Intro
This post is based on the company’s official 10-Q filing and investor relations (IR) materials. It summarizes only objective facts and the logical implications that directly follow from them. Personal opinions and forecasts have been minimized. The goal is to help readers understand and interpret the materials more easily.
Table of Contents
👉 1. Business Overview
👉 2. Financial Highlights
👉 3. Valuation
👉 4. Risk
👉 5. MD&A (Management’s Discussion and Analysis)
👉 6. Summary
1. Business Overview 🌐
💊 Company at a Glance
Eli Lilly and Company (LLY) is one of the world’s leading pharmaceutical companies, headquartered in Indianapolis, Indiana, USA.
Founded in 1876, Lilly develops, manufactures, and markets medicines primarily focused on diabetes, obesity, oncology (cancer), immunology, and neuroscience.
Headquarters: Indianapolis, Indiana, USA
Founded: 1876
Employees: ~45,000 worldwide
Core Focus: Diabetes, Obesity, Oncology, Immunology, Neuroscience
Plain English:
Eli Lilly makes the drugs that treat some of the world’s biggest health problems — from insulin for diabetes to blockbuster obesity drugs like Mounjaro (tirzepatide). It’s now seen as a global leader in both metabolic and obesity treatments.
🧬 Major Products & Innovation Areas
Lilly’s portfolio is dominated by fast-growing therapies addressing chronic diseases with global demand.
| Segment | Key Products | Focus |
|---|---|---|
| Diabetes & Obesity | Mounjaro (tirzepatide), Trulicity, Basaglar, Humalog | Weight management & glucose control |
| Oncology (Cancer) | Verzenio (breast cancer), Retevmo (lung cancer) | Targeted therapies |
| Immunology | Taltz, Olumiant, Ebglyss | Autoimmune diseases |
| Neuroscience | Emgality, Zyprexa | Migraine & psychiatric care |
| Other Therapies | Cyramza, Jaypirca | Specialty medicine expansion |
Plain English:
Lilly’s strength lies in a mix of high-demand chronic care drugs and next-gen biopharmaceuticals.
Its new class of GLP-1 drugs (for diabetes and weight loss) has transformed the company’s growth trajectory.
⚙️ Business Model & Strategy
Eli Lilly operates with a research-driven model, investing over 20% of its revenue in R&D (Research & Development).
Its strategy focuses on three pillars:
- Innovation-first pipeline: Expanding clinical trials for metabolic and oncology therapies.
- Manufacturing scale-up: Massive investments in U.S. and European facilities for Mounjaro and Zepbound.
- Global expansion: Accelerating international approvals, especially in Europe and Asia.
Plain English:
Lilly is betting big on science and factories — developing new drugs and building enough production capacity to meet exploding global demand for obesity medications.
🌍 Market Position & Growth Drivers
- Leader in GLP-1 obesity drugs, competing mainly with Novo Nordisk (Ozempic, Wegovy).
- Expanding beyond diabetes into weight loss, cardiovascular, and kidney health.
- Building dominance in oncology through targeted therapies and partnerships.
- Strong presence in U.S. and Europe, with rapid growth in emerging markets.
Plain English:
Lilly’s growth comes from two megatrends — the global fight against obesity and the rise of targeted cancer drugs.
Those markets are huge and still growing, which gives Lilly long-term tailwinds.
💵 Recent Momentum (Q3 FY2025 Snapshot)
- Revenue reached record levels, driven by strong Mounjaro and Zepbound demand.
- Diabetes and obesity portfolio accounted for more than half of total sales.
- Management continues heavy investment in AI-assisted drug discovery and manufacturing capacity.
- New products like Ebglyss and Jaypirca show early commercial traction.
Plain English:
The company’s sales boom comes mainly from its new weight-loss and diabetes drugs.
These products are not only selling fast — they’re reshaping Lilly’s entire business.
