USD billions unless noted. Calendar fiscal periods, latest comparable SEC flow facts at October 4 cutoff and original-accession balance facts; this is ex-post history, not a point-in-time backtest. Operating profit is a derived GAAP expense bridge excluding Other-net, not a separately reported EBIT line. Legacy R&D still excludes separately reported acquired IPR&D; original nondimensional USD XBRL contexts supplement custom-tag IPR&D where companyfacts lacks it. Missing historical fields remain N/A; no absent charge is presumed zero. Older capex uses reported net property purchases where only that cash tag exists, not a uniform gross-capex series. Historical net income/CFO can include discontinued operations (including Elanco), while later revenue is recast. CFO-minus-capex excludes investing-classified IPR&D and acquisitions. End-equity ROE is not average-equity ROE and may be unavailable. Year-end participating shares are issued less employee-benefit-trust shares where both are available; otherwise market ratios remain N/A.
As of October 4, 2026. Latest annual FY2025; latest filed quarter Q2 2026. Forecasts are assumptions, not reported results. General financial research, not personalized investment or clinical advice.
Close · Oct 2
$1,142.85
FY2025 revenue · USD B
65.179
Q2 tirzepatide sales share
64.7%
H1 CFO − capex − IPR&D cash · USD B
7.278
Investment report
1. Executive summary
Lilly is a pharmaceutical research and manufacturing platform whose recent growth is dominated by tirzepatide. The investment question is not simply whether obesity treatment demand is large. It is whether net pricing, access, supply execution and successful franchise renewal can turn that demand into durable cash returns at the market valuation. Our analysis separates reported earnings, issuer adjustments and independent cash-flow assumptions. Strong gross margins are not equivalent to distributable cash when capacity, acquired research and acquisitions consume capital. The base scenario already assumes expansion; it is not a conservative liquidation estimate. No scenario probabilities or personalized investment recommendation are assigned.
Founded in Indianapolis in 1876, Lilly has survived by renewing products rather than protecting an unchanged portfolio indefinitely. That is the useful interpretation of its long history. The historical financial database begins in 2011, not at incorporation or IPO. Later acquisitions and the separation of Elanco complicate comparisons of revenue, net income and cash generation. The database uses the latest available comparable SEC flow facts and original balance contexts, so it is explicitly ex-post. Changes in R&D taxonomy and missing early fields are marked rather than filled with invented precision. Long-run trend lines must be read with these boundaries in mind.
The platform converts discovery, clinical development, regulatory work, manufacturing and commercial access into medicine sales and collaboration income. Each stage can destroy value as well as create it. Scientific differentiation is only one layer of defensibility: reliable production, physician experience, distribution and payer coverage can matter just as much economically. Our inference is that scaled execution makes the franchise harder to replicate, but not immune to competition or price concessions. Lilly reports one operating segment; therapeutic categories and product revenue should not be presented as separately disclosed profit pools. We do not invent a product-level cost or lifetime patient value.
Revenue growth has lifted the earnings base, but the source and persistence of each improvement matter. Derived operating profit excludes the Other-net line, preventing investment income or financing effects from masquerading as operating performance. Reported R&D, acquired IPR&D and special charges remain in the historical GAAP bridge. In forecasts we use a different, explicitly normalized perimeter and then charge cash for external pipeline renewal. Examine gross margin, internal R&D intensity, capex and cash conversion together. A single quarter can contain favorable rebates, milestones, mix and timing effects that should not automatically become recurring margin assumptions.
Mounjaro and Zepbound serve different markets but share tirzepatide exposure. Their combined share of sales is a more useful concentration measure than the number of brand names. Volume growth can accompany falling realized prices; reimbursement expansion may increase access while reducing revenue per unit. Collaboration milestones and changes in estimates for prior shipments can also support a quarter without indicating equal growth in recurring prescription economics. Follow the product/geography tables and disclosed volume-price bridge rather than extrapolating list prices or social-media demand. Selected product rows are not a complete company revenue reconciliation; therapeutic totals provide that check, subject to rounding.
