Eli Lilly and Company

Company Overview

Business Model: Eli Lilly and Company discovers, develops, manufactures, and markets human pharmaceutical products globally. The company's core purpose is to unite caring with discovery to create medicines that improve lives, with long-term success dependent on its ability to continually discover or acquire, develop, and commercialize innovative medicines.

Market Position: Eli Lilly and Company operates in a highly competitive global pharmaceutical market, competing with numerous multinational pharmaceutical, biotechnology, and generic companies. Key competitive factors include product effectiveness, safety, availability, ease of use, patient preference, overall experience, formulary placement, pricing, payer coverage, reimbursement rates, cost-effectiveness, regulatory approvals, marketing effectiveness, and research and development of new products. The company emphasizes innovation and cost-effectiveness to achieve long-term competitive success. It faces intensifying global competition, particularly from markets like China, which have expanded research and development capabilities. Early market entry and rapid patient access are crucial for product acceptance. Anti-obesity medicines represent a significant portion of the company's revenues, and market access is impacted by payer coverage restrictions, such as the need for U.S. self-insured employers to opt-in for coverage and lack of coverage in various international markets.

Recent Strategic Developments:

• U.S. Government Agreements: In November 2025, Eli Lilly and Company announced 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. These agreements are expected to provide Medicare beneficiaries with access to discounted Eli Lilly and Company obesity medicines by July 1, 2026, and offer states the option to expand Medicaid access. The company will also participate in a government direct-to-patient purchasing platform for discounted medicines and received a three-year grace period from tariffs on products under a Section 232 investigation, contingent on U.S. manufacturing investment commitments.
• Manufacturing Expansion: Eli Lilly and Company is undertaking significant manufacturing expansion initiatives to support anticipated demand for current and prospective products, including new sites in North Carolina, Wisconsin, Indiana, Virginia, Texas, Alabama, Pennsylvania, Ireland, Germany, and the Netherlands.
• Digital Health Platform: LillyDirect, a direct-to-patient digital healthcare platform, is being utilized in certain jurisdictions for the delivery of select Eli Lilly and Company medicines dispensed by third-party pharmacies. Sales through LillyDirect represented a growing portion of the business in 2025, with ongoing efforts to expand access through new partnerships and tools.
• Pipeline Advancements: Orforglipron, a product candidate for obesity and type 2 diabetes, was submitted for regulatory review in the U.S., the EU, and Japan, receiving a Commissioner’s National Priority Voucher from the FDA for accelerated U.S. approval. Insulin efsitora alfa was submitted for regulatory review in the U.S., the EU, and Japan for type 2 diabetes.
• Strategic Acquisitions:
  • Verve Therapeutics, Inc.: Acquired in July 2025 for $549 million (net of cash acquired) plus contingent value rights up to an additional $300 million, focusing on genetic medicines for cardiovascular disease.
  • Manufacturing Site: Acquired a manufacturing site in Wisconsin in May 2024 for $925 million (net of cash acquired) to expand its global parenteral product manufacturing network.
  • POINT Biopharma Global Inc.: Acquired in December 2023 for $1.0 billion (net of cash acquired), enhancing capabilities in radiopharmaceutical discovery, development, and manufacturing for cancer treatment.
• Acquired In-Process Research and Development (IPR&D): Significant charges in 2025 included $1,412 million for Scorpion Therapeutics, Inc.'s PI3Kα inhibitor program STX-478 and $1,498 million for SiteOne Therapeutics, Inc.'s STC-004.

Geographic Footprint: Eli Lilly and Company manufactures and distributes products through facilities in the U.S. (including Puerto Rico), Europe, and Asia, with products sold in approximately 90 countries.

• Revenue Distribution (2025): U.S. accounted for $43,481 million, and outside the U.S. accounted for $21,698 million.
• Long-Lived Assets (2025): U.S. and Puerto Rico represented $18,764 million, Ireland $4,321 million, and the Rest of World $3,516 million.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 83.0%
• Operating Margin: 39.5%
• Net Margin: 31.7%

Investment in Growth:

• R&D Expenditure: $13,337 million (20.5% of revenue)
• Capital Expenditures: $7,841 million
• Strategic Investments:
  • Acquisition of Verve Therapeutics, Inc. for $549 million (net of cash acquired) plus contingent value rights up to $300 million.
  • Acquisition of a manufacturing site in Wisconsin for $925 million (net of cash acquired).
  • Acquisition of POINT Biopharma Global Inc. for $1.0 billion (net of cash acquired).
  • Acquired in-process research and development (IPR&D) charges of $2,910 million, primarily related to Scorpion Therapeutics, Inc.'s PI3Kα inhibitor program STX-478 ($1,412 million) and SiteOne Therapeutics, Inc. ($1,498 million).