🧠 Competitive Advantages
Lilly’s durable moat (long-term advantage) is built on:
- Strong IP protection (patents and exclusivity periods)
- High barriers to entry in biotech R&D
- Trusted regulatory history with FDA and EMA approvals
- Robust global distribution network
- Reputation for scientific credibility
Plain English:
Lilly’s advantage isn’t luck — it’s patents, trust, and decades of experience bringing complex medicines to market.
🌱 ESG & Responsibility
- Net Zero 2050 goal: Targeting carbon-neutral operations across facilities.
- Global health access programs: Expanding affordable insulin distribution.
- Diversity & inclusion: Over 50% of management roles held by women globally.
- Ethical R&D: Transparency in trial data and responsible AI drug design.
Plain English Recap:
Lilly aims to grow responsibly — cutting emissions, widening healthcare access, and using tech ethically.
✅ Quick Takeaway
“Eli Lilly has transformed from a traditional insulin maker into a global biotech powerhouse — led by obesity and metabolic breakthroughs like Mounjaro.”
In short:
- 🧬 Innovation-led growth engine (GLP-1 dominance)
- 💰 Record profitability & reinvestment
- 🌍 Expanding capacity and global reach
- 💡 Positioned as one of the most influential pharmaceutical leaders of the decade
2. Financial Highlights 📊
All figures in $ millions unless noted.
Percentages rounded to one decimal place. EPS shown in $ to one decimal.
Fiscal quarter ended September 30 2025 (Q3 FY2025).
🧾 Income Statement Summary
| ($ m) | Q3 FY2025 | Q3 FY2024 | 9M FY2025 | 9M FY2024 |
|---|---|---|---|---|
| Revenue | 17,600.8 | 11,439.1 | 45,887.0 | 31,509.9 |
| Cost of Sales | 3,008.3 | 2,170.8 | 7,680.3 | 6,014.5 |
| Gross Profit | 14,592.5 | 9,268.3 | 38,206.7 | 25,495.4 |
| Operating Income | 7,232.4 | 1,588.4 | 17,464.8 | 7,641.7 |
| Net Income | 5,582.5 | 970.3 | 14,002.3 | 6,180.2 |
| EPS ($) | 6.21 | 1.07 | 15.56 | 6.83 |
Plain English:
Revenue surged 54% YoY in Q3 2025, driven by explosive demand for Mounjaro and Zepbound.
Gross profit rose to nearly $14.6 billion, reflecting strong product mix and pricing.
Operating income jumped more than 4×, while net income rose over 5×,
as Lilly achieved major efficiency gains in manufacturing and R&D.
📈 Key Profitability Ratios
| Ratio | Q3 FY2025 | Q3 FY2024 | 9M FY2025 | 9M FY2024 |
|---|---|---|---|---|
| Gross Margin (%) | 82.9 | 81.0 | 83.3 | 81.0 |
| Operating Margin (%) | 41.1 | 13.9 | 38.1 | 24.2 |
| Net Margin (%) | 31.7 | 8.5 | 30.5 | 19.6 |
Plain English:
Profitability soared on high-margin GLP-1 products.
Operating margin tripled YoY, while net margin exceeded 30% — a record for Lilly — reflecting powerful pricing and cost discipline.
🧮 Balance Sheet Snapshot
| ($ m) | Q3 FY2025 | FY2024 Year-End |
|---|---|---|
| Cash & Equivalents | 9,791.9 | 3,268.4 |
| Total Assets | 114,935.4 | 78,714.9 |
| Total Liabilities | 91,084.6 | 64,443.3 |
| Shareholders’ Equity | 23,850.8 | 14,271.6 |
| Debt-to-Equity (%) | 44.0 | 46.0 |
Plain English:
Total assets jumped to $115 billion, up nearly 46 % from year-end 2024,
driven by major investments in manufacturing capacity and inventory growth for Mounjaro and Zepbound.
Equity surged as retained earnings accumulated, while leverage declined slightly,
keeping Eli Lilly’s balance sheet solid and flexible for future R&D expansion.
