Eli Lilly and Company
The maker of Mounjaro and Zepbound, the weekly injection that leads the obesity-drug market: one molecule now brings in two thirds of its sales.
Our viewNeutral Medium conviction
The scores
The profile · 1-4
Growth4/4 →
Three years of accelerating growth - 19.6%, 32.0%, 44.7% - none of it bought, carried by units sold rather than by price.
Business quality3/4 ↓
The molecule is protected to 2036, but a determined entrant took the first year of the oral market and the rival now contests the lead.
Financial position3/4 →
Net debt near 1.6 times annualised earnings after $9.0 billion of notes issued in May, spread across maturities to 2066 and comfortably serviced.
Execution record4/4 →
Revenue guidance raised twice this year, to $85-87 billion, and performance margin from 46.0-47.5% to 49.0-50.5%, with the acquisition charge disclosed rather than added back.
Per share capture4/4 →
Diluted share count fell year on year, $4.0 billion repurchased in the half, stock pay 0.8% of revenue, acquisitions paid in cash.
Potential3/4 →
Large upside on two or three dated, observable steps - a pill selling, a submission made - but retatrutide's pathway is in litigation.
Risk profile3/4 →
One molecule at 64.7% of revenue, three wholesalers at 16-24% each, and a Medicare programme that expires inside the horizon - all disclosed, none case-breaking.
Valuation3/4 ↑
31.6 times guided earnings and 38.0 times trailing against a six-year median of 51.5 pays for the current business and the guided plan.
Evidence quality4/4 ↑
The regulator's patent docket, the rival's own half-year filing, the Q2 2026 call, Form 4 for every sale, and peer-reviewed cost data.
The bet · 2-3 years
Safe, little upside1.0×
If it works 1.0× · if it fails you keep about 90%.
The Verdict
We rate Eli Lilly neutral. Mounjaro and Zepbound lead the obesity-drug market and sales grow very fast, so the business is strong. The price is fair: the shares cost less than their own history for each dollar of earnings. What holds us back is concentration: about two thirds of sales come from one molecule whose American patent protection ends in 2036, and a rival won the first year of the obesity pill. As a bet it is safe, with little upside: if Foundayo and retatrutide succeed the shares are worth about what they cost, and if they fail shareholders keep about nine-tenths.
The long caseObesity is now treated with medicine; a pill anyone can take and a stronger injection could reach patients the first medicine never did.
The evidence under this - 8 claims
C15facthigh confidence
Q2 2026 revenue was $22,974 million, up 48%, and the split is the whole story: volume up 60%, realised prices down 13%.
C39facthigh confidence
Revenue guidance for 2026 has been raised three times: from $80-83 billion at the outset to $82-85 billion in April, $85-87 billion in August and $91-92 billion in October, with performance margin going from 46.0-47.5% to 52.0-52.5% over the three steps. About $900 million of Q3 revenue was one-off (Jardiance milestones of $410 million, with no further milestones, and rebate-estimate adjustments).
sourceEli Lilly Form 8-K Exhibit 99.1: third-quarter 2026 results…primaryEli Lilly first-quarter 2026 results release, Exhibit 99 to…primaryEli Lilly second-quarter 2026 results release, Exhibit 99.1…primary
against this
- Guidance set low and raised twice is a presentation choice as much as a performance one, and the initial range was issued before the year began.
- The earnings-per-share line did not follow the same path - it went up in April and back down in August, because acquisition charges more than offset the underlying raise.
- Q3 revenue held about $900 million of benefits that will not repeat, so part of the raise is not run rate.
- 2026-10-29editedthird raise of the year in the Q3 2026 release, with the one-off benefits stated
C01facthigh confidence
One molecule is the company. Mounjaro and Zepbound are both tirzepatide, and together they were $14,871 million of $22,974 million of Q2 2026 revenue - 64.7%.
C04facthigh confidence
The FDA's own Orange Book records tirzepatide's drug-substance patent expiring on 13 May 2036, with new-chemical-entity exclusivity ending 13 May 2027 and later formulation patents running to 2039 and 2041.
sourceU.S. Food and Drug Administration, Orange Book patent and…primaryEli Lilly Form 10-K, fiscal year ended 31 December 2025primary
against this
- A listed patent is not an enforceable one: the Orange Book's own notice says users should not rely on a listing to determine the range of claims that may be asserted, and generic applicants routinely challenge the later formulation patents.
- Lilly's own 10-K gives a different framing - compound patent to 2036 in the US but data protection only to 2027 - so the date a competitor could first attempt entry is nine years earlier than the headline expiry.
C31inferencemedium confidence
At the midpoint of management's own 2026 guidance the shares cost about 31.6 times this year's earnings - $1,136.11 against non-GAAP earnings per share of $35.50 to $36.50 - on a franchise whose United States protection has ten more years to run.
sourceResearch pack for LLY, frozen beside this thesisprimaryEli Lilly second-quarter 2026 results release, Exhibit 99.1…primaryU.S. Food and Drug Administration, Orange Book patent and…primary
against this
- Guidance is given on a non-GAAP basis only, and Lilly's non-GAAP still carries the acquired in-process research and development it refuses to add back - so an acquisition-heavy year pushes this multiple up for a reason that is not operating deterioration.
- A multiple struck on the year in progress flatters a company whose revenue is growing 48%: on 2025's actual earnings the same price is far dearer, and on the 2028 consensus of $53.60 it is 21.2 times, so the figure moves with which year you choose.
C27facthigh confidence
At $1,136.11 the shares trade at 38.0 times trailing earnings against a six-year median of 51.5, and at a 1.9% free cash flow yield against a 1.1% median - cheaper than this company's own normal on earnings, in line on sales.
C40facthigh confidence
Medicare now covers these medicines, and the coverage has an end date: the Q2 2026 10-Q states that under the Medicare GLP-1 Bridge program beneficiaries obtained access to discounted Lilly obesity medicines effective 1 July 2026 through 31 December 2027, with state Medicaid programs free to expand access separately.
sourceEli Lilly Form 10-Q, quarter ended 30 June 2026primaryEli Lilly Q2 2026 earnings call, held 5 August 2026primary
against this
- The same paragraph says the uptake from the expanded access is unknown, and that Lilly continues to engage with CMS on long-term Medicare access - so the arrangement past 2027 is not settled.
- It is a pilot with a stated expiry inside this thesis's horizon, so the honest reading is a dated experiment rather than a permanent widening of the payer base.
C45facthigh confidence
Lilly lost the first year of the oral market. Novo launched its Wegovy pill on 5 January 2026, calls it 'the strongest-ever GLP-1 volume launch in the US' at around 2.9 million prescriptions in Q2 and over 5 million since launch; Foundayo reached the market in early April and had over 30% of new US oral patients by 14 September.
sourceNovo Nordisk Form 6-K, financial report for 1 January to 30…primaryReuters: Lilly says Foundayo has captured over 30% of new US…secondary
against this
- New patients are the leading measure and Lilly's share of them is rising fast: management described an inflection in late July, near a doubling of volume in a month, and prescribers rising from 8,000 to 36,000.
- A three-month head start explains much of the installed base, and Foundayo's global rollout across more than 40 markets is a 2027 event, so the first year is not the whole contest.
The company
Lilly is a drug maker, and today mostly one drug. Tirzepatide is a weekly injection that acts on two gut hormones at once, sold as Mounjaro for type 2 diabetes and, identically, as Zepbound for obesity. In August the FDA added heart protection to Mounjaro's label.
A patient's alternatives are diet, surgery, or Novo Nordisk's rival drugs, Wegovy and Ozempic. Lilly now sells a pill as well, Foundayo, which booked its first $98M in the June quarter.
The evidence under this - 5 claims
C01facthigh confidence
One molecule is the company. Mounjaro and Zepbound are both tirzepatide, and together they were $14,871 million of $22,974 million of Q2 2026 revenue - 64.7%.
C02facthigh confidence
Tirzepatide is a weekly injection that activates two gut-hormone receptors at once; the company markets the identical molecule as Mounjaro for type 2 diabetes and Zepbound for obesity.
C51facthigh confidence
The label widened on 28 August 2026: the FDA approved Mounjaro to lower the risk of major adverse cardiovascular events, on SURPASS-CVOT, an event-driven trial of 13,299 participants across 30 countries with a median four years of follow-up.
against this
- It was won on non-inferiority, not superiority: the release states an 8% lower rate of cardiovascular death, heart attack or stroke against Trulicity with a hazard ratio of 0.92 and a 95.3% confidence interval of 0.83 to 1.01, which crosses one.
- The comparator is Lilly's own older medicine rather than the rival's, so the trial does not rank tirzepatide against semaglutide on cardiovascular outcomes.
