended March 31, 2025 increased primarily due to higher gross margin, partially offset by increased acquired IPR&D charges and marketing, selling, and administrative expenses.

See "Results of Operations" for additional information.

Clinical Development Pipeline Updates

Our long-term success depends on our ability to continually discover or acquire, develop, and commercialize innovative new medicines. See “Management’s Discussion and Analysis of Results of Operations and Financial Condition—Executive Overview—Clinical Development Pipeline” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024 for select new molecular entities (NMEs) and new indication line extension (NILEX) products in Phase 2 or Phase 3 clinical trials or that were submitted for regulatory review or received regulatory approval in the U.S., European Union (EU), or Japan. The following reflects certain developments since our Annual Report on Form 10-K for the year ended December 31, 2024:


Compound			Development
Tirzepatide			In 2025, we withdrew our U.S. application for tirzepatide for heart failure with preserved ejection fraction.
Orforglipron			In 2025, we announced positive results for oral GLP-1, orforglipron, in the Phase 3 ACHIEVE-1 trial for type 2 diabetes.
Mirikizumab (Omvoh)			In 2025, Japan's Ministry of Health, Labour and Welfare approved mirikizumab for treatment of Crohn’s disease.
Donanemab			In 2025, the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) issued an opinion that does not recommend donanemab for approval for the treatment of early symptomatic Alzheimer's disease. We are seeking re-examination by CHMP.
Pirtobrutinib (Jaypirca)			In 2025, the European Commission approved pirtobrutinib for treatment of chronic lymphocytic leukemia.
Olomorasib			In 2025, a Phase 3 trial was initiated for olomorasib for resected adjuvant non-small cell lung cancer.

Other Matters

Trends Affecting Pharmaceutical Pricing, Reimbursement, and Access and Certain Other Regulatory Developments

Reforms, including those that may stem from political initiatives, periods of uneven economic growth or downturns, or as a result of inflation or deflation, trade and other global disputes and interruptions including related to tariffs, trade protection measures, and similar restrictions, the emergence or escalation of, and responses to, international tension and conflicts, or government budgeting priorities, are expected to continue to result in added pressure on cost, pricing, reimbursement, and access for our products.

Global concern over access to, and affordability of, pharmaceutical products continues to drive regulatory and legislative debate and action, as well as cost containment efforts by governmental authorities and scrutiny of pricing and access disparities. Cost containment measures include the use of mandated discounts, price reporting requirements, mandated reference prices, restrictive formularies, changes to available intellectual property protections, as well as other efforts. Among other measures, the Inflation Reduction Act of 2022 (IRA) requires HHS to effectively set prices for certain single-source drugs and biologics reimbursed under Medicare Part B and Part D. Currently, these government prices generally apply beginning at nine years (for medicines approved under a New Drug Application) or thirteen years (for medicines approved under a Biologics License Application) following FDA approval or licensure for the molecule, although the U.S. presidential administration has expressed support for legislation that would align these timelines through legislation. In August 2023, HHS selected Jardiance, which is part of our collaboration with Boehringer Ingelheim, as one of the first ten medicines subject to government-set prices effective in 2026 and we expect additional of our significant products will be selected in future years. The IRA has, and will continue to, meaningfully influence our business strategies and those of our competitors and could significantly impact our business and consolidated results of operations.

Other policies, regulations, legislation, or enforcement, including those proposed or pursued by lawmakers, regulators, and other authorities in the U.S. and worldwide, have and may continue to adversely impact our business and consolidated results of operations. For example, the U.S. and other countries have recently imposed new tariffs, some of which have been paused but may come into effect quickly and unpredictably. While pharmaceuticals are exempt from certain of these tariffs, such exemptions may be terminated or may not apply to any future tariffs. The precise impact of any further tariffs, trade protection measures, and other restrictions would depend on their ultimate scope, timing, and other factors. If enacted, any such restrictions could result in supply disruptions or delays, further increase costs, or otherwise have a negative impact on our business. Given the nature of pharmaceutical regulation and commercialization, we may not be able to share the burden of increased costs from tariffs and related impacts to any meaningful degree.