💵 Cash Flow Summary
| 항목 | 9M FY2025 | 9M FY2024 |
|---|---|---|
| Operating Cash Flow | 13,588 | 6,344 |
| Investing Cash Flow | (8,170) | (7,381) |
| Financing Cash Flow | +666 | +1,456 |
| Net Change in Cash | +6,524 | +550 |
| Ending Cash Balance | 9,792 | 3,369 |
Plain English Summary:
Operating cash flow more than doubled to $13.6 billion, fueled by surging profits from GLP-1 drugs (Mounjaro and Zepbound).
Despite heavy capital expenditure and R&D investment, cash generation easily covered these outflows.
Lilly also raised long-term debt to strengthen liquidity, ending the quarter with $9.8 billion in cash, up from $3.4 billion a year earlier — a very healthy position for continued AI and manufacturing expansion.
🧠 Beginner Takeaways
💰 Revenue +54% YoY (quarter) and +46% YoY (9M) — both driven by explosive demand for Mounjaro and Zepbound.
📈 Net margin reached 31.7% in Q3 — the highest in company history, reflecting strong pricing and efficiency.
🧬 GLP-1 drugs now generate most of Lilly’s profits, reshaping it into a metabolic-health powerhouse.
💵 Operating cash flow ($13.6 B) exceeded net income ($14.0 B) — showing exceptionally high earnings quality and cash conversion.
🧱 Balance sheet remains strong, with $9.8 B cash and modest leverage, providing ample capacity for R&D, manufacturing, and AI-enabled expansion.
3. Valuation 📈
Here are the valuation ratios. These numbers don’t tell you by themselves if the stock is cheap or expensive. Investors typically compare them with peers, the broader market, or with their own view of intrinsic value (DCF). It’s up to each investor to judge whether these multiples signal undervaluation or overvaluation.
📅 Share price (as of Nov 10, 2025): $966.64
💰 Market Cap: $865.16 B
📊 Valuation Metrics (TTM & Forward Basis)
| Metric | Value | Basis / Notes |
|---|---|---|
| P/E (Trailing) | 33.4 | TTM net income basis |
| Forward P/E | 30.5 | Analyst consensus for next 12 months |
| P/B (Price-to-Book) | 36.3 | Based on Q3 2025 book value per share |
| EV/EBITDA | 31.0 | TTM enterprise value basis |
| P/S (Price-to-Sales) | 19.2 | TTM revenue basis |
| Dividend Yield (%) | 0.6 | Annualized dividend ÷ share price |
| Free Cash Flow Yield (%) | 2.2 | TTM free cash flow ÷ market cap |
💡 Plain English Recap
Eli Lilly trades at a premium valuation reflecting its dominance in GLP-1 obesity and diabetes treatments.
A P/E of 33 and Forward P/E of 30 show investors expect strong, sustained growth from Mounjaro and Zepbound.
The P/B of 36 highlights the company’s high intangible value from patents and R&D assets.
Despite major spending on manufacturing and research, a Free Cash Flow Yield of 2 % indicates solid cash generation and financial strength.
Lilly remains one of the most valuable and profitable healthcare leaders in the world.
1) Forward P/E is shown as a consensus estimate (average from major financial data providers) for reference.
2) Date of preparation: 2025-11-10
4. Risk ⚠️
Editorial Note:
In order to enhance readability, we have omitted broad, market-wide risks that generally affect all companies.
The following discussion is focused solely on the risks that are specific to Eli Lilly and the biopharmaceutical industry in which it operates.
🧬 1. Product and Pipeline Risks
What the company highlights:
- Reliance on a small number of blockbuster drugs such as Mounjaro (tirzepatide) and Zepbound for revenue growth.
- Any clinical trial failure, delayed regulatory approval, or unexpected side effects could affect future sales.
- Pipeline projects for Alzheimer’s and oncology treatments are subject to scientific and regulatory uncertainty.