Internal research is an ongoing operating cost of keeping the platform competitive. Acquired research is economically another form of renewal even when its accounting location differs. Adding back an IPR&D charge to operating cash and stopping there can overstate owner cash when the acquisition payment appears in investing activities. We display both measures and deduct a recurring pipeline cash reserve in normalized forecasts. Manufacturing also requires more than buildings: qualification, work-in-process, supply reliability and utilization determine returns. Positive terminal net capex and continuing research replacement are necessary conditions for a credible perpetuity, not optional penalties added to an otherwise capital-free model.
A fast-growing earnings stream does not eliminate financing constraints. Manufacturing investment, pipeline purchases, full business acquisitions, dividends and buybacks all compete for cash. Rebate liabilities are operating obligations, not free permanent funding to capitalize without analysis. Our DCF adds dated cash and deducts financial debt, retains rent in margins and excludes noncurrent strategic investments from surplus cash. It does not deduct operating liabilities again after modeling working capital. The latest available balance sheet is not an October cash statement. Share buybacks are not an extra cash-flow addback or a guaranteed future reduction in the valuation denominator.
Growth can come from broader access, international penetration, supply expansion, new indications and replacement products. These channels have different margins and evidence requirements. Foundayo is already reflected in the latest disclosed product table; retatrutide remains investigational in the September issuer update. We do not translate a clinical headline into a guaranteed launch date, market share or safety conclusion. Successful trials can still require regulatory, manufacturing and commercial execution. The aggregate forecast expresses possible platform outcomes rather than a molecule-by-molecule risk-adjusted present value. A dedicated patent and launch model would be a meaningful extension, not evidence that the current terminal value is certain.
Novo Nordisk remains a direct cardiometabolic competitor, with oral and injectable offerings discussed in its own 2026 disclosures. Compare primary-source evidence rather than making cross-trial efficacy rankings from unrelated endpoints or populations. Other research platforms, payer bargaining and new modalities can also limit pricing power. In our analytical framework, the scarce economic resource is durable access at an acceptable net price, not simply manufacturing the largest number of doses. Oral products may broaden the market while changing mix and cannibalizing existing sales. Competition can lower returns even while the total treatment market continues expanding.
Evaluate management through observable decisions: staged manufacturing investment, cash discipline in external research, transparent accounting adjustments and progress against disclosed operating evidence. David Ricks and Lucas Montarce sign the latest filing's control evaluation; that is a dated disclosure, not a qualitative guarantee about future execution. A stronger pipeline can justify investment, but the price paid and the eventual cash return remain separate questions. Our framework favors tracking acquisition-inclusive cash demands and leverage alongside launch narratives. Do not infer a successful capital-allocation record merely from a rising share price or normalize every unfavorable cost away.
The risks are correlated: a concentrated franchise can face clinical or quality issues just when new factories, acquired programs and reimbursement commitments require cash. Lower net prices, rebate reversals, coverage restrictions, patent challenges and launch delays can reduce both growth and margins. Monitor inventory versus sales, receivables and rebates, cash after investing-classified research, net debt and recurring research intensity. A high valuation magnifies the effect of disappointing duration rather than only the next quarter's earnings. Our bear scenario includes revenue contraction and margin erosion; working-capital releases in contraction are a modeling convention and may not be fully realizable.
The model values ten explicit years plus an assumed remaining-year cash stub and terminal platform cash. Normalized operating margins retain internal R&D, SBC and rent, exclude acquired IPR&D and special charges, and are independent assumptions rather than issuer performance-margin guidance. We subtract a full cash pipeline reserve without a tax benefit, capex and incremental working capital. Terminal cash includes both continuing pipeline spending and net production reinvestment. WACC, terminal growth, renewal cost and dilution sensitivities expose the dependence on duration. No scenario outcome is a target guaranteed to occur; compare the market price with the embedded operating requirements, not just a headline valuation spread.