C06facthigh confidence
The only direct rival concedes the loss in its own annual report: Novo Nordisk's 20-F states Wegovy's US prescription lead in obesity was overtaken by a competing GLP-1 product at the beginning of 2025, and Ozempic's in type 2 diabetes during 2025.
C03facthigh confidence
Lilly now sells a pill as well: Foundayo, the oral GLP-1 orforglipron, was approved by the FDA for obesity in Q1 2026, booked its first $98 million in Q2 2026 and launched in the United Kingdom in August 2026.
How it makes money
Lilly sells to three big wholesalers, each 16% to 24% of revenue, who resell against prescriptions. It keeps far less than the list price: at the end of June it owed $21.12B in rebates and discounts to insurers and governments. And many patients pay themselves: about 45% of Zepbound prescriptions, at $245 to $449 a month.
The evidence under this - 3 claims
C23facthigh confidence
Three wholesalers each accounted for between 16% and 24% of consolidated revenue in each of 2023, 2024 and 2025, and between 20% and 29% of receivables. The Q2 2026 10-Q does not restate the figures, so this is an annual disclosure and the next reading is the FY2026 10-K.
C24facthigh confidence
The gross-to-net gap is enormous and growing: sales rebates and discounts sat at $21,122 million of current liabilities at 30 June 2026, up from $17,382 million six months earlier - roughly a quarter of the year's guided revenue.
C43facthigh confidence
Patients are routing around the payer rather than waiting for one: self-pay was approximately 45% of total Zepbound prescriptions in Q2 2026 and approximately 55% of new prescriptions, at company-stated cash prices of $245 to $449 a month.
against this
- A cash price of $245 to $449 a month is a fraction of the commercial net price, so a growing self-pay mix is itself part of the realised price decline rather than a clean expansion.
- Novo reports the same phenomenon - around 120,000 of its 310,000 weekly injectable Wegovy prescriptions filled in the self-pay channel - so this is the market's shape, not this company's advantage.
Where the money comes from, stream by stream
| Stream | Share of sales (Q2 2026) | How it earns it |
|---|---|---|
| Tirzepatide (Mounjaro and Zepbound) | 64.7% | One weekly injection sold as Mounjaro for type 2 diabetes and Zepbound for obesity, through wholesalers, pharmacies and self-pay. |
| Other cardiometabolic | 15.2% | Jardiance with Boehringer Ingelheim, Trulicity, insulins and the new Foundayo pill, sold to the same diabetes and obesity prescribers. |
| Oncology | 11.2% | Verzenio for breast cancer, Jaypirca, Inluriyo and other cancer drugs, prescribed by oncologists and paid by insurers. |
| Immunology | 6.2% | Taltz for psoriasis and arthritis, Ebglyss for eczema and others, prescribed by dermatologists and rheumatologists. |
| Neuroscience and other | 2.8% | Kisunla for early Alzheimer's disease, older neuroscience products and other revenue. |
Who runs it
David Ricks has run Lilly since 2017 after a career there, and Daniel Skovronsky has run its research since 2018; the finance chief is the third since 2021. Insiders own almost none of the company. Most of the bonus rides on sales of newer drugs, profit per share and pipeline progress; the shares pay on the stock beating a cost of capital and rival drug makers. Nothing pays on cash or on the prices actually realised.
The evidence under this - 3 claims
C64facthigh confidence
David Ricks has been chair, president and chief executive since 2017 after more than 25 years at Lilly; Lucas Montarce has been chief financial officer since September 2024, the third since February 2021; Daniel Skovronsky has run research as chief scientific officer and president of Lilly Research Labs since 2018.
C62facthigh confidence
Insiders own almost none of it: the 25 directors and current executive officers held 1,362,076 shares at 25 February 2026, under 0.2% of the 944,818,881 outstanding, David Ricks the largest at 815,535; none was pledged. The holders above 5% at 31 December 2025 were the Lilly Endowment at 9.8%, Vanguard 8.6% and BlackRock 6.8%.
C63facthigh confidence
The annual bonus pays equally on product revenue from newer products, adjusted non-GAAP EPS and pipeline progress, capped at 250%, and paid 218% for 2025; the long-term award is half SVA, on the share price against a 9.48% cost of capital over three years, and half RVA, on three-year shareholder return against pharmaceutical peers including Novo Nordisk. Both 2023 awards paid 200%.
against this
- For the bonus the committee excluded acquired IPR&D and business-development charges from EPS, which the company's own public non-GAAP EPS keeps in (C19), so the bonus is struck on a more flattering figure than the one investors are shown.
- No measure pays on cash flow, return on capital or price realised, so the 13% fall in realised prices (C15) costs the plan nothing while volume rises.
Why it wins, and who could beat it
Why customers come back
The protection is a patent the regulator itself publishes: nobody may sell tirzepatide in America until 13 May 2036, and Lilly's filing gives 2037 in Europe and 2040 in Japan. That is strong, and it is dated.
Its effect shows in the rival's own words. Novo Nordisk's annual report concedes it lost both American prescription leads during 2025, and Novo now forecasts its 2026 sales flat to down 6% while Lilly grows 48%.
The evidence under this - 5 claims
C04facthigh confidence
The FDA's own Orange Book records tirzepatide's drug-substance patent expiring on 13 May 2036, with new-chemical-entity exclusivity ending 13 May 2027 and later formulation patents running to 2039 and 2041.
sourceU.S. Food and Drug Administration, Orange Book patent and…primaryEli Lilly Form 10-K, fiscal year ended 31 December 2025primary
against this
- A listed patent is not an enforceable one: the Orange Book's own notice says users should not rely on a listing to determine the range of claims that may be asserted, and generic applicants routinely challenge the later formulation patents.
- Lilly's own 10-K gives a different framing - compound patent to 2036 in the US but data protection only to 2027 - so the date a competitor could first attempt entry is nine years earlier than the headline expiry.
C05facthigh confidence
Lilly's own filing puts the same expiry at 2036 in the United States, 2037 in major European countries and 2040 in Japan - so the regulator and the company agree on the year the franchise stops being protected.
C06facthigh confidence
The only direct rival concedes the loss in its own annual report: Novo Nordisk's 20-F states Wegovy's US prescription lead in obesity was overtaken by a competing GLP-1 product at the beginning of 2025, and Ozempic's in type 2 diabetes during 2025.
C07inferencemedium confidence
The competing product Novo lost to is almost certainly Lilly's, because the same filing states that Novo Nordisk and Eli Lilly are the two most significant companies in the market by share.
against this
- Novo does not name the competitor anywhere in the filing, so this is a deduction from its own market-structure statement rather than a disclosure.
- The same filing says several major international pharmaceutical companies and smaller biotech companies have anti-obesity medications under development, so a third product is not formally excluded.
C49facthigh confidence
The rival is shrinking while Lilly grows: Novo's H1 2026 adjusted sales fell 2% at constant rates and its 2026 outlook is for adjusted sales growth of 0% to -6%, against Lilly's 48% revenue growth in the June quarter.
sourceNovo Nordisk Form 6-K, financial report for 1 January to 30…primaryEli Lilly second-quarter 2026 results release, Exhibit 99.1…primary
against this
- Novo raised that outlook twice - from -4% to -12% in May to 0% to -6% in August - on increased GLP-1 expectations, so the direction of its revisions is the same as Lilly's.
- Much of Novo's decline is US rebate and 340B accounting rather than lost units: its Q2 adjusted sales rose 7% at constant rates and its obesity volumes grew.
The threat
Novo is fighting back. It launched its obesity pill in January, calls it the strongest launch of its kind, and still leads that market; Lilly's pill had over 30% of new American pill patients by 14 September. Insurers can switch all their patients at once: CVS Caremark dropped Zepbound from July 2025 until this October. And Pfizer has bought its way in.
The evidence under this - 4 claims
C44facthigh confidence
The rival now contests the lead its annual report conceded. Novo's H1 2026 report states that 'measured by new patient starts, the Wegovy franchise remains the market leader among branded obesity medications in the US', while Lilly reports roughly 6 of 10 total US obesity prescriptions and 7 of 10 injectable ones.
sourceNovo Nordisk Form 6-K, financial report for 1 January to 30…primaryEli Lilly Q2 2026 earnings call, held 5 August 2026primary
against this
- The two are measured differently and can both be true: a share of new patient starts and a share of total prescriptions are different quantities, and Novo counts a franchise spanning injection, high dose and pill.
- Neither company publishes the other's measure, and no independent body publishes both cuts, so the disagreement cannot be resolved from outside.
C45facthigh confidence
Lilly lost the first year of the oral market. Novo launched its Wegovy pill on 5 January 2026, calls it 'the strongest-ever GLP-1 volume launch in the US' at around 2.9 million prescriptions in Q2 and over 5 million since launch; Foundayo reached the market in early April and had over 30% of new US oral patients by 14 September.
sourceNovo Nordisk Form 6-K, financial report for 1 January to 30…primaryReuters: Lilly says Foundayo has captured over 30% of new US…secondary
against this
- New patients are the leading measure and Lilly's share of them is rising fast: management described an inflection in late July, near a doubling of volume in a month, and prescribers rising from 8,000 to 36,000.