Business Segment Analysis

Eli Lilly and Company operates as a single reportable segment focused on human pharmaceutical products. The following breakdown reflects performance by therapeutic area.

Cardiometabolic Health Products

Financial Performance:

• Revenue: $33,864 million (+55.0% YoY)
• Key Growth Drivers: Strong demand for Mounjaro and Zepbound, partially offset by lower realized prices in the U.S. for these products. Product Portfolio:
• Major products include Mounjaro, Zepbound, Trulicity, Jardiance (including Glyxambi, Synjardy, and Trijardy XR), Basaglar, Humalog, and Humulin. Market Dynamics:
• Mounjaro and Zepbound collectively accounted for 56% of total revenues in 2025.
• Barriers to reimbursable patient access exist for anti-obesity medicines, including opt-in requirements for U.S. self-insured employers and lack of coverage in various international markets. Sub-segment Breakdown:
• Mounjaro: $22,965 million revenue (+55.4% YoY). U.S. revenue was $13,651 million (+53% YoY), and outside U.S. revenue was $9,315 million (vs $2,600 million in 2024).
• Zepbound: $13,542 million revenue (+174.9% YoY). U.S. revenue was $13,484 million (+174% YoY), and outside U.S. revenue was $58 million.
• Trulicity: $4,276 million revenue (-21.3% YoY). U.S. revenue was $2,914 million, and outside U.S. revenue was $1,362 million.
• Jardiance: $3,432 million revenue (+2.7% YoY). U.S. revenue was $1,582 million, and outside U.S. revenue was $1,849 million.
• Other Cardiometabolic Health: $4,006 million revenue (-10.2% YoY).

Oncology Products

Financial Performance:

• Revenue: $5,352 million (+6.3% YoY) Product Portfolio:
• Major products include Verzenio, Cyramza, Erbitux, Inluriyo, Jaypirca, Retevmo, and Tyvyt. Sub-segment Breakdown:
• Verzenio: $5,723 million revenue (+7.8% YoY). U.S. revenue was $3,464 million (+1% YoY), and outside U.S. revenue was $2,259 million (+20% YoY).
• Other Oncology: $3,653 million revenue (+3.0% YoY).

Immunology Products

Financial Performance:

• Revenue: $2,964 million (+20.6% YoY) Product Portfolio:
• Major products include Taltz, Ebglyss, Olumiant, and Omvoh. Sub-segment Breakdown:
• Taltz: $3,563 million revenue (+9.3% YoY). U.S. revenue was $2,333 million, and outside U.S. revenue was $1,230 million.
• Other Immunology: $1,684 million revenue (+48.6% YoY).

Neuroscience Products

Financial Performance:

• Revenue: $1,391 million (-5.7% YoY) Product Portfolio:
• Major products include Emgality and Kisunla.

Other Products

Financial Performance:

• Revenue: $943 million (+4.4% YoY)

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $4.1 billion (4.8 million shares) in 2025. As of December 31, 2025, $10.9 billion remained under the $15.0 billion share repurchase program authorized in December 2024.
• Dividend Payments: $5,384 million in 2025, representing $6.23 per share. The quarterly dividend was increased to $1.73 per share effective for the first quarter of 2026, indicating an annual rate of $6.92 per share for 2026.
• Future Capital Return Commitments: $10.9 billion remaining under the authorized share repurchase program.

Balance Sheet Position:

• Cash and Equivalents: $7,268 million as of December 31, 2025.
• Total Debt: $42,503 million as of December 31, 2025.
• Net Cash Position: -$35,235 million (net debt) as of December 31, 2025.
• Debt Maturity Profile: Key maturities include $1,632 million due in 2026, $2,516 million in 2027, $3,256 million in 2028, $3,077 million in 2029, and $2,132 million in 2030. Longer-term debt includes $11,582 million due 2031-2040, $4,543 million due 2041-2050, $8,280 million due 2051-2060, and $5,824 million due 2061-2070. The 2028 tranche includes $750 million of floating-rate notes issued in August 2025, with interest reset quarterly using the Secured Overnight Financing Rate (SOFR) plus 0.530 percent.

Cash Flow Generation:

• Operating Cash Flow: $16,813 million in 2025.
• Free Cash Flow: $8,972 million in 2025 (Operating Cash Flow of $16,813 million minus Capital Expenditures of $7,841 million).