Lilly's research engine and expanding production offer meaningful commercial opportunity, but opportunity and an attractive purchase price are not interchangeable. The strongest thesis requires durable net revenue growth, manufacturing returns and repeated portfolio renewal while preserving funding flexibility. The most important counterargument is that concentration, reinvestment and access costs may absorb more of the growth than adjusted earnings suggest. Use the report as a research framework with explicit missing data and dated balances. Recheck new filings, net-price evidence, pipeline status and the market quote before making decisions. This is general financial research, not individualized investment advice or a recommendation to use any medicine.
Chart values match the tables; gaps are N/A, not zero. Negative values are marked red. Historical FCF is CFO minus capex, before investing-classified pipeline/acquisition cash.
Annual revenue USD B
2011
24.29
2012
22.60
2013
23.11
2014
19.62
2015
19.96
2016
21.22
2017
19.97
2018
21.49
2019
22.32
2020
24.54
2021
28.32
2022
28.54
2023
34.12
2024
45.04
2025
65.18
Derived operating profit USD B
2011
5.53
2012
4.73
2013
5.37
2014
2.66
2015
2.69
2016
3.26
2017
2.00
2018
3.53
2019
4.97
2020
6.17
2021
6.36
2022
7.13
2023
6.46
2024
12.90
2025
26.30
Net income USD B
2011
4.35
2012
4.09
2013
4.68
2014
2.39
2015
2.41
2016
2.74
2017
-0.20
2018
3.23
2019
8.32
2020
6.19
2021
5.58
2022
6.24
2023
5.24
2024
10.59
2025
20.64
CFO minus capex USD B
2011
6.56
2012
4.40
2013
4.72
2014
3.30
2015
1.90
2016
3.81
2017
4.54
2018
4.31
2019
3.80
2020
5.11
2021
6.06
2022
5.73
2023
0.79
2024
3.76
2025
8.97
Gross margin %
2011
79.13
2012
78.78
2013
78.76
2014
74.85
2015
74.76
2016
73.09
2017
77.73
2018
78.22
2019
78.85
2020
77.66
2021
74.18
2022
76.77
2023
79.25
2024
81.31
2025
83.04
Operating margin %
2011
22.76
2012
20.94
2013
23.24
2014
13.56
2015
13.47
2016
15.37
2017
10.03
2018
16.44
2019
22.29
2020
25.13
2021
22.45
2022
24.97
2023
18.92
2024
28.64
2025
40.35
Research spending USD B
2011
5.02
2012
5.28
2013
5.53
2014
4.73
2015
4.80
2016
5.31
2017
5.10
2018
5.05
2019
5.60
2020
5.98
2021
6.93
2022
7.19
2023
9.31
2024
10.99
2025
13.34
Inventory USD B
2011
2.30
2012
2.64
2013
2.93
2014
2.74
2015
3.45
2016
3.56
2017
4.46
2018
4.11
2019
3.19
2020
3.98
2021
3.89
2022
4.31
2023
5.77
2024
7.59
2025
13.74
Quarterly revenue USD B
2023 Q3
9.50
2023 Q4
9.35
2024 Q1
8.77
2024 Q2
11.30
2024 Q3
11.44
2024 Q4
13.53
2025 Q1
12.73
2025 Q2
15.56
2025 Q3
17.60
2025 Q4
19.29
2026 Q1
19.80
2026 Q2
22.97
Quarterly CFO minus capex USD B
2023 Q3
1.22
2023 Q4
-1.38
2024 Q1
0.18
2024 Q2
0.24
2024 Q3
2.36
2024 Q4
0.98
2025 Q1
0.16
2025 Q2
1.39
2025 Q3
6.75
2025 Q4
0.68
2026 Q1
3.01
2026 Q2
7.76
Q2 selected products USD B
Mounjaro
9.94
Zepbound
4.93
Jardiance group
1.23
Trulicity
1.22
Verzenio
1.47
Taltz
0.86
Foundayo
0.10
Base forecast FCFF USD B
2027
20.98
2028
25.12
2029
28.28
2030
34.41
2031
36.39
2032
38.11
2033
43.60
2034
44.56
2035
45.31
2036
47.31
Ten-year forecast and enterprise DCF
USD B; shares in billions. Normalized EBIT retains internal R&D/SBC/rent but excludes acquired IPR&D and special charges. FCFF = EBIT after assumed operating tax + D&A − capex − incremental working capital − external pipeline cash reserve. Reserve is 5% of sales, deducted once with no tax shield; not a company budget. D&A 2.5%; capex 10% in 2027–29, 7% in 2030–32, then 4.5%; working capital 18% of revenue change. No separate acquired-amortization addback. Terminal cash retains pipeline cost and 2% net capex. No probabilistic drug valuation or guaranteed approval. Revenue baseline $86B uses guidance midpoint as an assumption, not a FY2026 actual.
