Here is the summary of Eli Lilly and Company’s Quarterly Report (Form 10-Q) for the period ended September 30, 2025, with reference numbers and separator lines removed:
Financial Performance Overview
Revenue for the third quarter of 2025 reached $17,600.8 million, a 54% increase compared to the third quarter of 2024. Net income for the third quarter was $5,582.5 million, significantly higher than the $970.3 million reported in the same period in 2024. Diluted earnings per share for the quarter were $6.21. Growth was primarily driven by higher volume for Mounjaro and Zepbound, partially offset by lower realized prices.
Key Product Revenue (Nine Months Ended September 30, 2025)
- Mounjaro: Totaled $15,555.8 million, with $9,507.8 million from the U.S.
- Zepbound: Totaled $9,281.3 million, with $9,253.6 million from the U.S.
- Verzenio: Totaled $4,118.3 million, a 10% increase year-over-year.
- Trulicity: Totaled $3,239.2 million.
- Jardiance: Totaled $2,663.4 million.
Strategic Business Developments
In July 2025, the company acquired Verve Therapeutics, Inc. for approximately $549.4 million in cash plus contingent value rights to enhance its genetic medicine pipeline. The company recognized significant acquired in-process research and development (IPR&D) charges of $2.38 billion during the first nine months of 2025. Lilly issued $6.50 billion in notes in February 2025 and an additional $6.75 billion in August 2025 for general corporate purposes and acquisitions.
Research, Development, and Regulatory Updates
Research and development expenses increased to $3,465.7 million for the third quarter, representing a 27% increase. Insulin efsitora alfa was submitted for approval to the FDA and European Commission for type 2 diabetes. The European Commission approved donanemab (Kisunla) for the treatment of early symptomatic Alzheimer’s disease.
Legal and Regulatory Factors
In July 2025, the One Big Beautiful Bill Act (OBBBA) was enacted, modifying U.S. tax laws and impacting the company’s income tax provision. The company continues to face litigation and investigations regarding insulin pricing, the 340B program, and product liability for incretin medicines. Jardiance was selected by the U.S. government for price negotiations effective in 2026 under the Inflation Reduction Act.
Consolidated Statement of Income (Unaudited)
Units: Millions of USD (except per share data)
| Item | Q3 2025 | % of Revenue | Q3 2024 | YoY Change |
| Total Revenue | 17,600.8 | 100% | 11,439.1 | +54% |
| Cost of Sales | 3,008.3 | 17.1% | 2,170.8 | +38.6% |
| Gross Margin | 14,592.5 | 82.9% | 9,268.3 | +57.4% |
| Research and Development | 3,465.7 | 19.7% | 2,734.1 | +26.8% |
| Marketing, Selling, and Administrative | 2,740.7 | 15.6% | 2,099.8 | +30.5% |
| Acquired IPR&D | 655.7 | 3.7% | 2,826.4 | -76.8% |
| Asset Impairment, Restructuring, and Other | 364.9 | 2.1% | 81.6 | +347.2% |
| Other Net (Income) Expense | 133.1 | 0.8% | (62.0) | NM |
| Income Before Income Taxes | 7,232.4 | 41.1% | 1,588.4 | +355.3% |
| Income Taxes | 1,649.9 | 9.4% | 618.1 | +166.9% |
| Net Income | 5,582.5 | 31.7% | 970.3 | +475.3% |
| Diluted EPS | 6.21 | – | 1.07 | +480.4% |
Key Data Analysis and Notes
Revenue Growth Drivers: The 54% increase in third-quarter revenue was primarily driven by volume growth from higher demand for Mounjaro and Zepbound.
Gross Margin Improvement: Gross margin increased from 81.0% last year to 82.9%, benefiting from a favorable product mix, which was partially offset by lower realized prices for products.
Operating Expense Increases: Research and development expenses grew by approximately 27% YoY, mainly due to continued investment in early and late-stage portfolios. Marketing and administrative expenses rose by approximately 31% YoY due to promotional activities supporting new product launches.