Operational Excellence

Production & Service Model: Eli Lilly and Company's operational philosophy centers on the discovery, development, manufacturing, and marketing of human pharmaceutical products. The company's long-term success is tied to its ability to continually innovate and commercialize medicines. Manufacturing and distribution operations are conducted through facilities in the U.S. (including Puerto Rico), Europe, and Asia. The supply chain is managed to meet product demand, maintain flexibility, and improve efficiency by reallocating manufacturing capacity in response to changes in supply and demand.

Supply Chain Architecture: Key Suppliers & Partners:

• Materials Sourcing: Most principal materials are available from multiple sources, but certain materials are procured from a single source.
• Manufacturing Partners: Eli Lilly and Company utilizes third parties for certain active ingredient manufacturing, filling, finishing operations, and for device or component production and assembly. The company has expanded relationships with contract manufacturing organizations, entities supporting consumer-directed access channels, and artificial intelligence vendors.
• Geographic Dependencies: The pharmaceutical industry, including Eli Lilly and Company, depends on China-based suppliers for portions of its supply chain, including integral chemical synthesis, reagents, starting materials, and ingredients.

Facility Network:

• Manufacturing: Active ingredient manufacturing and finishing operations (formulation, filling, assembling, delivery device manufacturing, and packaging) occur at sites in the U.S. (including Puerto Rico), Ireland, and other global locations. Major production sites are in Indiana, North Carolina, Puerto Rico, Wisconsin, Ireland, France, Spain, Italy, China, and Japan. Significant manufacturing capacity expansion initiatives are underway, with new sites in North Carolina, Wisconsin, Indiana, Virginia, Texas, Alabama, Pennsylvania, Ireland, Germany, and the Netherlands.
• Research & Development: R&D facilities are primarily located in the U.S., including owned facilities in Indiana and leased sites in California, Massachusetts, Colorado, and New York.
• Distribution: The company maintains its own sales organizations in many countries and utilizes third parties for commercial sales operations, including distribution and promotion arrangements.

Operational Metrics:

• Capital expenditures were $7,841 million in 2025, an increase from $5,058 million in 2024, reflecting significant investments in global facilities to manufacture existing and future products.
• Eli Lilly and Company has executed agreements for contract manufacturing and material supply that could require payments of up to approximately $10 billion if specified amounts of goods or services are not purchased over durations generally up to 8 years.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Eli Lilly and Company educates healthcare providers through online and other channels, distributes information and samples, and exhibits at medical meetings. In the U.S., promotion includes engagement by employee or contracted sales representatives with healthcare professionals. Account managers service a broad range of organizations including wholesalers, pharmacy benefit managers, insurers, plan sponsors, employers, managed care organizations, group purchasing organizations, government and long-term care institutions, hospitals, and certain retail pharmacies, often involving discounts or rebates.
• Digital Platforms: LillyDirect, a direct-to-patient digital healthcare platform, provides delivery of select Eli Lilly and Company medicines dispensed by third-party pharmacies in certain jurisdictions. It also offers tools for patient access to independent healthcare providers and treatment adherence programs. Eli Lilly and Company is developing and deploying alternative product access strategies, including direct-to-patient and direct-to-employer channels.

Customer Portfolio: Customer Concentration:

• Wholesale Distributors: In 2025, 2024, and 2023, three U.S. wholesale distributors—McKesson Corporation, Cencora, Inc., and Cardinal Health, Inc.—each accounted for between 16 percent and 24 percent of consolidated revenue. No other single customer accounted for more than 10 percent of consolidated revenue in any of these years.

Geographic Revenue Distribution:

• U.S.: $43,481 million (66.7% of total revenue)
• Europe: $11,558 million (17.7% of total revenue)
• Japan: $2,132 million (3.3% of total revenue)
• China: $1,951 million (3.0% of total revenue)
• Rest of world: $6,057 million (9.3% of total revenue)

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The pharmaceutical market is highly competitive and global, characterized by intense competition from multinational pharmaceutical, biotechnology, and generic companies. Key competitive factors include product effectiveness, safety, availability, ease of use, patient preference, overall experience, formulary placement, pricing, payer coverage, reimbursement rates, cost-effectiveness, regulatory approvals, marketing effectiveness, and research and development of new products, processes, modalities, indications, and uses. Early market entry and rapid patient access are important for product success. The industry faces increasing pressure from global scientific advancement and expanded R&D capabilities in markets like China. Technological innovation, including artificial intelligence, is amplifying competitive dynamics and enabling new drug discovery and healthcare delivery models.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: Eli Lilly and Company competes with a large number of multinational pharmaceutical, biotechnology, and generic pharmaceutical companies. Specific competitors mentioned in legal proceedings include Teva Pharmaceuticals International GmbH, Teva Pharmaceuticals USA, Inc., Sanofi-Aventis U.S., LLC, Novo Nordisk Inc., AstraZeneca Pharmaceuticals LP, and Takeda Pharmaceuticals America, Inc.