- A three-month head start explains much of the installed base, and Foundayo's global rollout across more than 40 markets is a 2027 event, so the first year is not the whole contest.
C56facthigh confidence
A single buyer has already shown it can move the book: CVS Caremark removed Zepbound from most commercial formularies from 1 July 2025 in favour of the rival, and restores it as a preferred option from 1 October 2026.
sourceManaged Healthcare Executive: CVS Caremark to put Zepbound…secondaryEli Lilly Q2 2026 earnings call, held 5 August 2026primary
against this
- It reversed, and patient backlash is reported as the reason - which is evidence the product's pull limits how far a formulary manager can go.
- Lilly's finance chief said the restoration will lower realised price 'for sure', because the medical-exception route it replaces was billing at a higher net price, so winning the buyer back costs margin.
C09facthigh confidence
Pfizer bought its way into the same market: its own 10-K names the acquisition of Metsera in November 2025 and in-licensing agreements with YaoPharma and 3SBio in obesity and cardiometabolic diseases.
The rivals: NVO, NVO, CVS, PFE, AMGN, ABBV, MRK, and 2 more that are private, in-house or listed abroad.
Who else does this, rival by rival
| Ticker | Rival | Where it competes | How far along | Priced against it |
|---|---|---|---|---|
| NVO | Novo Nordisk (semaglutide - Wegovy injection, Wegovy HD and the Wegovy pill)Priced against it: No usable figure | Tirzepatide and the rest of Lilly's medicines | On sale | No usable figure |
| Novo Nordisk's Wegovy pill (oral semaglutide) | Foundayo and retatrutide, the next obesity medicines | On sale | ||
| CVS | CVS Caremark and the other pharmacy benefit managers, as the channel that choosesPriced against it: Different product | Tirzepatide and the rest of Lilly's medicines | On sale | Different product |
| Not listed | Compounding pharmacies and illicit sellers of unapproved copiesPriced against it: Not listed | Tirzepatide and the rest of Lilly's medicines | On sale | Not listed |
| PFE | Pfizer (Metsera, and the YaoPharma and 3SBio in-licensing)Priced against it: Yes | Tirzepatide and the rest of Lilly's medicines | Announced | Yes |
| Not listed | Generic manufacturers, from 2036 - and the class's first challenges are already filed against the rivalPriced against it: Not listed | Tirzepatide and the rest of Lilly's medicines | In research | Not listed |
| AMGN | AmgenPriced against it: Yes | - | On sale | Yes |
| ABBV | AbbViePriced against it: Yes | - | On sale | Yes |
| MRK | Merck & Co.Priced against it: Yes | - | On sale | Yes |
How big it could get
How big this could get
The World Health Organization counted 890 million adults living with obesity in 2022, 16% of all adults. In America the rate is 40.3%. Lilly's tirzepatide sales come to $16.71 a quarter for each of those 890 million people, so the limit is not patients but who will pay.
The evidence under this - 3 claims
C11facthigh confidence
The World Health Organization counted 890 million adults living with obesity in 2022 - 16% of adults aged 18 and over, out of 2.5 billion who were overweight.
C12facthigh confidence
In the United States the rate is two and a half times the world's: the CDC put adult obesity prevalence at 40.3% for August 2021 to August 2023, with severe obesity at 9.4%.
C13inferencemedium confidence
Lilly's quarterly tirzepatide revenue of $14,871 million against the 890 million adults the WHO counts as living with obesity is $16.71 a person for the quarter.
sourceEli Lilly second-quarter 2026 results release, Exhibit 99.1…primaryWorld Health Organization, Obesity and overweight fact sheetprimary
against this
- Roughly half that revenue is Mounjaro sold for type 2 diabetes, a different and only partly overlapping population, so the numerator is not all obesity revenue.
- The denominator is everyone with obesity rather than everyone whose payer would reimburse a medicine for it, and Lilly's own filing says United States self-insured employers must generally opt in and many international payers do not cover the indication at all.
The results
The numbers
Is it growing?Fast
Sales grew 45% in the year to Dec 2025, faster than the 32% in the year before.
Is it profitable?Strong
It keeps 32% of sales as profit, up from 22% in the year to Dec 2022.
What does it keep on each sale?Rich
It keeps 83¢ of each sales dollar after making what it sells, and spends 20¢ of it on research, its biggest running cost.
Does it earn good returns?Strong
Shareholders' money earned 101% a year, up from 76% in the year to Dec 2021.
Is it making cash?Solid
It turned 14% of sales into free cash, $8.97B over the year.
Is the balance sheet safe?Heavy debt
It owes $35.2B more than the cash it holds, about 2.1 years of the cash its operations bring in.
Are shares being diluted?Stable
The share count fell 1.4% in 4.0 years, and pay in shares costs 1.0% of sales.
All the numbers
Filed figures from the company's 10-K and 10-Q, read 2026-10-04. Fiscal years end in December.
| Dec 2021 | Dec 2022 | Dec 2023 | Dec 2024 | Dec 2025 | |
|---|---|---|---|---|---|
| Size and growth | |||||
| Sales | $28.3B | $28.5B | $34.1B | $45.0B | $65.2B |
| Sales growth | +15% | +0.8% | +20% | +32% | +45% |
| Profit | |||||
| Gross margin | 74% | 77% | 79% | 81% | 83% |
| Net margin | 20% | 22% | 15% | 24% | 32% |
| What growth costs, per sales dollar | |||||
| Research and development | 24% | 25% | 27% | 24% | 20% |
| Selling, general and admin | 23% | 23% | 22% | 19% | 17% |
| Pay in shares | 1.2% | 1.3% | 1.8% | 1.4% | 1.0% |
| Capital spending | 4.6% | 6.5% | 10% | 11% | 12% |
| Cash | |||||
| Cash from operations | $7.37B | $7.59B | $4.24B | $8.82B | $16.8B |
| Free cash flow | $6.06B | $5.73B | $792M | $3.76B | $8.97B |
| Balance sheet | |||||
| Cash and short-term investments | $3.91B | $2.21B | $2.93B | $3.42B | $7.27B |
| Debt | $16.9B | $16.2B | $25.2B | $33.6B | $42.5B |
| Net cash | −$13.0B | −$14.0B | −$22.3B | −$30.2B | −$35.2B |
| Returns and shares | |||||
| Shares (diluted) | 912M | 905M | 903M | 904M | 899M |
What growth costs
Growing has made Lilly more profitable: making, researching and selling each cost less per dollar of sales than four years ago. The cost that grows faster than sales is factories, built ahead of demand, and the research the company buys in rather than does itself sits on its own line.
The evidence under this - 2 claims
C61facthigh confidence
Per sales dollar, from 2021 to 2025 cost of sales fell from 25.8 cents to 17.0, research and development from 24.5 to 20.5 and marketing, selling and administrative from 22.7 to 17.0, while capital spending rose from 4.6 to 12.0; pretax margin went from 21.7% to 39.5%. Acquired IPR&D is a separate line, 3.4 cents in 2021 and 4.5 in 2025.
sourceEli Lilly Form 10-K, fiscal year ended 31 December 2025primaryEli Lilly Form 10-K, fiscal year ended 31 December 2023primary
against this
- Capital spending per sales dollar more than doubled, and the first half of 2026 ran at $5,259 million against $3,207 million a year earlier (S02): factories for the next volume are bought ahead of it (C37).
- Acquired IPR&D sits outside the research line and was $3,360 million in the first half of 2026 alone (S02), so the research cost of the pipeline is understated by the narrower line.
C37facthigh confidence
Capacity is being bought ahead of demand: the company committed a further $4.5 billion to its Indiana manufacturing sites in Q2 2026.
The last report (5 Aug)
Quarter ended June 2026, filed figures.
48%
Sales growth
against the same quarter a year earlier
16.0%
Growth from the quarter before
against 2.6% the quarter before that
In the third quarter of 2026 sales rose 39% to $24.4B, on volume up 53% and prices down 15%. About $900M was one-off, mostly milestone payments from a partner. Foundayo, the new pill, sold $184M.
Profit per share rose 7% on the company's adjusted basis, held down by $4.57 a share of research bought in deals. Gross margin was 83.9%, a point up on a year ago but 1.9 points below the second quarter. The sales forecast rose to $91B to $92B; the earnings forecast edged down for the deals.
What it did to the thesisIt kept the strategy of trading price for volume working, and the forecast rose again. It did not touch what holds us at Neutral: one drug with a patent end date and a rival's pill. The slip in gross margin is the thing to watch next quarter.