Case
WACC
Terminal g
Stub PV
10Y PV
Terminal PV
EV
Equity
USD/share
Vs close
Terminal weight
Bear
11.0%
1.5%
4.88
82.41
47.06
134.35
88.39
98.91
-91.3%
35.0%
Base
9.0%
2.5%
6.86
215.53
312.49
534.87
488.92
547.07
-52.1%
58.4%
Bull
8.5%
3.0%
8.82
341.82
681.88
1,032.52
986.56
1,103.90
-3.4%
66.0%
Equity bridge: cash 8.950 minus financial debt 54.908 at June 30; noncurrent investments excluded. Starting 0.8937B shares are Q2 weighted diluted shares, not exact current shares. The employee-benefit trust means cover/issued shares differ from EPS-participating shares. No future buyback benefit assumed. Remaining October 4–December 31 cash stubs $5/$7/$9B are independent assumptions discounted to year-end, not actual Q4 results. June–October unreported cash movements are not imputed; this dated-balance convention is a limitation.
Bear
Operating tax assumption: 22.0%
Year
Revenue
Growth
Norm. OM
NOPAT
D&A
Capex
ΔWC
Pipeline cash
FCFF
FCFF margin
2027
88.00
2.3%
38.0%
26.08
2.20
8.80
0.36
4.40
14.72
16.7%
2028
92.00
4.5%
37.0%
26.55
2.30
9.20
0.72
4.60
14.33
15.6%
2029
98.00
6.5%
36.0%
27.52
2.45
9.80
1.08
4.90
14.19
14.5%
2030
100.00
2.0%
34.0%
26.52
2.50
7.00
0.36
5.00
16.66
16.7%
2031
96.00
-4.0%
32.0%
23.96
2.40
6.72
-0.72
4.80
15.56
16.2%
2032
90.00
-6.3%
30.0%
21.06
2.25
6.30
-1.08
4.50
13.59
15.1%
2033
86.00
-4.4%
29.0%
19.45
2.15
3.87
-0.72
4.30
14.15
16.5%
2034
85.00
-1.2%
28.0%
18.56
2.13
3.82
-0.18
4.25
12.79
15.1%
2035
86.00
1.2%
28.0%
18.78
2.15
3.87
0.18
4.30
12.58
14.6%
2036
88.00
2.3%
28.0%
19.22
2.20
3.96
0.36
4.40
12.70
14.4%
Base
Operating tax assumption: 20.0%
Year
Revenue
Growth
Norm. OM
NOPAT
D&A
Capex
ΔWC
Pipeline cash
FCFF
FCFF margin
2027
100.00
16.3%
45.0%
36.00
2.50
10.00
2.52
5.00
20.98
21.0%
2028
113.00
13.0%
46.0%
41.58
2.83
11.30
2.34
5.65
25.12
22.2%
2029
126.00
11.5%
46.0%
46.37
3.15
12.60
2.34
6.30
28.28
22.4%
2030
138.00
9.5%
45.0%
49.68
3.45
9.66
2.16
6.90
34.41
24.9%
2031
150.00
8.7%
44.0%
52.80
3.75
10.50
2.16
7.50
36.39
24.3%
2032
161.00
7.3%
43.0%
55.38
4.03
11.27
1.98
8.05
38.11
23.7%
2033
170.00
5.6%
42.0%
57.12
4.25
7.65
1.62
8.50
43.60
25.6%
2034
179.00
5.3%
41.0%
58.71
4.48
8.06
1.62
8.95
44.56
24.9%
2035
187.00
4.5%
40.0%
59.84
4.68
8.42
1.44
9.35
45.31
24.2%
2036
195.00
4.3%
40.0%