Emerging Competitive Threats:

• Generic and Biosimilar Products: Generic pharmaceuticals and biosimilars pose major competitive challenges due to abbreviated regulatory approval processes and lower pricing. Regulatory changes, such as proposed FDA policy changes to streamline biosimilar development, could accelerate market entry for competitors.
• Counterfeit and Compounded Products: The company continues to observe the production, marketing, and sale of counterfeit, misbranded, adulterated, and mass-compounded incretins in the U.S. and other markets. These practices impact patient safety, undermine regulatory processes, and can lead to consumer confusion, sales diversion, and price erosion.

Competitive Response Strategy: Eli Lilly and Company is developing and deploying alternative product access strategies, including direct-to-patient channels (e.g., LillyDirect) and direct-to-employer channels, to mitigate unfavorable private sector dynamics. The company also pursues legal actions to address unlawful practices and patient safety risks associated with unapproved, untested, and manipulated drugs.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Product Concentration: Eli Lilly and Company derives a significant percentage of its total revenue from relatively few products. Mounjaro, Zepbound, Verzenio, Trulicity, Taltz, and Jardiance collectively accounted for 82% of total revenues in 2025, with Mounjaro and Zepbound alone representing 56%. This concentration exposes the company to risks from loss of patent protection, changes in prescription rates, product liability claims, unexpected side effects, demand fluctuations, regulatory proceedings, negative publicity, and competitive pressures.
• Pricing and Reimbursement: The business is subject to government price controls and public/private restrictions on pricing, reimbursement, and access for drugs. The Inflation Reduction Act of 2022 (IRA) requires the U.S. Department of Health and Human Services (HHS) to set prices for certain single-source drugs, with Jardiance, Trulicity, and Verzenio already selected for government-set prices effective in 2026 and 2028, respectively. This accelerates revenue erosion prior to exclusivity expiry.
• Intellectual Property Loss: The company depends on intellectual property protection for most of its revenues. Loss of effective patent or data protection for products, such as Trulicity, is expected to result in rapid and severe revenue declines due to generic or biosimilar competition. Technology Disruption:
• AI and Emerging Technologies: The deployment of artificial intelligence (AI) and other emerging technologies in operations, including drug discovery, presents risks such as inadequate or biased AI-generated content, competitive disadvantages if rivals adopt AI more effectively, and exacerbation of regulatory, cybersecurity, and litigation risks. Customer Concentration:
• Wholesale Distribution: In the U.S., most products are distributed through a limited number of wholesalers (McKesson Corporation, Cencora, Inc., and Cardinal Health, Inc. each accounted for 16-24% of consolidated revenue in 2025), creating supply chain disruption and collection risks if these entities face difficulties.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Single-Source Materials: While most principal materials are available from multiple sources, certain materials are procured from a single source, posing supply interruption risks.
• Third-Party Reliance: Reliance on third parties for aspects of product development, manufacturing, commercialization, IT systems, and distribution introduces risks of non-performance, quality issues, data breaches, and inability to meet commitments.
• Geographic Concentration: Dependence on China-based suppliers for portions of the supply chain exposes the company to risks from geopolitical developments, trade restrictions (e.g., BIOSECURE Act, tariffs), and increased costs. Capacity Constraints:
• Manufacturing Capacity: Despite significant investments in manufacturing expansion, there is no assurance that capacity increases will meet future demand, potentially limiting the ability to capitalize on product demand. Conversely, overestimation of demand could lead to underutilized capacity and significant capital expenditure write-offs.