The quarter in detail
Sales growth from the previous quarter, filed figures. The company has restated its own history, so a quarter either side of the restatement may describe a different business; n/c marks one that does not compare.
Earnings per share $8.38 against $6.40 expected; $7.94 as filed, the gap being what the company adds back.
The evidence under this - 5 claims
C69facthigh confidence
Q3 2026 revenue was $24,397 million, up 39%: volume up 53%, realised prices down 15%. In the United States volume rose 41% and prices fell 7%; outside it volume rose 76% and prices fell 29%. Gross margin was 83.9% on the filed basis (84.4% non-GAAP), against 85.8% filed in Q2 (C17). Foundayo sold $184 million in its second quarter on sale.
against this
- About $900 million of the quarter's revenue was one-off (Jardiance milestones and rebate-estimate adjustments), so underlying growth was lower than 39%.
- Gross margin fell about two points from the second quarter even though it rose a point on a year earlier; the release gives only the year-on-year reason, mix and production cost.
C21facthigh confidence
Management raised 2026 revenue guidance to $91.0-92.0 billion from $85-87 billion and performance margin to 52.0-52.5% from 49.0-50.5%, while earnings-per-share guidance moved to $35.00-36.00 from $35.50-36.50 because a $4.57 acquisition charge more than offset a $4.07 underlying raise.
sourceEli Lilly Form 8-K Exhibit 99.1: third-quarter 2026 results…primaryEli Lilly second-quarter 2026 results release, Exhibit 99.1…primary
- 2026-10-29editedQ3 2026 release raised guidance again; the August range was superseded
C39facthigh confidence
Revenue guidance for 2026 has been raised three times: from $80-83 billion at the outset to $82-85 billion in April, $85-87 billion in August and $91-92 billion in October, with performance margin going from 46.0-47.5% to 52.0-52.5% over the three steps. About $900 million of Q3 revenue was one-off (Jardiance milestones of $410 million, with no further milestones, and rebate-estimate adjustments).
sourceEli Lilly Form 8-K Exhibit 99.1: third-quarter 2026 results…primaryEli Lilly first-quarter 2026 results release, Exhibit 99 to…primaryEli Lilly second-quarter 2026 results release, Exhibit 99.1…primary
against this
- Guidance set low and raised twice is a presentation choice as much as a performance one, and the initial range was issued before the year began.
- The earnings-per-share line did not follow the same path - it went up in April and back down in August, because acquisition charges more than offset the underlying raise.
- Q3 revenue held about $900 million of benefits that will not repeat, so part of the raise is not run rate.
- 2026-10-29editedthird raise of the year in the Q3 2026 release, with the one-off benefits stated
C15facthigh confidence
Q2 2026 revenue was $22,974 million, up 48%, and the split is the whole story: volume up 60%, realised prices down 13%.
C16facthigh confidence
Outside the United States prices fell 36% while volume rose 113%, driven by putting Mounjaro on China's National Reimbursement Drug List; inside it, prices fell 3%, or about 9% excluding rebate-estimate adjustments.
What management did with the money
It returned $4.0B through buybacks and $3.1B in dividends in the first half, while buying a string of small drug developers, the latest agreed on 31 August for up to $2.875B. Net debt was $45.96B at the end of June, about 1.6 times annualised profit.
Insiders in 2026Q2: 12 purchases and 3 sales, from their Form 4 filings.
The evidence under this - 3 claims
C59facthigh confidence
Capital is returned as well as spent: $4.0 billion of shares were repurchased and $3.1 billion of dividends paid in the six months to 30 June 2026, with $7.0 billion left under the $15.0 billion authorisation.
C57facthigh confidence
The acquisition cadence is the run rate, not an event: Orna, Ajax, Centessa and Kelonia closed in Q2 2026, three infectious-disease acquisitions and AtaiBeckley followed, and Merida Biosciences was agreed on 31 August 2026 for up to $2.875 billion in cash.
sourceEli Lilly second-quarter 2026 results release, Exhibit 99.1…primaryEli Lilly Q2 2026 earnings call, held 5 August 2026primary
against this
- Individually none of them required an 8-K, so each is immaterial by the filing threshold even though the acquired in-process charge they produced cost $3.03 a share in one quarter.
- Paying cash from a balance sheet carrying $45.9 billion of net debt is a different act from paying cash from net cash, and the May 2026 issuance of $9.0 billion of notes is where much of it came from.
C25inferencehigh confidence
Cash of $8,950 million stands against $7,050 million of short-term borrowings and $47,858 million of long-term debt at 30 June 2026 - net debt of $45,958 million, about 1.6 times annualised first-half net income.
against this
- Short-term borrowings quadrupled from $1,635 million at the year end, so the near-term figure is moving quickly and part of it funds acquisitions rather than operations.
- Annualising a half in which revenue grew 51% overstates the coverage if growth decelerates, which the price decline of 13% suggests it will.
The price, and where we disagree
In short. Fair. The price pays for Lilly's business as it is today. What keeps us neutral is that two thirds of its sales come from one drug whose patent has an end date.
Share price
$1,136.11
close,
Price for each $1 of yearly profit
38.0
rivals' middle 55.2 · its 6-year normal 51.5
The shares rose 50.4% in a year, yet buyers paid no more for each dollar of sales at the end than at the start: the rise was earned. They now sit 12.1% below their high.
The next test is the third-quarter report on 29 October: whether volume keeps outrunning the price cuts, and whether Lilly's share of new pill patients keeps climbing from 30%.
The evidence under this - 4 claims
C52facthigh confidence
The year's advance was earned, not paid for. Over the 252 sessions to 15 September 2026 the price rose 50.4% while trailing revenue per share, taken from the filer's own income statements, rose 50.6% - so buyers paid the same 12.8 times trailing revenue per share at both ends. Over the last 126 sessions that figure fell 6.5%.
sourceEli Lilly Form 10-Q, quarter ended 30 June 2026primaryResearch pack for LLY, frozen beside this thesisprimary
against this
- Revenue per share is not earnings per share, and the identity holds on whichever line you choose - a flat sales multiple is consistent with a falling or rising earnings multiple if margins moved.
- The window's start point does the work: measured from the August 2025 low, after a 14% single-session fall, the business had further to travel than the price.
C32facthigh confidence
The shares are up 50.4% over 252 sessions but sit 12.1% below a 52-week high of $1,292.65 and 3.9% below their 50-day average, having fallen 4.0% in the last twenty - an advance that has stopped and partly reversed.
C15facthigh confidence
Q2 2026 revenue was $22,974 million, up 48%, and the split is the whole story: volume up 60%, realised prices down 13%.
C45facthigh confidence
Lilly lost the first year of the oral market. Novo launched its Wegovy pill on 5 January 2026, calls it 'the strongest-ever GLP-1 volume launch in the US' at around 2.9 million prescriptions in Q2 and over 5 million since launch; Foundayo reached the market in early April and had over 30% of new US oral patients by 14 September.
sourceNovo Nordisk Form 6-K, financial report for 1 January to 30…primaryReuters: Lilly says Foundayo has captured over 30% of new US…secondary
against this
- New patients are the leading measure and Lilly's share of them is rising fast: management described an inflection in late July, near a doubling of volume in a month, and prescribers rising from 8,000 to 36,000.
- A three-month head start explains much of the installed base, and Foundayo's global rollout across more than 40 markets is a 2027 event, so the first year is not the whole contest.
The betSafe, little upside
If it works
1.0×
from today's value, at the stated multiple
If it fails
keep 90%
of today's market value: the rest of the company, less its debt
How we read the multiple
Buyers pay about 38 times last year's profit, well under Lilly's own six-year normal, and about 32 times this year's profit as the company forecasts it.
That pays for today's business and less for the decade beyond it. The objection is not the price but how much rides on one drug, tirzepatide, whose US patent protection runs ten more years.
Against its own history. Cheaper than its own past on profit and level on sales: the business caught up with its price, rather than the price running ahead of the business.
The evidence under this - 5 claims
C31inferencemedium confidence
At the midpoint of management's own 2026 guidance the shares cost about 31.6 times this year's earnings - $1,136.11 against non-GAAP earnings per share of $35.50 to $36.50 - on a franchise whose United States protection has ten more years to run.
sourceResearch pack for LLY, frozen beside this thesisprimaryEli Lilly second-quarter 2026 results release, Exhibit 99.1…primaryU.S. Food and Drug Administration, Orange Book patent and…primary
against this
- Guidance is given on a non-GAAP basis only, and Lilly's non-GAAP still carries the acquired in-process research and development it refuses to add back - so an acquisition-heavy year pushes this multiple up for a reason that is not operating deterioration.
- A multiple struck on the year in progress flatters a company whose revenue is growing 48%: on 2025's actual earnings the same price is far dearer, and on the 2028 consensus of $53.60 it is 21.2 times, so the figure moves with which year you choose.
