LLY Q1 Earnings Call: Revenue Beats Expectations, Profit Guidance Trimmed Amid Price Pressures

Global pharmaceutical company Eli Lilly (NYSE: LLY) reported revenue ahead of Wall Street’s expectations in Q1 CY2025, with sales up 45.2% year on year to $12.73 billion. The company expects the full year’s revenue to be around $59.5 billion, close to analysts’ estimates. Its non-GAAP profit of $3.34 per share was 3.4% below analysts’ consensus estimates.

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StockStory’s Take

Eli Lilly’s first quarter results were driven by significant revenue growth in its key therapeutic areas, notably diabetes and obesity, supported by strong uptake of products such as Mounjaro and Zepbound. Management highlighted the contribution from new launches, expanded reimbursement for immunology products, and the advancement of late-stage pipeline assets. CEO Dave Ricks emphasized the successful Phase 3 data for orforglipron, positioning it as an oral alternative to injectable GLP-1 therapies for chronic diseases.

Looking forward, Lilly reconfirmed its annual revenue outlook but lowered its non-GAAP earnings forecast due to ongoing investments and anticipated pricing headwinds. CFO Lucas Montarce noted that mid- to high-single-digit price erosion is expected to persist, while management stressed ongoing uncertainties related to trade policy and reimbursement dynamics. The company is focused on executing its manufacturing expansion and pipeline milestones, with the upcoming orforglipron obesity trial results cited as a key event.

Key Insights from Management’s Remarks

Lilly’s management attributed the quarter’s revenue growth to robust demand for diabetes and obesity therapies, new product launches, and progress in expanding global access. At the same time, profit margins were affected by increased R&D and marketing investments, as well as acquired in-process R&D charges.

• GLP-1 Portfolio Expansion: Uptake of Mounjaro in diabetes and Zepbound in obesity was a major growth driver, with both products gaining market share in the U.S. and international markets. Zepbound also launched higher-dose vials, aimed at improving patient access through self-pay channels.
• Immunology and Neuroscience Progress: Ebglyss in atopic dermatitis showed improving patient starts and coverage, with further reimbursement gains anticipated. Kisunla, for Alzheimer’s disease, is approved in 12 countries, with increasing adoption but expectations for a gradual build in the market.
• Manufacturing Investment: The company announced plans to more than double U.S. manufacturing investments, totaling over $50 billion since 2020, including four new facilities to support future supply needs and reduce reliance on imports.
• Pipeline Advancements: Orforglipron’s positive Phase 3 results in diabetes support its potential as an oral GLP-1 therapy, with further obesity data expected soon. Additional late-stage programs in oncology and cardiometabolic health also advanced.
• Tariff and Pricing Pressures: Management addressed recent U.S. trade policies and pharmacy benefit manager (PBM) decisions, noting that announced tariffs are not expected to materially affect 2025 results, but ongoing pricing and reimbursement negotiations remain a key focus.

Drivers of Future Performance

Management’s outlook for the rest of the year centers on maintaining revenue momentum through new product launches and expanded access, while navigating pricing pressures and external policy risks.

• Pricing and Reimbursement Dynamics: Persistent mid- to high-single-digit price erosion in the U.S. and Europe, influenced by PBM formulary changes and competitive discounting, is expected to weigh on profits.
• Pipeline and Launch Execution: Upcoming data readouts for orforglipron in obesity, as well as continued launches in international markets for Mounjaro and Zepbound, are seen as crucial for sustaining growth.
• Manufacturing and Supply Expansion: The scaling of U.S. manufacturing capacity is intended to support both domestic supply and export growth, potentially mitigating risks from future trade or tariff actions.

Top Analyst Questions

• Asad Haider (Goldman Sachs): Asked about the impact of the CVS formulary decision favoring a competitor over Zepbound. CEO Dave Ricks explained that while such PBM moves are expected, Lilly aims to expand access and avoid limiting patient and physician choice.
• Geoff Meacham (Citibank): Inquired about the breadth of indications for orforglipron and whether its oral format could expand usage beyond current injectable therapies. Dr. Dan Skovronsky indicated confidence in pursuing broader indications, including combinations for immunology and neuroscience.
• Chris Schott (JPMorgan): Sought clarification on orforglipron’s potential role relative to injectables in diabetes and obesity. Management highlighted that a substantial share of patients prefer oral therapies, supporting significant global opportunity.
• Tim Anderson (Bank of America): Questioned the prevalence of exclusive PBM arrangements in obesity drug coverage. Lilly replied that such “one of one” formulary strategies are rare but acknowledged ongoing negotiations and market evolution.
• Evan Seigerman (BMO Capital Markets): Asked about the withdrawal of the heart failure indication for Tirzepatide. Dr. Skovronsky said additional trials are required by the FDA, but noted that patients in the study are already eligible under existing obesity indications.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) the readout of orforglipron obesity trials and subsequent regulatory submissions, (2) progress in expanding U.S. and international reimbursement for key products like Zepbound and Ebglyss, and (3) the pace of manufacturing expansion and its impact on supply reliability. We will also track further data from late-stage pipeline assets and any shifts in PBM or trade policy that could influence pricing or access.

Eli Lilly currently trades at a forward P/E ratio of 28.2×. Is the company at an inflection point that warrants a buy or sell? See for yourself in our free research report.

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