Financial & Regulatory Risks

Market & Financial Risks:

• Foreign Exchange: As a global company, Eli Lilly and Company faces foreign currency risk from fluctuating exchange rates, primarily the U.S. dollar against the euro, Japanese yen, Chinese yuan, and British pound sterling. A strong U.S. dollar adversely impacts results.
• Credit & Liquidity: Economic slowdowns can decrease product utilization, increase pressure on governments to reduce healthcare spending, and impact customer payment ability. Regulatory & Compliance Risks:
• Extensive Regulation: Operations are extensively regulated by numerous government agencies (e.g., FDA, European Medicines Agency, Ministry of Health, Labor and Welfare in Japan, National Medical Products Administration in China), leading to costly and time-consuming approval processes and ongoing compliance requirements.
• Regulatory Scrutiny: Heightened governmental scrutiny of manufacturing quality (cGMP), marketing, pricing, and interactions with healthcare providers can result in investigations, legal actions, product recalls, fines, and production interruptions.
• Counterfeit Products: The proliferation of counterfeit, misbranded, adulterated, and mass-compounded incretins poses risks to patient safety, regulatory processes, business reputation, and potential sales diversion.
• Tax Law Changes: Evolving and complex tax laws, regulations, and administrative practices globally can affect effective tax rates, cash flows, and results of operations.

Geopolitical & External Risks

Geopolitical Exposure:

• Global Operations: Global operations and complex supply chains expose the company to legislation, regulatory actions, and geopolitical risks, including uneven economic growth, international trade disputes, tariffs, trade protection measures, and international conflicts.
• U.S.-China Tensions: Tensions between the U.S. and China, including tariffs and sanctions, could escalate, impacting market access, operations, and business development transactions.
• International Cost Containment: Most international markets operate under government-mandated cost-containment programs, including price controls, reference pricing, discounts, and rebates, which adversely affect pricing and access.

Innovation & Technology Leadership

Research & Development Focus: Eli Lilly and Company has a nearly 150-year commitment to R&D, viewing it as critical to long-term competitiveness. Approximately 12,000 employees are engaged in pharmaceutical R&D activities. Internal research primarily focuses on cardiometabolic health, immunology, neuroscience, and oncology. The company also seeks to expand the value of existing products through new uses, formulations, and therapeutic approaches, including complementary delivery devices or diagnostic tools.

Core Technology Areas: The company invests in novel modalities, recognizing they can present challenging or lengthy development timelines and additional risks due to scientific uncertainty.

Innovation Pipeline: Eli Lilly and Company has a robust pipeline with several new molecular entities (NMEs) and new indication line extensions (NILEX) in clinical trials or under regulatory review:

• Cardiometabolic Health: Tirzepatide (Mounjaro, Zepbound) for heart failure with preserved ejection fraction (Approved in EU), pediatric and adolescent type 2 diabetes (Approved in U.S. and EU), cardiovascular outcomes in type 2 diabetes (Submitted in U.S.), metabolic dysfunction-associated steatotic liver disease (Phase 3), morbidity and mortality in obesity (Phase 3), type 1 diabetes (Phase 3). Insulin efsitora alfa (Submitted in U.S., EU, Japan for type 2 diabetes). Orforglipron (Submitted in U.S., EU, Japan for obesity; Submitted in EU for type 2 diabetes; Phase 3 for cardiovascular outcomes, hypertension, obstructive sleep apnea, osteoarthritis pain, peripheral artery disease, stress urinary incontinence). Eloralintide (Phase 3 for obesity). Lepodisiran (Phase 3 for atherosclerotic cardiovascular disease). Muvalaplin (Phase 3 for atherosclerotic cardiovascular disease). Retatrutide (Phase 3 for cardiovascular/renal outcomes, chronic low back pain, metabolic dysfunction-associated steatotic liver disease, obesity, osteoarthritis, OSA, type 2 diabetes).
• Immunology: Mirikizumab (Omvoh) for Crohn's disease (Approved in U.S., EU, Japan). Lebrikizumab (Phase 3 for AR (perennial allergens), CRSwNP).
• Neuroscience: Donanemab (Kisunla) for early Alzheimer's disease (Approved in U.S., EU, Japan), pre-clinical Alzheimer's disease (Phase 3). Brenipatide (Phase 3 for alcohol use disorder). Ixo-vec (Phase 3 for wet age-related macular degeneration, acquired in Adverum Biotechnologies, Inc. acquisition). Remternetug (Phase 3 for pre-clinical/MCI Alzheimer's disease).
• Oncology: Imlunestrant (Inluriyo) for ER+, HER2-, ESR1-mutated advanced or metastatic breast cancer (Approved in U.S., EU, Japan), adjuvant breast cancer (Phase 3). Pirtobrutinib (Jaypirca) for chronic lymphocytic leukemia (Full approval in U.S., EU, Japan). Olomorasib (Phase 3 for 1L KRAS G12C+ NSCLC, resected adjuvant NSCLC, unresected adjuvant NSCLC; granted FDA Breakthrough Therapy designation). Sofetabart mipitecan (FRα ADC) (Phase 3 for platinum-resistant ovarian cancer; granted FDA Breakthrough Therapy designation).