C27facthigh confidence
At $1,136.11 the shares trade at 38.0 times trailing earnings against a six-year median of 51.5, and at a 1.9% free cash flow yield against a 1.1% median - cheaper than this company's own normal on earnings, in line on sales.
C28facthigh confidence
Against the five rivals confirmed from filings, Lilly is the dearest on sales at 14.0 times enterprise value against a median of 6.3, and on cash at 53.4 times against 21.0.
against this
- It also grows revenue at 49.6% against a cohort median of 6.7% and earns 27.4% on invested capital against 11.4%, so the premium is paying for something the others do not have.
- On price to earnings it ranks third of five and screens below the median, which is the opposite conclusion from the same cohort on a different line.
C29inferencehigh confidence
That earnings ranking is an artefact and should not be used: the cohort's price-to-earnings median of 55.25 is lifted by Merck at 114.1 and AbbVie at 74.1, both of whose earnings are temporarily depressed, so Lilly screens cheap against two denominators rather than against a valuation.
against this
- Depressed earnings are a real state rather than a distortion, and a buyer of Merck today is buying that earnings base, so the multiple is not wrong - it is answering a different question.
- Excluding the two would leave a median of two names, which is one name's opinion and is below what this repo will score on.
C01facthigh confidence
One molecule is the company. Mounjaro and Zepbound are both tirzepatide, and together they were $14,871 million of $22,974 million of Q2 2026 revenue - 64.7%.
Priced against its rivals
The competitors its own annual report names, each confirmed against the rival's filing. Measured on price for each $1 of yearly profit, cheapest first:
| Ticker | Company | price for each $1 of yearly profit |
|---|---|---|
| AMGN | Amgen | 23.2× |
| PFE | Pfizer | 36.4× |
| LLY | Eli Lilly and Company | 38.0× |
| ABBV | AbbVie | 74.1× |
| MRK | Merck & Co. | 114.1× |
| NVO | Novo Nordisk A/S held out | not priced |
The middle of the other 4 is 55.2. Eli Lilly and Company is 3rd cheapest of 5.
Rivals' figures come from a data provider, so read the spread of the group rather than any single pair.
Mid-table on profit, but that flatters it: two rivals' earnings are temporarily depressed. On sales and cash it is the dearest, and that position is its own.
Private or foreign rivals that cannot be priced: Compounding pharmacies (503A and 503B), Generic and biosimilar manufacturers, post-expiry, Metsera, Inc.
The bet: what it pays if it works
The bet is on Foundayo, Lilly's daily obesity pill, and retatrutide, a stronger injection not yet filed. Foundayo has sold for only one quarter and Novo's pill took the first year, so the rest of Lilly is counted separately, at thirty times this year's guided earnings.
If both medicines succeed, the shares are worth about what they cost today, because the price already pays for most of that. If they fail, shareholders keep about nine-tenths.
| Foundayo and retatrutide, the next obesity medicines revenue in two to three years | Patient-years at the lowest self-pay price needed | At the stated multiple |
|---|---|---|
| $2.00B | about 1.1M at 100% kept | 0.9× |
| $5.00B (the big win) | about 2.8M at 100% kept | 1.0× |
| $10.00B | about 5.6M at 100% kept | 1.0× |
To pay 2× (a Fair bet) it would need about $87.79B of Foundayo and retatrutide, the next obesity medicines revenue (about 49.1M patient-years at the lowest self-pay price); to pay 5× (a Cheap bet), about $327.51B of Foundayo and retatrutide, the next obesity medicines revenue (about 183.2M patient-years at the lowest self-pay price), at the same multiple.
Each row is Foundayo and retatrutide, the next obesity medicines alone, plus the rest of the company (Tirzepatide and the rest of Lilly's medicines) counted at about $965.10B.
The steps it has to take
- Done Foundayo approved and launched for obesity in the United States
- In progress Foundayo approved for type 2 diabetes in the United States due 2026-12
- In progress Foundayo launched in all major markets due 2027-12
- Not started Retatrutide application filed and accepted due 2027-03
- Not started Retatrutide approved and selling due 2028-06
The detail behind the label
Rating
Expensive
the big win's payoff against the 2× and 5× lines
Cheap bet at about
$219.02
81% below the price (close, )
The option
0.6×
what Foundayo and retatrutide, the next obesity medicines is worth if it works, against what the price pays for it
The evidence under this - 6 claims
C03facthigh confidence
Lilly now sells a pill as well: Foundayo, the oral GLP-1 orforglipron, was approved by the FDA for obesity in Q1 2026, booked its first $98 million in Q2 2026 and launched in the United Kingdom in August 2026.
C45facthigh confidence
Lilly lost the first year of the oral market. Novo launched its Wegovy pill on 5 January 2026, calls it 'the strongest-ever GLP-1 volume launch in the US' at around 2.9 million prescriptions in Q2 and over 5 million since launch; Foundayo reached the market in early April and had over 30% of new US oral patients by 14 September.
sourceNovo Nordisk Form 6-K, financial report for 1 January to 30…primaryReuters: Lilly says Foundayo has captured over 30% of new US…secondary
against this
- New patients are the leading measure and Lilly's share of them is rising fast: management described an inflection in late July, near a doubling of volume in a month, and prescribers rising from 8,000 to 36,000.
- A three-month head start explains much of the installed base, and Foundayo's global rollout across more than 40 markets is a 2027 event, so the first year is not the whole contest.
C34management claimmedium confidence
The next asset has a date: retatrutide's Phase 3 package is complete for obesity, obstructive sleep apnea and knee osteoarthritis pain, with a Biologics License Application planned for the first quarter of 2027.
against this
- The pathway itself is disputed. On the Q2 2026 call the chief executive said Lilly's position that retatrutide is a biologic is in active litigation with the FDA, after 'a mixed decision in the first decision in the court', and that chemistry and manufacturing data still has to be gathered before filing.
- Unapproved retatrutide is already being sold: Lilly sued six companies over it in August 2026 and asked platforms and payment companies to shut the channel down, so the molecule is in patients before it is in a label.
C68facthigh confidence
Novo Nordisk's Wegovy pill booked DKK 3,218 million of adjusted sales in Q2 2026 and DKK 5,474 million in the first half, its first two quarters on sale, with more than 265,000 US prescriptions in the week ending 17 July.
against this
Novo itself says external data providers under-capture prescriptions for its pill, and Foundayo had taken over 30% of new US oral patients by mid-September (C45), so the first two quarters overstate how much of the oral market Novo will keep.
C21facthigh confidence
Management raised 2026 revenue guidance to $91.0-92.0 billion from $85-87 billion and performance margin to 52.0-52.5% from 49.0-50.5%, while earnings-per-share guidance moved to $35.00-36.00 from $35.50-36.50 because a $4.57 acquisition charge more than offset a $4.07 underlying raise.
sourceEli Lilly Form 8-K Exhibit 99.1: third-quarter 2026 results…primaryEli Lilly second-quarter 2026 results release, Exhibit 99.1…primary
- 2026-10-29editedQ3 2026 release raised guidance again; the August range was superseded
C31inferencemedium confidence
At the midpoint of management's own 2026 guidance the shares cost about 31.6 times this year's earnings - $1,136.11 against non-GAAP earnings per share of $35.50 to $36.50 - on a franchise whose United States protection has ten more years to run.
sourceResearch pack for LLY, frozen beside this thesisprimaryEli Lilly second-quarter 2026 results release, Exhibit 99.1…primaryU.S. Food and Drug Administration, Orange Book patent and…primary
against this
- Guidance is given on a non-GAAP basis only, and Lilly's non-GAAP still carries the acquired in-process research and development it refuses to add back - so an acquisition-heavy year pushes this multiple up for a reason that is not operating deterioration.
- A multiple struck on the year in progress flatters a company whose revenue is growing 48%: on 2025's actual earnings the same price is far dearer, and on the 2028 consensus of $53.60 it is 21.2 times, so the figure moves with which year you choose.
Where we disagree with the market
The market believes
Lilly has won obesity and is compounding into the largest medicine franchise ever built.
We believe
Right about the business, but too relaxed about a rival that won the pill market, and about coverage with an expiry date.
We read the rival's half-year report, not only its annual one, and that is where the fight shows. The market has twice sold these shares hard on one setback, a disappointing pill trial in August 2025 and CVS dropping Zepbound, and been wrong both times.
The evidence against us: two forecast raises, a heart-protection label in August, and a rival forecasting its own sales to shrink.
