Eli Lilly (LLY) Q1 2025: 45% Revenue Surge as Obesity and Diabetes Pipeline Redefines Growth Trajectory

May 1, 2025 | By EarningsIQ Research

Eli Lilly delivered a transformative Q1 2025, posting 45% revenue growth on the strength of its incretin portfolio and continued pipeline execution, while navigating payer dynamics and global trade headwinds. Management spotlighted the pivotal role of new launches and the upcoming oral GLP-1, Orforglipron, as the company positions for global scale and sustained market leadership in obesity and diabetes. Despite mounting PBM and tariff pressures, Lilly reaffirmed full-year guidance and reinforced its capital allocation discipline.

Summary

• Obesity and Diabetes Franchise Drives Results: Key products, led by Monjaro and Zepbound, propelled 45% YoY revenue growth to $7.5B in Q1.
• Oral GLP-1 Pipeline Milestone: Orforglipron phase 3 data met expectations, positioning Lilly for broad global reach and manufacturing scalability.
• PBM and Formulary Volatility: CVS formulary changes highlight ongoing payer risk and competitive maneuvering in anti-obesity access.
• Tariff and Trade Risks Managed: Management sees limited 2025 impact from current US tariffs, but flags risk of escalation or retaliatory measures.

Performance Analysis

Eli Lilly’s Q1 2025 financials showcase a business in high-velocity transformation. Revenue grew 45% year-over-year, driven by explosive demand for its incretin-based therapies, particularly Monjaro, type 2 diabetes and obesity, and Zepbound, anti-obesity. These two products alone contributed $6.1B of revenue, with Monjaro sales more than doubling to $3.8B and Zepbound increasing by $1.8B to $2.3B. The company’s “key products” portfolio now accounts for $7.5B, reflecting a $4B increase from the prior year.

Gross margin expanded to 80.5%, up one percentage point YoY, supported by improved production costs and a favorable product mix, even as realized prices declined by 6-7%. Non-GAAP performance margin reached 42.6%, an 11-point YoY increase, underscoring strong operating leverage. The bottom line delivered $3.34 in EPS, up from $2.58, despite a $1.72 per share hit from acquired IPR&D charges. US revenue surged 49%, while Europe grew 71% in constant currency (or 46% excluding a one-time alliance benefit). International launches, particularly in China, Japan, India, and Mexico, are building global scale for Monjaro.

• Incretin Portfolio Momentum: Monjaro and Zepbound are now category leaders, with Zepbound holding 60% of total and 74% of new anti-obesity prescriptions in the US.
• Margin Expansion: Operating leverage from scale and improved production offset rising R&D and SG&A investments.
• Geographic Breadth: Global launches and reimbursement gains, especially for Monjaro and Epulis, are broadening Lilly’s revenue base and reducing US concentration risk.

Lilly’s Q1 results reflect both the power and the complexity of scaling blockbuster innovation in a market shaped by payer consolidation and global trade uncertainty.

Executive Commentary

Strategic Positioning

1. Incretin Platform as Core Growth Engine

Lilly’s business model is increasingly centered on its incretin franchise, with Monjaro and Zepbound driving both revenue and prescription share. These drugs, GLP-1 and dual GIP/GLP-1 agonists, are reshaping the diabetes and obesity markets, with Zepbound now the US anti-obesity market leader. Management’s focus is on maximizing patient access, expanding global launches, and leveraging the self-pay channel to reach new segments.

2. Orforglipron: Oral GLP-1 as Global Scale Catalyst

The phase 3 readout for Orforglipron, oral GLP-1, met efficacy and safety expectations, supporting plans for broad regulatory filings in obesity and diabetes. Leadership expects the oral format to unlock new patient segments, address needle aversion, and scale manufacturing to meet global demand, positioning Lilly for market expansion beyond injectable limitations.

3. Navigating Payer and PBM Dynamics

Formulary access and PBM, pharmacy benefit manager, negotiations remain a strategic battleground. The CVS decision to favor a competitor’s drug over Zepbound highlights the risk of restricted access and price-based competition. Lilly’s stance is to avoid exclusive “one-of-one” deals that limit choice, instead aiming for broad access and portfolio differentiation—including future triple agonist therapies and oral options.