Intellectual Property Portfolio: Intellectual property protection is critical for commercialization and R&D investment. Eli Lilly and Company holds numerous patents and patent applications globally for products, uses, formulations, and manufacturing processes, and benefits from data protection under pharmaceutical regulatory laws.

• Key Product Expiry Dates (Compound Patent/Data Protection):
  • Jardiance: U.S. 2029, major European countries 2029, Japan 2030.
  • Mounjaro/Zepbound: Compound patent U.S. 2036, major European countries 2037, Japan 2040. Data protection U.S. 2027, major European countries 2033, Japan 2030.
  • Trulicity: Compound patent U.S. 2027, major European countries 2029, Japan 2029. Biologics data protection U.S. 2027.
  • Cyramza: Compound patent U.S. 2026, major European countries 2028, Japan 2026. Biologics data protection U.S. 2026.
  • Inluriyo: Compound patent U.S. 2039, major European countries 2039, Japan 2039. Data protection U.S. 2030, major European countries 2036, Japan 2033.
  • Jaypirca: Compound patent U.S. 2037, major European countries 2038, Japan 2040. Data protection U.S. 2028, major European countries 2033, Japan 2032.
  • Retevmo: Compound patent U.S. 2038, major European countries 2037, Japan 2038. Data protection U.S. 2025, major European countries 2031, Japan 2031.
  • Verzenio: Compound patent U.S. 2031, major European countries 2033, Japan 2034. Data protection major European countries 2028, Japan 2026.
  • Ebglyss: Compound patent U.S. 2026, Japan 2029. Biologics data protection U.S. 2036. Data protection major European countries 2033, Japan 2034.
  • Olumiant: Compound patent U.S. 2032, major European countries 2032, Japan 2033. Data protection major European countries 2027, Japan 2025.
  • Omvoh: Compound patent U.S. 2037, major European countries 2038, Japan 2039. Biologics data protection U.S. 2035. Data protection major European countries 2033, Japan 2033.
  • Taltz: Compound patent U.S. 2030, major European countries 2031, Japan 2030. Biologics data protection U.S. 2028. Data protection major European countries 2027.
  • Emgality: Compound patent U.S. 2033, major European countries 2033, Japan 2035. Biologics data protection U.S. 2030. Data protection major European countries 2028, Japan 2029.
  • Kisunla: Compound patent U.S. 2036, major European countries 2036, Japan 2036. Biologics data protection U.S. 2036. Data protection major European countries 2035, Japan 2032.

Technology Partnerships: Eli Lilly and Company collaborates with academic institutions and research-based pharmaceutical and biotechnology companies, and invests in external research and technologies through licensing arrangements, co-development agreements, co-promotion arrangements, joint ventures, acquisitions, and equity investments. Notable collaborations include Boehringer Ingelheim (Jardiance), F. Hoffmann-La Roche Ltd and Genentech, Inc. (Ebglyss), Almirall, S.A. (Ebglyss in Europe), and Chugai Pharmaceutical Co., Ltd (Orforglipron).

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The term of office for each executive officer expires on the date of the annual meeting of the board of directors, to be held on May 4, 2026, or when a successor is chosen. The company's Chief Information Security Officer (CISO) reports to the Chief Information and Digital Officer (CIDO), who is a member of the Executive Committee and regularly updates the committee on cybersecurity matters.

Board Composition: The board of directors includes an audit committee composed of four independent nonemployee members. This committee oversees information security, cybersecurity, and data protection programs, policies, procedures, and risk management activities, meeting regularly with the CIDO, CISO, and Chief Privacy Officer. The ethics and compliance committee supports the audit committee and board in oversight of legal and regulatory compliance.

Human Capital Strategy

Workforce Composition:

• Total Employees: Approximately 50,000 people at the end of 2025.
• Geographic Distribution: Approximately 27,000 employees outside the U.S. at the end of 2025.
• Skill Mix: Approximately 12,000 employees are engaged in research and development activities.

Talent Management: Acquisition & Retention:

• Hiring Strategy: Eli Lilly and Company is committed to attracting and retaining a highly skilled workforce by fostering a positive, inclusive culture, focusing on fair and nondiscriminatory employment practices, and offering robust training, development opportunities, and competitive pay and benefits. The company faces intense competition for qualified individuals, which has increased labor costs.
• Retention Metrics: Confidential employee surveys are regularly conducted to gather feedback and identify opportunities to improve the employee experience.