Plain English:
Most of Lilly’s growth comes from a few star drugs. If new data go wrong or a drug faces safety issues, it can hit the stock hard. The research pipeline takes years and billions to deliver, so delays matter.
💊 2. Manufacturing and Supply Risks
What the company highlights:
- Ongoing capacity expansion for GLP-1 production involves complex biologic manufacturing.
- Supply chain disruptions or quality control failures could limit availability of key medicines.
- Dependence on third-party suppliers and contract manufacturers adds operational risk.
Plain English:
Lilly is ramping up factories to make its new weight-loss and diabetes drugs, but biotech production is delicate. Any factory issue can create shortages or costly recalls.
⚖️ 3. Regulatory and Compliance Risks
What the company highlights:
- Subject to FDA and international regulation on drug approval, manufacturing, and marketing.
- Pricing controls and government negotiation programs (e.g., U.S. Medicare Drug Price Negotiation) may reduce profit margins.
- Global anti-corruption and data-protection laws increase compliance costs.
Plain English:
Governments are tightening rules on how much drug companies can charge and how they advertise. If Lilly can’t adapt fast, profits could shrink even when sales stay strong.
🌍 4. Market and Competitive Risks
What the company highlights:
- Intense competition from Novo Nordisk, Pfizer, and others developing similar obesity and diabetes treatments.
- Patent expirations could lead to generic or biosimilar entries.
- Pricing pressures from insurers and pharmacy benefit managers (PBMs) affect net realized price per dose.
Plain English:
Competitors are rushing to catch up in the same drug category. If rivals launch faster or cheaper versions, Lilly may lose market share or need to cut prices.
🔐 5. Cybersecurity and Information Risks
What the company highlights:
- Reliance on digital platforms for clinical data and manufacturing operations.
- Exposure to cyberattacks and ransomware threats that could disrupt operations or expose sensitive health data.
- Compliance requirements under HIPAA and international data-protection laws.
Plain English:
Lilly handles vast amounts of medical and patient data. A hack or IT outage could halt production or breach privacy laws, leading to fines and reputation damage.
💰 6. Financial and Operational Risks
What the company highlights:
- Currency fluctuations impact reported results since half of revenue comes from outside the U.S.
- Rising interest rates and capital spending for new plants could affect cash flow.
- Heavy R&D investment and acquisitions increase cost volatility.
Plain English:
Even with strong sales, foreign exchange and big construction projects can swing profits from quarter to quarter.
✅ Summary of Section 4 — Risk
Eli Lilly’s main risks center on its dependence on a few key drugs, manufacturing complexities, and tightening regulatory controls over drug pricing and safety.
While demand remains strong, competition, compliance costs, and production scaling remain the most important watch points for investors.
5. MD&A (Management’s Discussion and Analysis) 🧭
🧩 Management Overview
Eli Lilly’s management reports that Q3 2025 was another record-setting quarter, driven primarily by strong global demand for Mounjaro (tirzepatide) and Zepbound, the company’s next-generation obesity and diabetes medicines.
Growth was broad-based across therapeutic areas, with additional support from new product launches in oncology and immunology.
Operating momentum remained high as the company expanded manufacturing capacity and maintained strict cost discipline despite higher R&D spending.
Plain English:
Lilly’s latest quarter showed that its new obesity and diabetes drugs continue to power the company. Even though it’s spending heavily to expand factories and research, profits are rising faster than costs.
💵 Revenue & Growth Drivers
Management attributes revenue growth mainly to:
- Obesity and diabetes portfolio — double-digit expansion from Mounjaro and Zepbound in both U.S. and international markets.
- New product launches — including Ebglyss (immunology) and Jaypirca (oncology), which added incremental sales.
- Geographic diversification — strong performance in the U.S. plus accelerating uptake in Europe and Japan.
- Pricing mix — modest price increases and favorable product mix toward high-margin therapies.
Plain English:
Most of Lilly’s sales growth came from its new weight-loss drugs, while new cancer and immune-disease medicines added extra lift. Demand spread worldwide, not just in the U.S.