What analysts say, and the evidence
Analysts positive
81%
of 31, 1 Sep
Four months earlier
75%
of 32, 1 May
The evidence under this - 7 claims
C44facthigh confidence
The rival now contests the lead its annual report conceded. Novo's H1 2026 report states that 'measured by new patient starts, the Wegovy franchise remains the market leader among branded obesity medications in the US', while Lilly reports roughly 6 of 10 total US obesity prescriptions and 7 of 10 injectable ones.
sourceNovo Nordisk Form 6-K, financial report for 1 January to 30…primaryEli Lilly Q2 2026 earnings call, held 5 August 2026primary
against this
- The two are measured differently and can both be true: a share of new patient starts and a share of total prescriptions are different quantities, and Novo counts a franchise spanning injection, high dose and pill.
- Neither company publishes the other's measure, and no independent body publishes both cuts, so the disagreement cannot be resolved from outside.
C45facthigh confidence
Lilly lost the first year of the oral market. Novo launched its Wegovy pill on 5 January 2026, calls it 'the strongest-ever GLP-1 volume launch in the US' at around 2.9 million prescriptions in Q2 and over 5 million since launch; Foundayo reached the market in early April and had over 30% of new US oral patients by 14 September.
sourceNovo Nordisk Form 6-K, financial report for 1 January to 30…primaryReuters: Lilly says Foundayo has captured over 30% of new US…secondary
against this
- New patients are the leading measure and Lilly's share of them is rising fast: management described an inflection in late July, near a doubling of volume in a month, and prescribers rising from 8,000 to 36,000.
- A three-month head start explains much of the installed base, and Foundayo's global rollout across more than 40 markets is a 2027 event, so the first year is not the whole contest.
C40facthigh confidence
Medicare now covers these medicines, and the coverage has an end date: the Q2 2026 10-Q states that under the Medicare GLP-1 Bridge program beneficiaries obtained access to discounted Lilly obesity medicines effective 1 July 2026 through 31 December 2027, with state Medicaid programs free to expand access separately.
sourceEli Lilly Form 10-Q, quarter ended 30 June 2026primaryEli Lilly Q2 2026 earnings call, held 5 August 2026primary
against this
- The same paragraph says the uptake from the expanded access is unknown, and that Lilly continues to engage with CMS on long-term Medicare access - so the arrangement past 2027 is not settled.
- It is a pilot with a stated expiry inside this thesis's horizon, so the honest reading is a dated experiment rather than a permanent widening of the payer base.
C56facthigh confidence
A single buyer has already shown it can move the book: CVS Caremark removed Zepbound from most commercial formularies from 1 July 2025 in favour of the rival, and restores it as a preferred option from 1 October 2026.
sourceManaged Healthcare Executive: CVS Caremark to put Zepbound…secondaryEli Lilly Q2 2026 earnings call, held 5 August 2026primary
against this
- It reversed, and patient backlash is reported as the reason - which is evidence the product's pull limits how far a formulary manager can go.
- Lilly's finance chief said the restoration will lower realised price 'for sure', because the medical-exception route it replaces was billing at a higher net price, so winning the buyer back costs margin.
C21facthigh confidence
Management raised 2026 revenue guidance to $91.0-92.0 billion from $85-87 billion and performance margin to 52.0-52.5% from 49.0-50.5%, while earnings-per-share guidance moved to $35.00-36.00 from $35.50-36.50 because a $4.57 acquisition charge more than offset a $4.07 underlying raise.
sourceEli Lilly Form 8-K Exhibit 99.1: third-quarter 2026 results…primaryEli Lilly second-quarter 2026 results release, Exhibit 99.1…primary
- 2026-10-29editedQ3 2026 release raised guidance again; the August range was superseded
C51facthigh confidence
The label widened on 28 August 2026: the FDA approved Mounjaro to lower the risk of major adverse cardiovascular events, on SURPASS-CVOT, an event-driven trial of 13,299 participants across 30 countries with a median four years of follow-up.
against this
- It was won on non-inferiority, not superiority: the release states an 8% lower rate of cardiovascular death, heart attack or stroke against Trulicity with a hazard ratio of 0.92 and a 95.3% confidence interval of 0.83 to 1.01, which crosses one.
- The comparator is Lilly's own older medicine rather than the rival's, so the trial does not rank tirzepatide against semaglutide on cardiovascular outcomes.
C49facthigh confidence
The rival is shrinking while Lilly grows: Novo's H1 2026 adjusted sales fell 2% at constant rates and its 2026 outlook is for adjusted sales growth of 0% to -6%, against Lilly's 48% revenue growth in the June quarter.
sourceNovo Nordisk Form 6-K, financial report for 1 January to 30…primaryEli Lilly second-quarter 2026 results release, Exhibit 99.1…primary
against this
- Novo raised that outlook twice - from -4% to -12% in May to 0% to -6% in August - on increased GLP-1 expectations, so the direction of its revisions is the same as Lilly's.
- Much of Novo's decline is US rebate and 340B accounting rather than lost units: its Q2 adjusted sales rose 7% at constant rates and its obesity volumes grew.
What could go wrong, and how we would know
The risks
- A generic challenge. Novo already faces a would-be generic of Ozempic. The same filing against tirzepatide would put the 2036 date itself in question.
- Coverage with an end date. Medicare's Bridge programme covers 20 million Americans at $50 a month only until 31 December 2027.
- Dearer than the disease. Obesity adds about $1,861 a year to an adult's medical bills; Lilly's cheapest stated price is $245 a month.
- The efficacy gap narrowing. Novo's higher-dose Wegovy won European approval in July on up to 20.7% weight loss.
- Copies and lawsuits. Unapproved copies are still sold, and Novo sued Lilly in July over its advertising.
The evidence under this - 8 claims
C47facthigh confidence
The generic challenge has already started at the rival: Novo reports that Cipla filed an abbreviated application for a generic Ozempic containing paragraph IV certifications, and that Sandoz filed in June 2026 to revoke its semaglutide patent covering 18 EU countries.
C04facthigh confidence
The FDA's own Orange Book records tirzepatide's drug-substance patent expiring on 13 May 2036, with new-chemical-entity exclusivity ending 13 May 2027 and later formulation patents running to 2039 and 2041.
sourceU.S. Food and Drug Administration, Orange Book patent and…primaryEli Lilly Form 10-K, fiscal year ended 31 December 2025primary
against this
- A listed patent is not an enforceable one: the Orange Book's own notice says users should not rely on a listing to determine the range of claims that may be asserted, and generic applicants routinely challenge the later formulation patents.
- Lilly's own 10-K gives a different framing - compound patent to 2036 in the US but data protection only to 2027 - so the date a competitor could first attempt entry is nine years earlier than the headline expiry.
C40facthigh confidence
Medicare now covers these medicines, and the coverage has an end date: the Q2 2026 10-Q states that under the Medicare GLP-1 Bridge program beneficiaries obtained access to discounted Lilly obesity medicines effective 1 July 2026 through 31 December 2027, with state Medicaid programs free to expand access separately.
sourceEli Lilly Form 10-Q, quarter ended 30 June 2026primaryEli Lilly Q2 2026 earnings call, held 5 August 2026primary
against this
- The same paragraph says the uptake from the expanded access is unknown, and that Lilly continues to engage with CMS on long-term Medicare access - so the arrangement past 2027 is not settled.
- It is a pilot with a stated expiry inside this thesis's horizon, so the honest reading is a dated experiment rather than a permanent widening of the payer base.
C42management claimmedium confidence
Management sized it on the call: the Bridge programme launched 1 July 2026 granting 20 million eligible Americans coverage at $50 a month out of pocket, and 'with this expansion, 35% more people now have coverage for our obesity medicines in the United States'.
against this
- Eligibility is not uptake. The company's own 10-Q says the uptake from this expanded access is unknown, and the commercial president described it as 'still early days'.
- The rival corroborates the reach but not the benefit to Lilly: Novo's H1 2026 report says Bridge 'covers a majority of beneficiaries' and that its own initial uptake has been encouraging.
C54facthigh confidence
The medicine costs the payer more than the disease does. Peer-reviewed work that the CDC cites puts the excess annual medical cost of an adult with obesity at $1,861, and $3,097 for severe obesity, against Lilly's own lowest stated price of $245 a month.
sourceWard, Bleich, Long and Gortmaker, 'Association of body mass…primaryEli Lilly Q2 2026 earnings call, held 5 August 2026primary
against this
- Excess medical expenditure is not the whole value: the study measures cross-sectional medical spend and excludes lost productivity, mortality and quality of life, all of which a payer or employer may price.
- It measures what obesity costs today, not what treating it saves, and the two differ - a real-world study Lilly published in August 2026 reports lower healthcare costs in treated adults over 55.
C46facthigh confidence
The efficacy gap that management calls its first line of defence is narrowing: Novo's Wegovy 7.2 mg won EMA approval in July 2026 on STEP UP data providing up to 20.7% mean weight loss, and its oral won approval on OASIS 4 data providing up to 16.6%.
against this
- Cross-trial weight-loss percentages are not a head-to-head comparison, and the only head-to-head oral trial to date - ACHIEVE-3 - favoured Lilly's orforglipron over oral semaglutide on glycemic control and weight.