Income Tax Impact: The effective tax rate decreased from 38.9% to 22.8%. While the implementation of the new OBBBA legislation increased tax amounts in 2025, the 2024 rate was abnormally high due to significant non-deductible Acquired IPR&D charges in that period.
Based on the financial report for the third quarter of 2025, Eli Lilly’s revenue is highly concentrated in the Cardiometabolic Health sector, specifically driven by the tirzepatide franchise (Mounjaro and Zepbound). Below is an analysis of the revenue share and growth rates for key products:
Q3 2025 Key Product Revenue Analysis
(Amount in Millions of USD)
| Product | Q3 2025 Revenue | % of Total Revenue | Q3 2024 Revenue | YoY Growth |
| Mounjaro | 6,515.1 | 37.0% | 3,112.7 | +109% |
| Zepbound | 3,588.1 | 20.4% | 1,257.8 | +185% |
| Verzenio | 1,470.2 | 8.4% | 1,369.3 | +7% |
| Trulicity | 1,051.8 | 6.0% | 1,301.4 | -19% |
| Jardiance | 959.0 | 5.4% | 686.4 | +40% |
| Taltz | 901.5 | 5.1% | 879.6 | +2% |
Core Analysis and Observations
1. Dominance of Tirzepatide
Revenue Contribution: Mounjaro (for type 2 diabetes) and Zepbound (for obesity) combined accounted for 57.4% of total revenue in Q3 2025.
Explosive Growth: Mounjaro achieved a YoY growth rate of 109%, while Zepbound grew by 185%. These two products are the core drivers behind the company’s overall 54% revenue increase.
Market Distribution: Zepbound’s revenue is almost entirely derived from the U.S. ($3,568.3 million), with only $19.8 million from outside the U.S. In contrast, Mounjaro has gained significant traction in international markets, which account for 45.5% of its revenue.
2. Shift in Therapeutic Focus
Cardiometabolic Leadership: The entire cardiometabolic health segment (including Mounjaro, Zepbound, Trulicity, Jardiance, etc.) contributed $13,177.9 million in Q3, representing 74.9% of total revenue.
Legacy Product Decline: Trulicity experienced a 19% YoY decline, reflecting the impact of competition and supply constraints as market demand shifts toward the next-generation tirzepatide products.
3. Performance in Other Areas
Oncology: Led by Verzenio, the oncology segment grew by 8% in Q3. Verzenio accounts for 8.4% of total revenue, showing relatively stable performance.
Immunology: While Taltz saw modest growth of 2%, other products in the immunology portfolio showed strong potential, with revenue increasing from $306.1 million to $460.9 million.
4. Geographic Analysis
U.S. Market: Contributed $11,300 million, accounting for 64.2% of total revenue.
International Markets: Although representing a smaller share, international revenue grew by 74% YoY, primarily driven by the penetration of Mounjaro in overseas markets.