Diversity & Development:

• Diversity Metrics: The company's focus on inclusion is intended to strengthen innovation.
• Development Programs: The company provides robust training and development opportunities.

Environmental & Social Impact

Environmental Commitments: Climate Strategy: Eli Lilly and Company is subject to a sustained focus by regulatory and legislative bodies on climate change, greenhouse gas emissions, carbon taxes, emissions trading schemes, and sustainability. Supply Chain Sustainability: The company's ability to achieve sustainability goals is influenced by the availability of suppliers that can meet its standards.

Social Impact Initiatives: Eli Lilly and Company is committed to creating a safe, supportive, ethical, and rewarding work environment, emphasizing fairness and nondiscrimination in employment practices. The company engages in community investment and considers the social impact of its products.

Business Cyclicality & Seasonality

Demand Patterns: Eli Lilly and Company's business can experience variability in demand and supply for its products, which can challenge supply capacity and resiliency. Incretin volume fluctuations, driven by channel dynamics or demand, can have a disproportionate impact on financial results in any given period. Planning & Forecasting: The company aims to maintain sufficient inventory to ensure production reliability and manage unforeseen supply variability. Its supply chain management strategy is designed to meet product demand while allowing flexibility to reallocate manufacturing capacity to improve efficiency and respond to changes in supply and demand.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations: Eli Lilly and Company's operations are extensively regulated by numerous government agencies globally. In the U.S., the FDA exercises jurisdiction over all products and devices, covering testing, safety, effectiveness, manufacturing, quality control, distribution, labeling, marketing, promotion, advertising, information dissemination, and post-marketing surveillance. Outside the U.S., similar regulatory requirements are imposed by bodies such as the European Medicines Agency in the EU, the Ministry of Health, Labor and Welfare in Japan, and the National Medical Products Administration in China.

• Inflation Reduction Act of 2022 (IRA): This U.S. law requires HHS to set prices for certain single-source drugs and biologics reimbursed under Medicare Part B and Part D, generally starting nine years (for New Drug Applications) or thirteen years (for Biologics License Applications) post-FDA approval. Jardiance was selected for government-set prices effective in 2026, and Trulicity and Verzenio were selected for prices effective in 2028. The IRA also mandates rebates for Medicare Part B and Part D medicines and redesigned the Part D benefit.
• Medicaid and 340B Programs: Eli Lilly and Company is required to provide rebates to federal and state governments for Medicaid and Medicaid Managed Care programs (minimum 23.1% plus price increase adjustments) and reduced prices to 340B covered entities. An annual fee is imposed on manufacturers selling branded prescription drugs to specified government programs. The company has implemented a Contract Pharmacy Limited Distribution System for 340B sales, which is subject to ongoing inquiries and litigation.
• International Regulations: In December 2025, the European Commission, Council, and Parliament reached an agreement-in-principle on EU Pharmaceutical Legislation, which is expected to impact the market. Japan imposes government-mandated annual price reductions and re-pricings. China's healthcare policies, including the National Reimbursement Drug List and value-based procurement programs, significantly influence drug access and pricing, often requiring substantial price concessions. Trade & Export Controls:
• U.S. Foreign Corrupt Practices Act of 1977 (FCPA): Eli Lilly and Company is subject to the FCPA, which prohibits offering or giving anything of value to foreign officials with corrupt intent to influence business.
• Anti-Corruption Laws: Various other jurisdictions have laws preventing corrupt and anticompetitive behavior, including the proposed EU Anti-Corruption Directive expected in 2026. Legal Proceedings: Eli Lilly and Company is involved in various lawsuits, claims, government investigations, and other legal proceedings.
• Emgality Patent Litigation: Teva Pharmaceuticals International GmbH and Teva Pharmaceuticals USA, Inc. alleged infringement by Eli Lilly and Company's Emgality. A jury verdict in favor of Teva was overruled by the trial court in September 2023, which found all asserted claims invalid. Teva's appeal to the U.S. Court of Appeals for the Federal Circuit is pending.
• Brazil Litigation – Cosmopolis Facility: Eli Lilly do Brasil Limitada faces a public civil action from the state Labor Public Attorney and related claims from former employees regarding alleged exposure to contaminants at a former manufacturing facility. A liquidated award was significantly reduced by the superior labor court in December 2025, with further appeals possible.
• 340B Litigation and Investigations: Eli Lilly and Company has filed lawsuits against HHS challenging its advisory opinion on 340B contract pharmacies and administrative dispute resolution regulations. The company is also a defendant in putative class action lawsuits related to 340B programs and faces multiple other challenges against HHS.
• Insulin Pricing Litigation: Various plaintiffs have filed lawsuits against Eli Lilly and Company and other manufacturers and pharmacy benefit managers concerning insulin pricing and rebates. Most cases are coordinated in a multidistrict litigation (MDL) in the U.S. District Court for the District of New Jersey. Eli Lilly and Company has entered into settlement agreements with New York and Minnesota without monetary payments or admission of wrongdoing.
• Average Manufacturer Price Litigation: A qui tam action alleged that Eli Lilly and Company and Takeda Pharmaceuticals America, Inc. improperly calculated average manufacturer prices. A jury verdict in favor of the relator was affirmed by the U.S. Court of Appeals for the Seventh Circuit in September 2025, leading to a recognized charge.
• Mounjaro, Trulicity, and Zepbound Product Liability Litigation: Since August 2023, lawsuits have been filed alleging injuries from incretin medicines, coordinated in two federal MDLs in the U.S. District Court for the Eastern District of Pennsylvania, and also pending in other federal and state courts, and class action petitions in Israel and Quebec, Canada.
• Health Choice Alliance: A qui tam lawsuit in Texas state court alleges claims under the Texas Medicaid Fraud Prevention Act related to patient support programs for several products.
• Research Corporation Technologies, Inc.: A lawsuit alleging breach of contract, unjust enrichment, and conversion related to manufacturing processes for Humalog and Humulin. A confidential settlement agreement was reached in July 2024, with Eli Lilly and Company's appeal pending.