The consolidation and integration of private payers and pharmacy benefit managers in the U.S. continues to significantly impact the market for pharmaceuticals by increasing payer leverage in negotiating manufacturer price or rebate concessions and pharmacy reimbursement rates. Furthermore, restrictive or unfavorable pricing, coverage, or reimbursement determinations for our medicines or product candidates by governments, regulatory agencies, courts, or private payers may adversely impact our business and consolidated results of operations. We expect that these actions may intensify and could particularly affect certain products, which could adversely affect our business. In addition, we are engaged in litigation and investigations related to the 340B program, access to insulin, pricing, product safety, and other matters that, if resolved adversely to us, could negatively impact our business and consolidated results of operations. It is not currently possible to predict the overall potential adverse impact to us or the general pharmaceutical industry of continued cost containment efforts worldwide.

In addition, regulatory issues concerning compliance with current Good Manufacturing Practices, quality assurance, safety signals, evolving standards, and increased scrutiny around excipients and potential impurities such as nitrosamines, and similar regulations and standards (and comparable foreign regulations and standards) for our products in some cases lead to regulatory and legal actions, product recalls and seizures, fines and penalties, interruption of production leading to product shortages, import bans or denials of import certifications, inability to realize the benefit of capital expenditures, or delays or denials in new product approvals, line extensions or supplemental approvals of current products pending resolution of the issues, or other negative impacts, any of which result in reputational harm or adversely affect our business.

Incretin Medicines

At various times during 2024, demand for our incretin medicines exceeded production. Tirzepatide supply currently exceeds demand in the U.S. Demand in launched markets remains dynamic, and increases or changes in demand, by dose or overall, as well as the complex supply chain, may result in periodic unavailability of certain presentations and dose levels at certain locations even when total tirzepatide supply can meet demand. Supply considerations will continue to influence the timing and approach (including available presentations) of tirzepatide launches in new markets. Production increases and delivery presentation initiatives are ongoing, and additional capacity is expected to be operational over the next several years.

We continue to see the production, marketing, and sale of counterfeit, misbranded, adulterated, and compounded incretins. These practices may impact patient safety and undermine regulatory drug approval processes. While the FDA has confirmed that the previous shortage of tirzepatide has ended and that compounding pharmacies are required to cease mass production, we cannot guarantee adequate regulation or compliance. Lilly will continue to consider all options, including filing lawsuits where appropriate, to address unlawful practices and the patient safety risks of unapproved, untested, and manipulated drugs.

Tax Matters

We are subject to income taxes and various other taxes in the U.S. and in many foreign jurisdictions; therefore, changes in both domestic and international tax laws or regulations have affected and may affect our effective tax rate, results of operations, and cash flows. The U.S. and countries around the world are actively proposing and enacting tax law changes. Further, actions taken with respect to tax-related matters by associations such as the Organisation for Economic Co-operation and Development (OECD) and the European Commission could influence tax laws in countries in which we operate. Tax authorities in the U.S. and other jurisdictions in which we do business routinely examine our tax returns and are expected to increase their scrutiny of cross-border tax issues. Changes to existing U.S. and foreign tax laws and increased scrutiny by tax authorities in the U.S. and other jurisdictions could have a material adverse impact our future consolidated results of operations and cash flows.

Effective January 1, 2024, several EU and non-EU countries enacted legislation (known as "Pillar Two") that provided for a minimum level of taxation of multinational companies. The increase to income tax expense as a result of the global minimum tax is not expected to be material in current and future years. Our assessment of the impact for 2025 and subsequent years could be affected by legislative guidance and future enactment of additional provisions.

Acquisitions

We invest in external research and technologies and manufacturing capabilities that we believe complement and strengthen our own efforts. These investments can take many forms, including acquisitions, collaborations, investments, and licensing arrangements. We view our business development activity as a way to enhance or refine our pipeline and strengthen our business.

See Note 3 to the consolidated condensed financial statements for further discussion regarding our recent acquisitions.