Below is the Consolidated Condensed Balance Sheet for Eli Lilly and Company as of September 30, 2025, with reference numbers removed:
Eli Lilly and Company Consolidated Balance Sheet (2025 Q3)
Units: Millions of USD
| Account | 2025/09/30 (Unaudited) | % of Total Assets | 2024/12/31 | Change % |
| Assets | ||||
| Cash and cash equivalents | 9,791.9 | 8.5% | 3,268.4 | +199.6% |
| Short-term investments | 121.6 | 0.1% | 154.8 | -21.4% |
| Accounts receivable, net | 16,107.4 | 14.0% | 11,005.7 | +46.4% |
| Other receivables | 3,349.8 | 2.9% | 2,269.7 | +47.6% |
| Inventories | 12,180.4 | 10.6% | 7,589.2 | +60.5% |
| Prepaid expenses (mostly taxes) | 20,248.7 | 17.6% | 8,340.5 | +142.8% |
| Other current assets | 271.5 | 0.2% | 111.4 | +143.7% |
| Total current assets | 62,071.3 | 54.0% | 32,739.7 | +89.6% |
| Non-current investments | 2,808.3 | 2.4% | 3,215.9 | -12.7% |
| Goodwill | 5,898.0 | 5.1% | 5,770.3 | +2.2% |
| Other intangibles, net | 6,446.7 | 5.6% | 6,166.3 | +4.5% |
| Deferred income taxes | 8,962.7 | 7.8% | 8,000.6 | +12.0% |
| Property, plant, and equipment, net | 22,316.0 | 19.4% | 17,102.4 | +30.5% |
| Other non-current assets | 6,432.4 | 5.6% | 5,719.7 | +12.5% |
| Total Assets | 114,935.4 | 100% | 78,714.9 | +46.0% |
| Liabilities | ||||
| Short-term borrowings and current mat. | 1,633.0 | 1.4% | 5,117.1 | -68.1% |
| Accounts payable | 4,262.2 | 3.7% | 3,228.6 | +32.0% |
| Employee compensation liabilities | 1,965.7 | 1.7% | 2,093.9 | -6.1% |
| Sales rebates and discounts | 17,620.2 | 15.3% | 11,539.3 | +52.7% |
| Income taxes payable (short-term) | 9,444.4 | 8.2% | 1,116.4 | +746.0% |
| Other current liabilities | 5,215.4 | 4.5% | 5,281.3 | -1.2% |
| Total current liabilities | 40,140.9 | 34.9% | 28,376.6 | +41.5% |
| Long-term debt | 40,873.6 | 35.6% | 28,527.1 | +43.3% |
| Income taxes payable (long-term) | 6,293.6 | 5.5% | 4,060.9 | +55.0% |
| Other non-current liabilities | 3,776.5 | 3.3% | 3,478.7 | +8.6% |
| Total Liabilities | 91,084.6 | 79.2% | 64,443.3 | +41.3% |
| Equity | ||||
| Retained earnings | 22,252.0 | 19.4% | 13,545.0 | +64.3% |
| Other equity items | (6,282.0) | -5.5% | (7,384.6) | -14.9% |
| Total Equity | 23,850.8 | 20.8% | 14,271.6 | +67.1% |
| Total Liabilities and Equity | 114,935.4 | 100% | 78,714.9 | +46.0% |
Summary of Significant Financial Structure Changes
Assets Side: Total assets grew by 46%. Prepaid expenses (primarily prepaid taxes) surged by 142.8% to $20.2 billion, reflecting capital reserves set aside for the new OBBBA tax legislation. Inventory and PP&E grew by 60.5% and 30.5% respectively, indicating heavy investment in production capacity to meet weight-loss drug demand.
Liabilities Side: Long-term debt increased by 43.3% (approximately $12.35 billion) to fund acquisitions and capacity expansion. Short-term income taxes payable skyrocketed from $1.1 billion to $9.4 billion (+746%), primarily due to the impact of the OBBBA tax act implemented in July 2025.
Equity Side: Retained earnings saw significant growth of 64.3%, driven by strong net income contribution of $14 billion during the first nine months of 2025.
In response to the U.S. Inflation Reduction Act (IRA), Eli Lilly and Company has implemented several strategic countermeasures and expectancy management practices, as detailed in its third-quarter 2025 financial report:
1. Legal and Regulatory Challenges
Eli Lilly, along with several other pharmaceutical companies, has initiated legal actions to challenge the constitutionality and legality of the federal government’s price negotiation powers under the IRA. Although some initial lawsuits have faced setbacks in lower courts, the company continues to monitor legal developments and may pursue appeals, maintaining that these regulations could significantly undermine long-term medical innovation.
2. Strategic Adjustment of Product Pipeline Investment
The company is actively reassessing its resource allocation across product life cycles. Because the IRA allows for government price setting on small molecule drugs after 9 years on the market, compared to 13 years for biologics, Eli Lilly is adapting its R&D selection process:
- Prioritizing Biologics: Leveraging the longer protection period afforded to biologics to maximize potential returns.
- Re-evaluating Small Molecule Value: Reviewing the return on investment (ROI) for certain small molecule development projects to account for earlier price controls.