4. Manufacturing and Trade Resilience

Over $50B in US manufacturing investments since 2020, including four new facilities, signal a structural pivot to domestic production. This insulates Lilly from tariff shocks and positions it to supply the US market entirely from US facilities. Management continues to advocate for policy solutions that favor tax incentives over tariffs, while absorbing current trade headwinds within 2025 guidance.

5. Pipeline Breadth Beyond Metabolic Disease

Lilly’s pipeline advances in immunology, oncology, and neuroscience (notably Epulis, Kisunla, and Chypirka) provide diversification, though near-term growth is overwhelmingly driven by metabolic health. Early progress in blood-based Alzheimer’s diagnostics and new oncology indications reflect a multi-asset R&D engine, with five new phase 1 starts this quarter.

Key Considerations

Lilly’s Q1 underscores both the rewards and the risks of category leadership in metabolic disease, as payer consolidation, global trade, and the need for manufacturing scale converge around blockbuster launches.

Key Considerations:

• PBM Access Volatility: Recent CVS formulary changes demonstrate the risk of sudden access loss and price-based competition in obesity, with implications for net pricing and volume growth.
• Oral GLP-1 Market Creation: Orforglipron’s success could open new global patient segments, but will require careful pricing, reimbursement, and clinical positioning versus injectables.
• Manufacturing Investment as Strategic Moat: $50B+ in US manufacturing spend is a long-term hedge against supply chain, tariff, and policy shocks, and may become a competitive advantage as global sourcing risk rises.
• Portfolio Differentiation Imperative: The shift to transparent pricing and a multi-asset portfolio (including triple agonists) is critical to avoid commoditization in a payer-driven market.

Risks

Lilly remains exposed to payer-driven pricing pressure, as PBMs and employers seek to manage spend via restricted formularies or price-based deals, potentially compressing margins or limiting volume. Trade and tariff escalation, especially outside the US, could disrupt supply chains and profitability. Regulatory uncertainty—including FDA trial requirements and international policy shifts—adds further unpredictability, especially as Lilly pursues new indications and global launches.

Forward Outlook

For Q2 2025, Lilly guided to:

• Continued double-digit revenue growth, led by Monjaro, Zepbound, and new launches.
• Gross margin stability, with ongoing price erosion offset by favorable product mix and scale.
• Ongoing investment in R&D and manufacturing to support pipeline and supply expansion.

For full-year 2025, management reaffirmed:

• Revenue guidance at $32B midpoint.
• Performance margin guidance unchanged, targeting 42-43% non-GAAP.
• EPS guidance maintained, with IPR&D charges absorbed.

Management highlighted:

• Seven phase 3 readouts for Orforglipron and other incretin assets over the next 12 months.
• Further global launches and reimbursement gains for Monjaro and Zepbound.
• Ongoing monitoring of PBM and tariff dynamics, with guidance absorbing current known risks.

Takeaways

Lilly’s Q1 2025 performance cements its leadership in the metabolic disease market, but underscores the need for payer agility and global execution.

• Obesity and Diabetes as Growth Flywheel: Monjaro and Zepbound are now the engine of revenue and prescription share, but face increasing payer scrutiny and price compression.
• Oral GLP-1 as Next Inflection Point: Orforglipron’s phase 3 success could unlock new patient segments and global scale, but clinical differentiation and access will be critical.
• Watch PBM and Trade Volatility: Formulary access and tariff escalation remain the primary risks to ongoing margin and volume growth.

Conclusion

Lilly’s Q1 2025 marks a step-change in scale and strategic ambition, with its incretin franchise driving unprecedented growth and its pipeline poised to expand the addressable market. However, the company’s ability to sustain leadership will hinge on navigating payer dynamics, pricing transparency, and global policy risk, even as it accelerates innovation and manufacturing capacity.

Read-Through

Lilly’s results highlight the power of metabolic disease innovation to reshape pharma growth profiles, but also expose the entire industry to payer-driven volatility and global supply chain risk. Competitors in obesity and diabetes face a market where access, manufacturing scale, and payer strategy are as important as clinical data. The rapid pivot to oral GLP-1 signals a new phase of market expansion, with implications for device makers, CDMOs, and global health systems. PBM and trade policy developments are likely to ripple across the sector, pressuring legacy business models and rewarding those with scale, agility, and diversified pipelines.

LLY Healthcare Pharmaceuticals Obesity Diabetes Incretin PBM Tariffs