Tax Strategy & Considerations

Tax Profile: Eli Lilly and Company's effective tax rate was 19.8 percent in 2025, compared to 16.5 percent in 2024. This increase was primarily due to unfavorable impacts from the jurisdictional mix of earnings and U.S. tax law changes in 2025. Non-deductible acquired in-process research and development (IPR&D) charges unfavorably impacted effective tax rates in both periods, with a larger impact in 2024.

• U.S. Tax Law Changes: In July 2025, the One Big Beautiful Bill Act (OBBBA) was enacted, modifying and making permanent several provisions of the Tax Cuts and Jobs Act. These changes include reductions in scheduled increases for the rate of taxation of foreign income, immediate deductibility of U.S. research and development expenses, and reinstatement of 100 percent bonus depreciation for capital assets.

Geographic Tax Planning:

• Cash Tax Payments: Cash payments of income taxes increased by $4.3 billion in 2025 compared to 2024, primarily driven by a $4.2 billion increase in Ireland due to higher production activity. U.S. federal cash payments decreased from $3.8 billion in 2024 to $3.3 billion in 2025, influenced by immediate deductibility of U.S. R&D expenses, a prior year tax refund, and accelerated depreciation on U.S. capital investments, partially offset by higher U.S. income.
• Prepaid Taxes: Prepaid taxes of $12.9 billion in 2025 (vs $7.1 billion in 2024) largely reflect taxes paid on intercompany profit not yet recognized, primarily related to Ireland.
• Foreign Earnings: Substantially all unremitted earnings of foreign subsidiaries are not considered indefinitely reinvested.

Tax Reform Impact: Modifications to U.S. or international tax frameworks, including actions by the Organisation for Economic Co-operation and Development (OECD) and the European Commission (e.g., global minimum tax), could significantly impact the effective tax rate, results of operations, and cash flows.

Insurance & Risk Transfer

Risk Management Framework: Eli Lilly and Company employs a controlled program of risk management, including the use of derivative financial instruments, to limit the impact of fluctuations in interest and currency exchange rates on earnings. The company monitors credit exposure to counterparties for interest-bearing investments and derivatives. Insurance Coverage: Eli Lilly and Company maintains cyber liability insurance, though it may not be sufficient to cover all potential losses from IT system interruptions or breaches. Due to a restrictive market for liability insurance, the company is predominantly self-insured for litigation liability losses across all its currently and previously marketed products. Risk Transfer Mechanisms:

• Foreign Currency Risk: Managed primarily through foreign currency debt and foreign currency forward contracts. Foreign currency-denominated notes designated as accounting hedges had carrying amounts of $6.0 billion in 2025.
• Interest Rate Risk: Managed through derivative contracts to achieve an acceptable balance between fixed- and floating-rate debt or to reduce cash flow variability from changes in interest rates.