3. Supply Chain and Manufacturing Optimization
To mitigate the impact of potential margin compression, Eli Lilly has aggressively expanded its manufacturing capacity. The Q3 report shows a 30.5% increase in property, plant, and equipment assets. By achieving economies of scale, the company aims to reduce unit production costs—particularly for high-demand products like Mounjaro and Zepbound—using volume growth to offset pricing pressures.
4. Active Participation in Price Negotiations
Despite its opposition to the legislation, Eli Lilly has engaged in the price negotiation process for the first wave of affected drugs, such as Jardiance.
- Transparency and Data Submission: The company has submitted extensive data to the U.S. Department of Health and Human Services (HHS) to demonstrate the clinical value of its medicines and justify R&D costs, striving for the most favorable pricing outcomes possible under the law.
5. Commercial Insurance and Market Access Negotiations
To reduce over-reliance on Medicare (the segment directly impacted by the IRA), Eli Lilly is strengthening its partnerships with private payers and Pharmacy Benefit Managers (PBMs). The goal is to secure more favorable positioning and access terms within the commercial insurance market, ensuring broad coverage for non-Medicare patient populations.
In summary, Eli Lilly’s strategy involves a dual approach: combating the legislation through legal channels while simultaneously pivoting its R&D and commercial execution to thrive in a new pricing environment.
According to the third-quarter 2025 financial report, Eli Lilly’s inventory increased significantly from $7.589 billion at the end of 2024 to $12.180 billion by September 30, 2025—a massive 60.5% surge.
The primary reasons for this inventory buildup are as follows:
1. Capitalization of Pre-launch Inventory
Eli Lilly capitalizes inventory for new products when regulatory approval is deemed highly probable and the product is expected to provide future economic benefit.
- Primary Driver: As of September 30, 2025, capitalized pre-launch inventory reached $952.3 million, primarily related to orforglipron, the company’s highly anticipated oral small-molecule GLP-1 receptor agonist currently in development for obesity and type 2 diabetes.
2. Production Scaling and Market Demand
- Meeting Demand: To satisfy the surging global demand for incretin-based medicines like Mounjaro and Zepbound, the company is aggressively expanding its global manufacturing network.
- Facility Acquisitions: The acquisition of manufacturing sites, such as the facility in Wisconsin in early 2024 (followed by a $3 billion expansion announcement in December 2024), has significantly strengthened the supply chain for injectable products. This has led to a direct increase in raw materials and work-in-process (WIP) levels.
3. Inventory Breakdown
The most significant growth is seen in Work in Process, reflecting a high level of ongoing manufacturing activity:
- Work in Process (WIP): Increased from $3.980 billion to $7.275 billion.
- Raw Materials and Supplies: Increased from $2.326 billion to $3.397 billion.
- Finished Goods: Increased from $1.221 billion to $1.547 billion.
These figures demonstrate that the inventory surge is not just a reaction to current sales growth but a strategic reserve for future product launches and massive capacity expansion.
2025–2026 Capital Expenditure (CapEx) and Expansion Plans
Eli Lilly has entered an unprecedented phase of capital investment. Following the Q3 2025 report and subsequent announcements, here is a look at the company’s expansion trajectory:
- Historic $50 Billion Commitment: Since 2020, Lilly has committed over $50 billion to U.S. manufacturing expansion. In February 2025, the company announced a new $27 billion plan to build four “mega-sites” in the U.S.
- Major Project Highlights:
- Texas (Houston): A $6.5 billion facility announced in September 2025, focused on synthetic medicine Active Pharmaceutical Ingredients (API), specifically supporting the production of orforglipron.
- Virginia: A $5 billion facility announced in September 2025 for biologics and antibody-drug conjugates (ADCs).
- Wisconsin: A total investment of $4 billion (acquisition + expansion) for parenteral (injectable) products.
- International Sites: Continued construction and expansion in Alzey, Germany ($2.5 billion) and Ireland ($1.8 billion), with production expected to begin by 2027.
