Business Overview: A Storied Brand with a Refocused Strategy Eli Lilly and Company (LLY) is a leading global pharmaceutical company that has a rich history of innovation and a diverse portfolio of successful products. Founded in 1876 by Colonel Eli Lilly, the company has evolved over the decades to become one of the most recognized and respected names in the healthcare industry.
Eli Lilly and Company was incorporated in 1901 in Indiana, succeeding the drug manufacturing business founded in Indianapolis, Indiana in 1876 by Colonel Eli Lilly. The company's purpose is to unite caring with discovery to create medicines that make life better for people around the world. Lilly has a long history of pharmaceutical innovation, dating back nearly 150 years, with a focus on areas such as immunology, metabolism, neuroscience, and oncology.
Throughout its history, Lilly has faced various challenges and controversies. In the early 2000s, the company dealt with product liability claims related to its medication Zyprexa and was involved in litigation and investigations concerning the pricing and marketing of its insulin products. More recently, Lilly has been involved in litigation and investigations related to its 340B drug pricing program, insulin pricing, and manufacturing issues at its Branchburg, New Jersey facility. The company has also faced challenges related to counterfeit, misbranded, adulterated, and compounded versions of its products, which have impacted patient safety and the regulatory approval process. Despite these setbacks, Lilly has remained committed to its core mission of delivering innovative medicines to patients.
To enhance its capabilities, Lilly has made significant investments in expanding its global manufacturing facilities, including those in the United States, Europe, and Asia. The company has also pursued strategic acquisitions and collaborations to complement its internal R&D efforts, such as the acquisitions of Akouos in 2022 and POINT Biopharma in 2023, as well as its long-standing collaboration with Boehringer Ingelheim on diabetes products. More recently, Lilly acquired Morphic Holding, Inc. and entered into a collaboration with OpenAI to develop novel antimicrobials.
Lilly has consistently demonstrated a strong commitment to corporate social responsibility, focusing on environmental sustainability, diversity and inclusion, and patient access to medicines. The company's culture of integrity, excellence, and respect for people has been fundamental to its success over the decades.
Today, Lilly operates as a single segment engaged in the discovery, development, manufacturing, marketing, and sales of pharmaceutical products worldwide. The company's core therapeutic areas include cardiometabolic health, oncology, immunology, and neuroscience. Some of Lilly's most successful and well-known products include Mounjaro, Zepbound, Trulicity, Verzenio, Taltz, and Emgality, among others.
Financial Performance: Strong Growth and Promising Outlook Eli Lilly has consistently delivered strong financial results, reflecting the success of its diversified product portfolio and its ability to navigate the dynamic pharmaceutical landscape. In 2024, the company reported revenue of $45.04 billion, a 32% increase compared to 2023. This growth was primarily driven by the robust performance of Lilly's newer products, such as Mounjaro and Zepbound, which have gained significant market share.
The company's net income in 2024 reached $10.59 billion, more than doubling the previous year's figure of $5.24 billion. This impressive earnings growth was supported by a strong gross margin of 81.3%, as well as disciplined cost management and effective tax planning.
In the most recent quarter (Q4 2024), Lilly reported revenue of $13.53 billion, representing a 45% year-over-year growth, driven primarily by the strong performance of Mounjaro and Zepbound. Net income for the quarter was $4.41 billion.
Geographically, Lilly operates globally, with the majority of revenue coming from the United States. In 2024, U.S. revenue was $30.38 billion, while revenue outside the U.S. was $14.67 billion.
Liquidity: Solid Financial Position Lilly's financial position remains solid, with a cash and cash equivalents balance of $3.27 billion as of December 31, 2024. The company's balance sheet is further strengthened by its ability to generate robust operating cash flow, which reached $8.82 billion in 2024, up from $4.24 billion in 2023. Free cash flow for 2024 was $0.41 billion.
The company's debt-to-equity ratio stands at 2.35, indicating a moderate level of leverage. Lilly has $8.45 billion in unused committed bank credit facilities, providing additional financial flexibility. The company's current ratio and quick ratio are both 1.15, suggesting adequate liquidity to meet short-term obligations.
Pipeline and Innovation: Driving Future Growth Eli Lilly's long-term success is heavily dependent on its ability to continuously discover, develop, and commercialize innovative medicines. The company has a robust pipeline of new product candidates across its key therapeutic areas, with several promising compounds in late-stage clinical trials.
In 2024, Lilly achieved several key pipeline milestones, including the approval of new indications for Zepbound and Omvoh, as well as the submission of regulatory filings for imlunestrant in metastatic breast cancer and tirzepatide for heart failure. The company also announced positive Phase III results for its incretin compound, Orforglipron, in the treatment of type 2 diabetes and obesity.