62.40
4.88
8.78
1.44
9.75
47.31
24.3%
Bull
Operating tax assumption: 18.0%
Year
Revenue
Growth
Norm. OM
NOPAT
D&A
Capex
ΔWC
Pipeline cash
FCFF
FCFF margin
2027
110.00
27.9%
48.0%
43.30
2.75
11.00
4.32
5.50
25.23
22.9%
2028
132.00
20.0%
49.0%
53.04
3.30
13.20
3.96
6.60
32.58
24.7%
2029
156.00
18.2%
49.0%
62.68
3.90
15.60
4.32
7.80
38.86
24.9%
2030
181.00
16.0%
49.0%
72.73
4.53
12.67
4.50
9.05
51.03
28.2%
2031
205.00
13.3%
48.0%
80.69
5.13
14.35
4.32
10.25
56.89
27.8%
2032
227.00
10.7%
47.0%
87.49
5.68
15.89
3.96
11.35
61.96
27.3%
2033
247.00
8.8%
46.0%
93.17
6.18
11.12
3.60
12.35
72.28
29.3%
2034
264.00
6.9%
45.0%
97.42
6.60
11.88
3.06
13.20
75.88
28.7%
2035
279.00
5.7%
44.0%
100.66
6.98
12.56
2.70
13.95
78.43
28.1%
2036
294.00
5.4%
44.0%
106.08
7.35
13.23
2.70
14.70
82.80
28.2%
Sensitivity · base USD/share
WACC / g
1.5%
2.5%
3.5%
8.0%
593.84
664.77
767.23
9.0%
499.61
547.07
611.79
10.0%
427.97
461.11
504.46
Pipeline reserve / sales
Value/share
3.0%
595.86
5.0%
547.07
7.0%
498.28
Extra shares · M
Value/share
0
547.07
10
541.02
30
529.30
Dilution is a generic stress, not a warrant issuance or buyback prediction. Pipeline-rate sensitivity changes the ten-year and terminal reserve, holding the independent stub fixed. Contraction releases working capital mechanically; inventory or rebate realities may prevent the assumed release.
Historical valuation
Ex-post annual facts joined to last trading close on/before December 31. Participating end-shares = issued minus employee-benefit-trust shares when disclosed; missing shares/debt prevent ratios. Prices are split-consistent, not dividend-return adjusted; no splits in retrieved interval. P/E N/A for losses. EV deducts cash only; FCF yield excludes IPR&D/acquisition investing cash and is not recurring FCFF.
USD M. One operating segment; product sales do not imply product profits. Selected rows are not exhaustive. Q2 Mounjaro/Zepbound concentration is 64.7%; H1 64.7%. Product/geography sums can differ by $1M rounding; zero is reported no sales, not missing disclosure. Foundayo geography is N/A here.
Lilly's current non-GAAP earnings retain acquired IPR&D charges; our separate normalized forecast perimeter is not that issuer measure. All adjustments above are signed as in the release.