As of September 30, 2025, Eli Lilly and Company’s total assets reached $114.94 billion, a significant increase of approximately $36.22 billion (about 46%) compared to $78.71 billion at the end of 2024.
The primary drivers of this asset growth are analyzed below:
1. Surge in Cash and Liquid Assets
- Cash and Cash Equivalents: Increased from $3.27 billion to $9.79 billion. This surge was primarily driven by the issuance of long-term notes in February and August 2025, totaling approximately $13.25 billion.
- Accounts Receivable: Rose from $11.01 billion to $16.11 billion, reflecting the revenue growth generated by the massive volume increase of Mounjaro and Zepbound.
2. Tax-Related Assets
- Prepaid Expenses: Jumped from $8.34 billion to $20.25 billion. This was largely driven by prepaid taxes, which climbed from $7.13 billion to $18.69 billion. This movement is tied to the implementation of the new OBBBA tax legislation and related tax remeasurements.
3. Inventory and Production Capacity Expansion
- Inventory: Grew from $7.59 billion to $12.18 billion.
- This includes approximately $952 million in pre-launch inventory, mainly for the oral weight-loss drug orforglipron.
- The increase reflects the company’s aggressive efforts to build supply to meet the robust global demand for incretin medicines like Mounjaro and Zepbound.
- Property, Plant, and Equipment (PP&E): Net PP&E increased from $17.10 billion to $22.32 billion. This reflects continuous investment in global manufacturing facilities to expand production capacity.
4. Intangible Assets and Acquisitions
- Goodwill and Other Intangible Assets: Showed a slight increase, primarily influenced by the July 2025 acquisition of Verve Therapeutics (for approximately $549 million in cash) and other strategic technology acquisitions.
Strategic Context: The Tirzepatide Production Cycle
To support this rapid asset growth, particularly in PP&E and inventory, Lilly has optimized its manufacturing for the tirzepatide molecule (the active ingredient in Mounjaro and Zepbound).
The production involves complex peptide synthesis followed by advanced fill-finish operations in sterile environments. The growth in “Work in Process” inventory ($7.28 billion) specifically highlights these high-value stages of production currently underway in Lilly’s expanded facilities.
Eli Lilly and Company significantly increased its long-term debt in 2025, a move tied to several strategic and financial objectives aimed at sustaining its rapid growth.
Funding Strategic Acquisitions
The company utilized its capital to bolster its drug pipeline through significant acquisitions:
- In July 2025, Lilly acquired Verve Therapeutics, a company focused on genetic medicines, for approximately $549.4 million in cash.
- During the first nine months of 2025, the company paid a total of approximately $2.38 billion for Acquired In-Process Research and Development (IPR&D), which included asset acquisitions from Scorpion Therapeutics and SiteOne Therapeutics.
Debt Issuance and Capital Optimization
To ensure a robust cash position, the company executed two major rounds of financing:
- In February 2025, Lilly issued notes totaling $6.50 billion.
- In August 2025, the company issued an additional $6.75 billion in notes.These funds were allocated for general corporate purposes, including the repayment of existing debt, funding daily operations, and supporting the aforementioned acquisition activities.
Expanding Manufacturing Capacity
A primary driver for capital demand is the unprecedented market appetite for incretin-based therapies such as Mounjaro and Zepbound.
- To meet this demand, the company has continuously invested in expanding its global manufacturing footprint.
- This strategy is evident in the balance sheet, which shows that Property, Plant, and Equipment (PP&E) assets increased by approximately $5.21 billion within just nine months.
Tax and Working Capital Requirements
The implementation of the One Big Beautiful Bill Act (OBBBA) in July 2025 introduced new tax complexities.
- The company faced substantial tax provisions and remeasurements, necessitating high levels of liquidity.
- Maintaining a strong cash reserve through long-term borrowing allows the company to manage these large cash outflows without disrupting its R&D or expansion plans.
In summary, the increase in long-term debt was designed to provide ample low-cost capital to support the company’s long-term strategic goals: expanding its product pipeline through acquisitions, building out manufacturing infrastructure, and maintaining overall financial flexibility.