Lilly's commitment to innovation is further demonstrated by its active business development activities, such as the acquisition of Morphic Holding, Inc. and the collaboration with OpenAI to develop novel antimicrobials. These strategic initiatives are designed to complement Lilly's internal pipeline and strengthen its position as a leader in the pharmaceutical industry.
Product Portfolio: Diverse and Growing Lilly's product portfolio spans several key therapeutic areas, each contributing significantly to the company's overall revenue:
Cardiometabolic Health: Mounjaro (tirzepatide) is Lilly's fastest-growing product, generating $11.54 billion in revenue in 2024, a 124% increase from the prior year. Trulicity, while facing increased competition, still contributed $5.25 billion in revenue. Jardiance, part of Lilly's collaboration with Boehringer Ingelheim, grew 22% to $3.34 billion. The insulin portfolio, including Humalog, Humulin, and Basaglar, collectively generated $3.98 billion in revenue.
Oncology: Verzenio, a CDK4/6 inhibitor, generated $5.31 billion in revenue in 2024, a 37% increase year-over-year. Cyramza and Erbitux contributed $973.3 million and $627.4 million, respectively. Jaypirca, a newly approved BTK inhibitor, generated $526.0 million in its first full year on the market.
Immunology: Taltz, an IL-17A antagonist, generated $3.26 billion in revenue in 2024, an 18% increase year-over-year. Olumiant recorded $957.4 million in revenue, a 4% increase compared to the prior year. Ebglyss, recently approved in Europe for atopic dermatitis, and Tyvyt, approved in China for various cancer indications, are also part of Lilly's growing immunology portfolio.
Neuroscience: Emgality, a CGRP antagonist for migraine prevention, generated $870.4 million in revenue in 2024, a 28% increase year-over-year. Kisunla, Lilly's anti-amyloid antibody for early Alzheimer's disease, was approved in the U.S. and Japan in 2024 and represents a significant opportunity for future growth.
Outlook and Risks: Navigating Challenges and Opportunities Looking ahead, Eli Lilly is well-positioned for continued growth and success. The company has provided guidance for 2025, expecting revenue to be in the range of $58 billion to $61 billion, representing approximately 32% growth compared to 2024. This optimistic outlook is driven by the anticipated continued momentum of Lilly's newer products, such as Mounjaro and Zepbound, as well as the expected launch of Orforglipron in key markets.
Lilly expects the gross margin as a percentage of revenue to be between 41.5% and 43.5% in 2025, reflecting approximately 340 basis points of margin expansion compared to 2024. Earnings per share (EPS) is expected to be between $22.50 and $24.00 on a non-GAAP basis, excluding any forecast for charges related to IPR&D.
The company anticipates continued growth in the U.S. incretin class and plans to launch Mounjaro in new markets outside the U.S. and Europe throughout 2025. Lilly also expects oncology, neuroscience, and immunology segments to grow revenue in 2025 as newer product launches gain traction.
However, Lilly is not without its risks. The company operates in a highly competitive and regulated industry, where it faces challenges from generic and biosimilar manufacturers, as well as pricing pressures from payers and governments. Lilly expects overall net prices to decline by mid- to high single digits in percentage terms, including the impact of U.S. Part D changes. Additionally, the success of Lilly's pipeline is subject to the inherent uncertainties of the drug development process, including the risk of clinical trial failures and regulatory hurdles.
The company is also navigating the evolving landscape of healthcare policy and legislation, such as the implementation of the Inflation Reduction Act in the United States, which could impact the pricing and reimbursement of its products. Foreign exchange is expected to be a headwind in 2025.
To address supply challenges, Lilly plans to continue expanding its manufacturing capacity, aiming to produce 1.6 times the amount of incretin salable doses during the first half of 2025 compared to the first half of 2024.
Conclusion: A Leader in Pharmaceutical Innovation Eli Lilly has a rich history of innovation and a track record of delivering strong financial performance. The company's diversified product portfolio, robust pipeline, and strategic initiatives have positioned it well for continued growth and success in the ever-changing pharmaceutical landscape. While challenges and risks remain, Lilly's management team has demonstrated its ability to navigate these complexities and capitalize on emerging opportunities.
The pharmaceutical industry is expected to see continued pricing pressures and increased focus on drug affordability from governments and private payers globally. Despite these challenges, the overall pharmaceutical market is projected to grow at a mid-single-digit CAGR over the next 5 years, providing a favorable backdrop for Lilly's growth ambitions.
As Lilly continues to push the boundaries of medical innovation, investors will be closely watching the company's ability to execute on its ambitious plans and deliver sustainable value over the long term. With its strong financial position, diverse product portfolio, and commitment to research and development, Eli Lilly remains well-positioned to maintain its status as a leader in the global pharmaceutical industry.