⚙️ Operating Performance
- Gross margin expanded to over 80%, supported by volume growth in high-margin GLP-1 products.
- Operating income rose more than fourfold year-over-year, reflecting efficiency gains and scale leverage.
- R&D expenses increased, as the company accelerated late-stage trials in Alzheimer’s, oncology, and next-gen metabolic treatments.
- SG&A expenses grew modestly due to higher marketing and logistics costs associated with new launches.
Plain English:
Lilly kept expenses under control while sales soared. Its focus on efficient manufacturing and selective R&D spending allowed profit margins to climb sharply.
💰 Liquidity & Capital Allocation
- Operating cash flow improved to over $12 billion for the first nine months of 2025, easily covering capital expenditures and dividends.
- Capital expenditures focused on expanding U.S. and European manufacturing sites for GLP-1 and antibody therapies.
- Balance sheet stayed strong with declining leverage and growing cash reserves.
- Management continued a balanced approach between reinvestment and shareholder returns (dividends + buybacks).
Plain English:
Lilly generated plenty of cash to fund new plants, research, and shareholder payouts without borrowing more money.
🔍 Risks & Trends Highlighted by Management
Management identified several factors that could affect near-term results:
- Manufacturing capacity: Rapid scale-up for obesity drugs may create temporary bottlenecks.
- Regulatory pricing pressure: U.S. Medicare drug-price negotiations and EU pricing reforms could impact margins.
- Competition: Intensifying GLP-1 competition from Novo Nordisk and other entrants.
- Foreign exchange volatility: Large international exposure adds quarterly earnings fluctuations.
- R&D execution: Pipeline timing for Alzheimer’s and oncology programs remains critical for long-term growth.
Plain English:
Lilly’s biggest short-term challenges are making enough supply of its hit drugs and dealing with government price controls. Competition is heating up, and currency swings can still affect results.
📊 Outlook
Management expects continued strong performance through the remainder of FY2025 and into FY2026, supported by:
- Expanding capacity for Mounjaro / Zepbound.
- Broader launches of Ebglyss and Jaypirca across new markets.
- Ongoing margin expansion from operational scale.
- Sustained R&D investment in next-generation obesity and Alzheimer’s therapies.
Plain English:
Lilly plans to keep growing by selling more of its obesity drugs worldwide and pushing new medicines through the pipeline while maintaining profitability.
✅ Summary of MD&A Section
Eli Lilly’s Q3 2025 results reflect exceptional revenue growth, record profitability, and disciplined reinvestment.
Management emphasized that demand for its GLP-1 medicines remains strong and global expansion is underway.
Even as R&D and production spending rise, cash flow easily funds both growth projects and shareholder returns.
The company continues to balance innovation, efficiency, and risk management as it scales up to meet historic demand for its metabolic and oncology therapies.
6. Summary 🧭
Eli Lilly’s Q3 2025 results highlight a company at the center of a global healthcare transformation.
Revenue surged 54% year over year, driven by record sales of Mounjaro and Zepbound, its breakthrough diabetes and obesity treatments.
Margins expanded significantly, with net margin reaching 31.7%, the highest in company history.
Strong cash generation enabled Lilly to finance major factory expansions and research investments with minimal additional debt.
The company’s valuation remains elevated, reflecting investor confidence in sustained GLP-1 growth and continued innovation leadership.
However, key risks persist — including dependence on a few blockbuster drugs, regulatory oversight, and rising competition from peers such as Novo Nordisk.
Overall, Lilly’s transformation into a science-driven biotech powerhouse is firmly underway, supported by innovation, disciplined execution, and strong global demand for metabolic health solutions.
📝 Disclaimer
This article is intended for educational purposes only. It does not constitute financial, investment, or legal advice. All investment decisions involve risks, and readers should conduct their own research or consult with a licensed financial advisor.
👉 Eli Lilly and Company (LLY) Q3 2025 10-Q Key Highlights | Explained for Beginners