Eli Lilly (LLY -14.23%), a leading pharmaceutical company known for its focus on diabetes, obesity, oncology, and neuroscience, posted its results on August 7, 2025. The key headline was a significant beat on both revenue (GAAP) and earnings (non-GAAP), powered by strong volume growth in its diabetes and obesity medicines. Revenue (GAAP) hit $15.56 billion versus GAAP expectations of $14.70 billion, while Non-GAAP EPS landed at $6.31 compared to estimates of $5.60. This performance reflects continued robust demand for therapies like Zepbound and Mounjaro, exceeding even aggressive analyst forecasts, as non-GAAP EPS of $6.31 exceeded the analyst estimate of $5.60. With a 38% increase in revenue (GAAP) and 61% earnings growth (non-GAAP EPS) year over year, the quarter showed notable acceleration in core franchises, as reflected by strong growth in key products revenue—leading management to raise guidance for FY2025. Despite ongoing pricing and access challenges, overall momentum in sales, margins, and the pipeline resulted in a strong period for the company.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $6.31 | $5.60 | $3.92 | 61% |
| Revenue | $15.56 billion | $14.70 billion | $11.30 billion | 37.7% |
| Net Income – Non-GAAP | $5.68 billion | $3.54 billion | 60.5% | |
| Gross Margin (Non-GAAP) | $13.23 billion | $9.27 billion | 43% | |
| Gross Margin as % of Revenue (Non-GAAP) | 85.0% | 82.0% | 3.0 pp |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Key Success Factors
Eli Lilly is a leading global pharmaceutical manufacturer with a focus on chronic diseases including diabetes, obesity, oncology, immunology, and neuroscience. The company stands out for its heavy investment in research and development (R&D), employing around 11,000 people in these activities. Its business is built on continuous drug innovation and its ability to replace aging products with new therapies—a crucial need in pharma due to patent expirations.
Key strategic priorities for the company include building a robust pipeline of novel drugs, safeguarding exclusive rights to its products through intellectual property protections, and ensuring regulatory compliance to bring new medicines to market efficiently. Management believes continued investment in R&D, strong intellectual property coverage, and proactive navigation of the complex pricing and reimbursement landscape are all essential to maintain growth in a competitive market. Recent business action also reflects efforts to expand supply capacity, manage global competition, and adapt to changes in policy—such as drug pricing reforms and formulary decisions by U.S. pharmacy benefit managers.
Quarter Highlights: Financial and Product Drivers
The quarter saw a surge in both revenue and profits, driven by outsized growth in its obesity and diabetes treatment portfolios. Sales of Zepbound, a glucagon-like peptide-1 (GLP-1) receptor agonist medicine approved for chronic weight management, soared 172% compared to the prior year, reaching $3.38 billion in the U.S. (GAAP). Mounjaro, a GLP-1/GIP dual agonist for type 2 diabetes, grew 68% to $5.20 billion globally, including a near-tripling of revenue outside the U.S.
U.S. revenue (GAAP) jumped 38%, driven by a 46% increase in volume, which more than offset an 8% decline in average realized prices in the U.S. International revenue (GAAP) rose 37% year over year, fueled by a 35% volume increase and favorable currency effects, with pricing erosion remaining modest at 1%. This strong volume expansion reflects rapid adoption of the company's newer medicines—particularly as obesity and diabetes solutions see increased patient demand in both existing and new markets.
Profit margins expanded, with gross margin (Non-GAAP) up 3.0 percentage points to 85.0% of revenue, attributed to better production costs and a more favorable product mix. The company reported research and development expenses of $3.34 billion (a 23% increase), reflecting continued prioritization of the drug development pipeline. Spending for marketing, selling, and administrative support rose 30%, as Eli Lilly promoted new and existing launches.
The pipeline delivered key milestones and progress in several medicines. The company celebrated positive results from trials of orforglipron, an oral GLP-1 candidate, and reported clinical success with Jaypirca (a treatment for chronic lymphocytic leukemia/small lymphocytic lymphoma) in a head-to-head trial against Imbruvica. Donanemab (marketed as Kisunla) received new approval and label updates for Alzheimer’s disease, expanding its addressable patient population internationally. The company completed the acquisitions of SiteOne Therapeutics and Verve Therapeutics.
Pricing dynamics were a clear headwind, with average price erosion of 6% globally and 8% in the U.S. for the company’s top products. This trend is due to rising payer rebates and more competitive formulary access decisions in the rapidly growing obesity drug market. For example, CVS Caremark, a major U.S. pharmacy benefit manager, adjusted its formulary to favor Wegovy (Novo Nordisk’s obesity drug) over Zepbound for some employer plans, introducing risk for future sales growth and pricing power.
No significant asset impairment or restructuring charges were recorded for the quarter. The company’s tax rate (reported, GAAP) for 2025 rose slightly to 19% due to changes in U.S. tax law. Dividends paid per share rose 15% from the prior year to $1.50, reflecting the company’s ongoing capital return to shareholders.
Looking Forward: Outlook and Monitoring Points
Management raised full-year 2025 guidance following the strong results. It now expects revenue between $60.0 billion and $62.0 billion (midpoint raised by $1.5 billion) and Non-GAAP EPS of $21.75 to $23.00. The updated forecast assumes ongoing price erosion and access challenges, but continued growth in prescription volumes and new product launches. The company also raised the Non-GAAP performance margin target to 43.0–44.5%, highlighting improved operating leverage. The effective tax rate (reported, GAAP) is expected to rise to 19%, reflecting recent legislative changes.
Looking ahead, investors should pay attention to future pressure on drug pricing, the impact of competitive access and formulary decisions (especially around GLP-1 therapies), and the pace of R&D productivity. The company faces high expense growth, particularly in product development (research and development expenses increased 23% to $3.34 billion) and commercial spending (marketing, selling and administrative expenses increased 30% to $2.75 billion). Supply-chain capacity, regulatory risks, and new product launches all remain key drivers of performance. The company pays a quarterly dividend, which was raised 15% year over year to $1.50 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