- Lilly's own answer is a higher ceiling rather than a matched dose: retatrutide's TRIUMPH-1 showed weight loss approaching bariatric-surgery levels at the highest doses.
C10facthigh confidence
Unapproved copies are already being sold. Novo's 20-F records that compounding pharmacies introduced unapproved copies of its anti-obesity products during the shortage and that, following the shortage's resolution, compounding has illicitly continued.
C48facthigh confidence
Novo sued Lilly on 21 July 2026 in Federal Court in New Jersey, alleging false advertising and unfair competition over direct-to-consumer campaigns comparing the efficacy of the two companies' GLP-1 medicines.
What we still do not know
- Whether Lilly's share of new American obesity-pill patients keeps climbing from the 30% it reached by mid-September.
- Whether Medicare extends the Bridge programme past 2027, and on what price.
The evidence under this - 3 claims
C45facthigh confidence
Lilly lost the first year of the oral market. Novo launched its Wegovy pill on 5 January 2026, calls it 'the strongest-ever GLP-1 volume launch in the US' at around 2.9 million prescriptions in Q2 and over 5 million since launch; Foundayo reached the market in early April and had over 30% of new US oral patients by 14 September.
sourceNovo Nordisk Form 6-K, financial report for 1 January to 30…primaryReuters: Lilly says Foundayo has captured over 30% of new US…secondary
against this
- New patients are the leading measure and Lilly's share of them is rising fast: management described an inflection in late July, near a doubling of volume in a month, and prescribers rising from 8,000 to 36,000.
- A three-month head start explains much of the installed base, and Foundayo's global rollout across more than 40 markets is a 2027 event, so the first year is not the whole contest.
C40facthigh confidence
Medicare now covers these medicines, and the coverage has an end date: the Q2 2026 10-Q states that under the Medicare GLP-1 Bridge program beneficiaries obtained access to discounted Lilly obesity medicines effective 1 July 2026 through 31 December 2027, with state Medicaid programs free to expand access separately.
sourceEli Lilly Form 10-Q, quarter ended 30 June 2026primaryEli Lilly Q2 2026 earnings call, held 5 August 2026primary
against this
- The same paragraph says the uptake from the expanded access is unknown, and that Lilly continues to engage with CMS on long-term Medicare access - so the arrangement past 2027 is not settled.
- It is a pilot with a stated expiry inside this thesis's horizon, so the honest reading is a dated experiment rather than a permanent widening of the payer base.
C41facthigh confidence
The access was bought with price. The same 10-Q states Lilly entered voluntary agreements with the US government in which it agreed to lower Medicaid and certain other drug prices for US patients and to launch new medicines with a more balanced pricing approach across developed nations.
against this
- The filing does not quantify the concession, so its size against the volume it unlocks cannot be computed from the disclosure.
- Trading price for reimbursed volume is the strategy the thesis already accepts as deliberate; what is new is the counterparty, not the direction.
What would change our view
- Neutral→AttractiveThe pipeline replaces the dependence
It needs all of:
- ○Retatrutide, the next obesity drug, is filed on time in early 2027 and accepted, so a second molecule is really on the way.watched as it happens
- ○Volume keeps growing faster than prices fall, and Lilly keeps more than 20% of new American obesity-pill patients.checked at the next results, due by 12 Feb
- Neutral→UnattractiveThe franchise is challenged or loses the lead
It needs any of:
- ○A generic maker files to challenge tirzepatide's patent.watched as it happens
- ○Novo retakes the lead in all American obesity prescriptions, or Medicare's Bridge coverage ends in 2027 with nothing after it.watched as it happens
We would also be wrong if
- Volume growth falls below the price decline in any quarter.
- Lilly's share of new American obesity-pill patients falls back below 20%.
- The retatrutide filing slips, is withdrawn or is refused.
What is coming
- 29 October 2026 Third quarter 2026 results: Whether volume growth still outruns the price decline, gross margin holds near 85.8%, guidance holds, and Foundayo keeps gaining new oral patients against Novo's pill.
Every dated event ahead
- 29 October 2026 Third quarter 2026 results: Whether volume growth still outruns the price decline, gross margin holds near 85.8%, guidance holds, and Foundayo keeps gaining new oral patients against Novo's pill.
- February 2027 Fourth quarter and full-year 2026 results, with 2027 guidance: Whether 2026 lands inside the raised $85-87 billion range, and what 2027 guidance assumes for US price and the Medicare Bridge volume.
- March 2027 Retatrutide Biologics License Application: Whether the next obesity molecule is filed on time, the step that would extend the franchise past tirzepatide's 2036 expiry.
- 13 May 2027 Tirzepatide new-chemical-entity exclusivity ends: Patents still protect the molecule to 2036; whether generic filers challenge them once the five-year exclusivity lapses, as Cipla did against Ozempic.
- 31 December 2027 Medicare GLP-1 Bridge programme ends unless extended: Whether the coverage that added 20 million eligible Americans continues, and at what price.
Since we wrote this
Written
25 Aug
Price the thesis read
$1,136.11
15 Sep
- 29 OctEarningsThird raise of 2026 guidance; volume up 53%, prices down 15%The strategy of trading price for volume kept working and the sales forecast rose again. Gross margin slipped below our line and the oral share is unread, so the view stays Neutral.
- 19 OctNewsLilly's Omvoh hit its goal in children; a $1.1B delivery deal was announced. View heldOmvoh pediatric ulcerative colitis trial result and Metis TechBio delivery deal.
- 11 OctThesis reviewFoundayo and retatrutide declared an early business, with a betThe owner's rule of 2026-10-11: every thesis names its lines, and an early line owes a bet. Lilly's answer to one molecule's patent date rests on two medicines not yet proven.
- 5 OctThesis reviewThe long case now sits under the verdictAfter the five-name pilot, the owner asked for the long case on every thesis.
- 4 OctThesis reviewOwner's checklist: revenue streams, cost of growth, management, catalystsThe owner's checklist found the method silent on who runs the company, what growth costs, where the money comes from and what is dated ahead; this pass fills those four blocks from the proxy and filings.
- 3 OctNewsFDA let Jaypirca be used first for untreated chronic lymphocytic leukemia. View heldFDA approved Jaypirca for first-line CLL and SLL.
- 1 OctNewsFoundayo showed heart safety in diabetes; a tirzepatide combination reached 23% weight loss. View heldFoundayo and EloraTZP results presented at the EASD diabetes meeting.
- 27 SepNewsOlumiant's label reached teenagers; a product inside 2.4% of revenue moved nothing. View heldThe FDA approved Olumiant for patients 12 and older with severe alopecia areata.
- 21 SepNewsA second approval for a small cancer drug. View heldInluriyo was $75M of $22.97B of quarterly sales. The view turns on obesity questions an oncology approval does not answer.
- 16 SepThesis reviewRival won the pill market; price fairer. View heldNovo took the first year of the obesity-pill market, weakening the franchise, while the shares proved cheaper than first recorded. The two cancelled out.
- 25 AugThesis writtenNeutral, medium convictionOne molecule was two thirds of sales, and the regulator dates its American protection to May 2036.
Also checked 7 times with nothing new to act on.
Sources 24
Where this came from
Sources - 24
Every claim above cites one of these, or states the reasoning that derived it. The quote is frozen at the date it was read: a link can rot, and an agent fetch returns a reading of a page rather than the page. Backs counts the whole claim ledger, so it can name a claim this page does not surface.