Continued regulatory focus on business combinations in our industry, including by the Federal Trade Commission and competition authorities in Europe and other jurisdictions, could continue to delay, jeopardize, or increase the costs of our business development activities and may negatively impact our consolidated financial position or results of operations.

Foreign Currency Exchange Rates

As a global company, we face foreign currency risk exposure from fluctuating currency exchange rates, primarily the U.S. dollar against the euro, Japanese yen, and Chinese yuan. While we seek to manage a portion of these exposures through hedging and other risk management techniques, significant fluctuations in currency rates can have a material impact, either positive or negative, on our consolidated results of operations in any given period. There is uncertainty in the future movements in foreign currency exchange rates, and fluctuations in these rates have and could adversely impact our consolidated results of operations and cash flows.

Other Factors

Other factors have had, and may continue to have, an impact on our consolidated results of operations. These factors include cost and wage inflation, supply chain and labor market complexities, international tension and conflicts, uneven economic growth, downturns or uncertainty, and an increase in overall demand in our industry for certain products and materials.

See "Business" in Part 1, Item 1 and "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 and Note 9 to the consolidated condensed financial statements for additional information and risks and uncertainties that could impact our business and operations, including the matters described within this Executive Overview.

RESULTS OF OPERATIONS

Revenue

The following table summarizes our revenue activity by region:


	2025		2024
U.S.	$	8,489.4	$	5,694.4	49
Outside U.S.	4,239.1		3,073.7		38
Revenue	$	12,728.5	$	8,768.0	45

The following are components of the change in revenue compared with the prior year:


	U.S.		Outside U.S.		Consolidated
Volume	57	%	46	%	53	%
Price	(7)		(3)		(6)
Foreign exchange rates	—		(5)		(2)
Percent change	49	%	38	%	45	%

NM - not meaningful

Revenue of Mounjaro increased 75 percent in the U.S. during the three months ended March 31, 2025, reflecting continued strong demand, partially offset by lower realized prices. Revenue outside the U.S. during the three months ended March 31, 2025 was $1.19 billion compared to $286.2 million during the three months ended March 31, 2024, primarily driven by volume growth, including entry into new markets, partially offset by lower realized prices.

Revenue of Zepbound in the U.S. during the three months ended March 31, 2025 was $2.31 billion, compared to $517.4 million for the three months ended March 31, 2024, primarily driven by increased demand, partially offset by lower realized prices.

Revenue of Verzenio increased 3 percent in the U.S. during the three months ended March 31, 2025, driven by higher realized prices. Increased demand was more than offset by wholesaler buying patterns and competitive dynamics. Revenue outside of the U.S. increased 22 percent during the three months ended March 31, 2025, primarily driven by volume growth, partially offset by the unfavorable impact of foreign exchange rates.

Gross Margin, Costs, and Expenses

The following table summarizes our gross margin, costs, and expenses:


	Three Months Ended March 31,						Percent Change
	2025			2024

Gross margin	$	10,504.3		$	7,094.5		48
Gross margin as a percent of revenue	82.5		%	80.9		%

Research and development	$	2,733.7		$	2,522.8		8
Marketing, selling, and administrative	2,468.8			1,952.2			26
Acquired IPR&D	1,571.7			110.5			NM
Asset impairment, restructuring, and other special charges	35.0			—			NM
Other–net, (income) expense	239.0			(27.1)			NM
Income taxes	696.8			293.2			138
Effective tax rate	20.2		%	11.6		%

* Filed herewith.

Long-term debt instruments under which the total amount of securities authorized does not exceed 10 percent of our consolidated assets are not filed as exhibits to this Quarterly Report. We will furnish a copy of these agreements to the Securities and Exchange Commission upon request.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.


		ELI LILLY AND COMPANY
		(Registrant)

Date:	May 1, 2025	/s/ Lucas Montarce
		Lucas Montarce
		Executive Vice President and Chief Financial Officer
Date:	May 1, 2025	/s/ Donald Zakrowski
		Donald Zakrowski
		Senior Vice President, Finance, and Chief Accounting Officer

ELI LILLY & Co - Quarter Report: 2025 March (Form 10-Q)

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