Cash and operating evidence · USD B unless labeled
Metric
Value
H1 CFO / capex / headline FCF
16.023 / 5.259 / 10.764
Less investing IPR&D cash / remaining
3.486 / 7.278
Less full acquisitions / remaining (not recurring FCF)
9.805 / −2.527
H1 dividends / buybacks
3.094 / 3.957
Inventory Jun / Dec
16.793 / 13.744
PP&E Jun / Dec
29.286 / 24.675
Rebates liability Jun / Dec
21.122 / 17.382
Q2 volume / price / FX growth contributions
+60% / −13% / +1%
Q2 US price / excluding estimate adjustments
−3% / ~−9%
Prior-shipment estimate benefits / Q2 US revenue
3%
Q2 Jardiance milestone · USD M
250
Q2 US / international revenue
14.413 / 8.561
Issuer FY2026 guidance · August 5
Metric
Range
Revenue · USD B
85–87
Non-GAAP performance margin
49.0–50.5%
Non-GAAP tax rate
18–19%
Non-GAAP EPS · USD
35.50–36.50
Performance margin is not our normalized EBIT margin: the issuer excludes acquired IPR&D for this margin measure, while tax/EPS guidance includes known charges and excludes future business-development charges after Q2. Forward GAAP reconciliation is not provided by the issuer. This is dated guidance, not a forecast actual.
Revenue is not prescriptions
Reported sales are net of rebates, discounts and returns, and include collaboration income. Geography, channel inventory and retrospective estimates change realized revenue. No patient count, net price per prescription or product-level profit is inferred.
Mounjaro and Zepbound are both tirzepatide franchises. Different indications and market labels do not remove shared clinical, manufacturing and competitive exposure. Analyze their combined concentration, not seven independent product bets.
Internal R&D is expensed. Acquired IPR&D charges may be added back in CFO while purchase cash is investing. Our normalized-margin forecast excludes those charges and subtracts a recurring 5% revenue cash reserve without a tax shield. It is not a disclosed budget; failure and full business acquisitions can cost more.
New facilities require commissioning, qualification and utilization. Inventory and receivables tie up cash before sales mature. Forecast capex remains 10% of sales initially, then 7% and 4.5%; D&A is 2.5%, so terminal net reinvestment stays positive.
A perpetual terminal value belongs to a renewing research platform, not an immortal drug. Bear stresses franchise erosion, base moderates growth and margins, bull assumes successful renewal. No molecule receives a guaranteed approval date or a clinical probability in this aggregate model.
Access and net-price pressure: Volume expansion can coexist with price erosion and one-time rebate benefits. Coverage rules, cash-pay channels and government negotiations alter economics.
Concentration and renewal: Shared tirzepatide exposure, patent challenges, clinical setbacks and rival oral/injectable products can impair durable growth.
Capital allocation and leverage: Acquisition cash, manufacturing commitments and shareholder distributions compete for liquidity. Headline FCF does not measure all of those claims.
Execution, safety and valuation: Quality disruptions and safety findings can affect a correlated franchise. A high valuation leaves limited room for cash conversion or launch delays.
All 62 quarters. Q4 additive flows are annual minus Q1–Q3; Q4 EPS/shares N/A. YTD differences require all prior quarters. Missing operating components are not presumed zero; original filing provenance identifies derivation.
15 annuals and 62 quarters through Q2 2026. Core sources and derived facts are traced. Older capex, standalone IPR&D, share and operating fields may be N/A; accounting perimeter changed.
August filings plus September EASD issuer update and Novo Q2 material. Retatrutide remains investigational. No trial-level probability model, complete patent schedule or clinical efficacy ranking.
Dated Yahoo daily closes; no splits in retrieved interval. Ratios join annuals ex post with participating end-shares when available. DCF uses dated Q2 diluted-share proxy; noncurrent strategic investments excluded.
Both production builds and exact 14-module adapted mirror parity passed; existing SVIM bundle-size warning remains.
Browser / 浏览器
passed
Both languages/sites checked at 1280px and 390px: discovery, translation, eight anchors, twelve nonblank charts, contained tables and filing/provenance expansion.
Limitations / 限制
warning
Historical gaps and changing accounting perimeters remain explicit. Latest balances are June 30, not current cash. Pipeline reserve and patent/launch scenarios are assumptions; not clinical advice. Local verification is not production deployment.
SEC submissions/companyfacts establish filings and typed financial rows; issuer releases support manually verified operating metrics and bridges; Yahoo supplies dated closes; peer disclosures support competition. Regeneration, mirror and invariant tests are versioned with the report. Eight report sections, 13 research chapters and the following chart inventory are complete; coverage gaps remain visible.