- S01primarycompany filing2026-02-12Item 1 on the products and the competition stated as classes, the patent and data-protection expiry table by product and territory, the wholesaler concentration, the payer-coverage barrier for anti-obesity medicines, and the FY2025 statementsbacksC02C04C05C14C20C23C61C65
- S02primarycompany filing2026-08-05the Q2 2026 income statement line by line, the balance sheet including the sales rebates and discounts liability, the share count and stock compensationbacksC01C14C15C17C18C24C25C26C27C38C40C41C52C59C60
- S03primarycompany release2026-08-05the product-by-product revenue table, the volume and price decomposition by geography, the raised full-year guidance, and the pipeline and business-development items
In Q2 2026, worldwide revenue was $23.0 billion, an increase of 48% compared with Q2 2025, driven by a 60% increase in volume, partially offset by a 13% decrease in realized prices.
backsC01C02C03C13C15C16C17C19C21C39C24C31C34C35C36C37C49C57 - S04primarycompany release2026-02-04the full-year 2025 figures and the guidance the 2026 year was launched on, against which the August raise is measured
Lilly reports fourth-quarter and fiscal year 2025 financial results
read, but no claim rests on it - S05primaryregulator2026-08-25U.S. Food and Drug Administration, Orange Book patent and exclusivity data for NDA 215866 (tirzepatide) U.S. Food and Drug Administrationthe regulator's own record of when the molecule carrying most of this company's revenue stops being protected, independent of the company's own estimate
Patent and Exclusivity for: N215866 Product 001 TIRZEPATIDE (MOUNJARO (AUTOINJECTOR)) ... 001 9474780 05/13/2036 DS DP U-4374 ... Exclusivity Data ... 001 NCE 05/13/2027 001 NPP 12/19/2028
backsC04C05C31 - S06primarycompany filing2026-02-04Novo Nordisk Form 20-F, fiscal year ended 31 December 2025 Novo Nordisk A/Sthe only direct rival's own account of who leads the market, its concession that it lost both prescription leads during 2025, the rate the market is growing at, and the compounding-pharmacy substitute
In the US, the once-weekly GLP-1 product, Wegovy, has been the leading anti-obesity medication for years measured by total weekly prescriptions, but this position was overtaken by a competing GLP-1 based product in the beginning of 2025. ... The global branded obesity market doubled by volume in 2025.
backsC06C07C08C10C30 - S07primarycompany filing2026-02-26a large rival's own dated, filed record of buying its way into the obesity market
our acquisitions of Metsera in November 2025 and Seagen in December 2023 and our in-licensing agreements with YaoPharma and 3SBio entered into in 2025 in the obesity and cardiometabolic diseases and oncology therapeutic areas
backsC09 - S08primarygovernment data2026-08-25World Health Organization, Obesity and overweight fact sheet World Health Organizationthe size of the treatable population, counted by a body that sells nothing
In 2022, 2.5 billion adults (18 years and older) were overweight. Of these, 890 million were living with obesity. ... 43% of adults aged 18 years and over were overweight and 16% were living with obesity.
backsC11C12C13 - S09primarygovernment data2026-08-25U.S. Centers for Disease Control and Prevention, NCHS Data Brief 508 - obesity and severe obesity prevalence in adults U.S. Centers for Disease Control and Prevention, National Center for Health Statisticshow concentrated that population is in the one market that reimburses these medicines, measured by a survey rather than by a vendor
The prevalence of obesity among adults was 40.3% during August 2021-August 2023 ... The prevalence of severe obesity in adults was 9.4%
backsC12 - S10primaryvendor data2026-09-16Research pack for LLY, frozen beside this thesiscontent/LLY/research-pack.jsonprice, the 252-day range and returns, the analyst split, insider filings, the cohort multiples struck on the confirmed competitor set, and the company's own six-year multiple historybacksC03C20C22C27C28C29C30C31C32C33C38C52C55C58
- S11primarycompany filing2026-02-24Merck Form 10-K, fiscal year ended 31 December 2025 Merck & Co., Inc.an independent statement of the buyer this industry sells to, used to confirm the cohort at the product
The Company sells these human health pharmaceutical products primarily to drug wholesalers and retailers, hospitals, government agencies, and managed health care providers such as health maintenance organizations, pharmacy benefit managers and other institutions.
read, but no claim rests on it - S12primarycompany release2026-04-30the middle rung of the 2026 guidance ladder, and the FDA approval of Foundayo for obesity that preceded its first revenue
Increased 2026 full-year revenue guidance to be in the range of $82.0 billion to $85.0 billion ... Prior Updated Revenue $80 to $83 billion $82 to $85 billion Performance Margin 46.0% to 47.5% 47.0% to 48.5%
backsC03C39 - S13primarytranscript2026-08-05Eli Lilly Q2 2026 earnings call, held 5 August 2026the Medicare GLP-1 Bridge scale and start date, the self-pay share of Zepbound prescriptions, the US and international incretin market growth, the Foundayo prescriber count and launch curve, management's own statement that realised price will fall further as formulary access is restored, and the retatrutide filing pathway being in active litigation
the Medicare GLP-1 Bridge program launched on July 1, granting 20 million eligible Americans insurance coverage for GLP-1s for obesity at the low out-of-pocket price of $50 per month. With this expansion, 35% more people now have coverage for our obesity medicines in the United States. ... you know that the starting point at $299 all the way to $449. Now you have the Bridge program at $245 as well.
backsC17C40C42C43C44C54C56C57C67 - S14primarycompany filing2026-08-04the rival's own current account of the US obesity lead, the Wegovy pill launch scale, the 7.2 mg and oral efficacy figures, the IQVIA branded-obesity market volume growth to May 2026, its own 2026 guidance, the Cipla paragraph IV certification against Ozempic, and its false-advertising suit against Lilly
Measured by new patient starts, the Wegovy franchise remains the market leader among branded obesity medications in the US.
backsC08C44C45C46C47C48C49C68 - S15primaryindustry data2021-03-24Ward, Bleich, Long and Gortmaker, 'Association of body mass index with health care expenditures in the United States by age and sex', PLOS ONE PLOS ONE (peer-reviewed; the source CDC cites for the cost of obesity)an independent measure of what obesity costs the payer per adult per year, which is the denominator the price of an anti-obesity medicine has to be read against
Obesity was associated with $1,861 (95% CI $1,656-$2,053) excess annual medical costs per person ... Severe obesity was associated with excess costs of $3,097 (95% CI $2,777-$3,413) per adult ... accounting for $172.74 billion (95% CI $153.70-$190.61) of annual expenditures
backsC54 - S16primarycompany filing2026-05-20the size and maturity ladder of the May 2026 note issuance that sits behind the net debt on the June balance sheet - $9.0 billion across eight tranches, from floating-rate notes due 2028 to 5.700% notes due 2066. The accession's other four exhibits are the forms of note and the legality opinions for the same issuance.read, but no claim rests on it
- S17primarycompany release2026-08-28the label expansion, the trial design and size, and the hazard ratio with its confidence interval
SURPASS-CVOT ... 13,299 enrolled across 30 countries ... non-inferiority to Trulicity (dulaglutide), a GLP-1 treatment with established cardiovascular benefit, with an 8% lower rate of cardiovascular death, heart attack or stroke (MACE-3) ... hazard ratio 0.92 (95.3% CI: 0.83, 1.01)
backsC51 - S18secondarynews2026-09-14Reuters: Lilly says Foundayo has captured over 30% of new US patients on oral weight-loss drugsthe only dated statement of where the two orals stand against each other on new patients, and Novo's own August estimate of roughly 90% of the oral market
captured more than 30% of new patients in the U.S. market for oral obesity treatments, narrowing the early lead gained by Danish rival Novo Nordisk
backsC45 - S19secondarynews2026-09-16Managed Healthcare Executive: CVS Caremark to put Zepbound back on formulary and add Foundayothe dated record of a concentrated buyer removing this product from most commercial formularies in July 2025 in favour of the rival, and restoring it fifteen months later
CVS Caremark dropped Zepbound in May 2025 in favor of Novo Nordisk's Wegovy ... As of July 1, 2025, CVS Caremark selected Wegovy as its preferred weight loss medication, removing Zepbound from most formularies ... Effective Oct. 1, 2026, CVS Caremark added Zepbound (tirzepatide) back to its commercial formularies as an additional preferred option
backsC56 - S20primarycompany release2026-09-18the dated record of the combination approval, the EMBER-3 progression-free survival figures behind it, and the company's own statement of where the drug now sits among oral SERD starts
This marks the second FDA approval for Inluriyo in less than a year, following its September 2025 approval as monotherapy for the treatment of adults with ER+, HER2-, ESR1-mutated MBC whose disease progressed after at least one line of endocrine therapy.
backsC36 - S21primarycompany filing2024-02-21the 2021 to 2023 income statement and cash flow statement: cost of sales, research and development, marketing, selling and administrative, acquired IPR&D and capital spendingbacksC61C65
- S22primarycompany filing2026-03-20beneficial ownership of directors and officers at 25 February 2026 and of holders above 5% at 31 December 2025, the named executive officers and their tenures, the Bonus Plan's measures and 2025 payout, the SVA and RVA designs and the 2023 award payouts, the CFO history behind pay versus performancebacksC62C63C64
- S23primarycompany release2026-04-09Foundayo's launch prices by channel: self-pay from $149 a month at the lowest dose, $25 with commercial coverage, $50 for eligible Medicare Part D patients from 1 July 2026
Foundayo is available starting at $149 per month at the lowest dose for self-pay patients. Eligible and commercially insured people with coverage for Foundayo may pay as little as $25 per month with the Foundayo savings card. Additionally, eligible Medicare Part D individuals may be able to get Foundayo for $50 per month, beginning July 1, 2026.
backsC66 - S24primarycompany filing2026-10-29Q3 2026 revenue split into volume and realised price by geography, gross margin on both bases, the acquired research charge, the product table including Foundayo, and the raised 2026 guidancebacksC21C39C69