• Revenue Growth: Full-year revenue grew 32% compared to 2023; Q4 revenue increased by 45%.
• New Products Revenue: New products contributed over $3.1 billion in Q4, led by Mounjaro and Zepbound.
• Gross Margin: Increased to 83.2% in Q4, driven by favorable product mix.
• R&D Expenses: Increased 18% due to investment in early and late-stage portfolio.
• Operating Income: More than doubled to $5.6 billion in Q4.
• Earnings Per Share (EPS): $5.32 in Q4, compared to $2.49 in Q4 2023.
• US Revenue Growth: Increased 40% in Q4, driven by volume growth of 45%.
• Europe Revenue Growth: Grew 82% in constant currency; excluding one-time payment, grew 61%.
• Japan Revenue Growth: Increased 27% in constant currency.
• China Revenue Growth: Increased 13% in constant currency.
• New Products Performance: Global Mounjaro sales of $3.5 billion; US Zepbound sales of $1.9 billion.
• 2025 Revenue Guidance: Expected between $58 billion and $61 billion, representing approximately 32% growth.
• 2025 EPS Guidance: Expected between $22.50 and $24 on a non-GAAP basis.

• Warning! GuruFocus has detected 9 Warning Signs with XEL.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Eli Lilly and Co (NYSE:LLY) reported a 32% increase in full-year revenue for 2024, exceeding guidance by $4 billion.
• The company achieved a 45% revenue growth in Q4 2024, driven by strong performance of new products like Mounjaro and Zepbound.
• Eli Lilly and Co (NYSE:LLY) advanced its pipeline with positive Phase 3 results for several drugs and initiated new Phase 3 programs.
• The company expanded its manufacturing capacity with significant investments in Indiana, Wisconsin, and Ireland.
• Eli Lilly and Co (NYSE:LLY) returned $3 billion to shareholders through dividends and share repurchases, and announced a $15 billion share repurchase program.

Negative Points

• R&D expenses increased by 18% due to continued investment in early and late-stage portfolios.
• Marketing, selling, and administrative expenses rose by 26%, driven by promotional efforts for new and future launches.
• The effective tax rate increased to 13.2%, impacting overall profitability.
• Realized prices in the US decreased by 5% due to changes in rebates and discounts.
• There are concerns about the sustainability of operating margin expansions, with some questioning if the manufacturing buildout may be too aggressive.

Q & A Highlights

Q: Does the 2025 guidance require acceleration in prescription uptake, or can it be achieved with the current trajectory? A: Lucas Montarce, Executive Vice President and Chief Financial Officer, stated that the 2025 guidance is based on a continuation of the total prescription growth seen in 2024, without requiring an acceleration.

Q: What are the expectations for Zepbound payer dynamics and access, particularly with the OSA label and heart failure filing? A: Patrik Jonsson, Executive Vice President, President of Lilly Diabetes and Obesity and President of Lilly USA, mentioned that commercial access remains strong with 87% coverage. The OSA label presents an opportunity for Medicare coverage, expected by the second half of the year, and similar opportunities are anticipated for Medicaid.

Q: Can you elaborate on the potential positioning of orforglipron, especially compared to single injectable GLP-1 efficacy? A: Daniel Skovronsky, Chief Scientific Officer, explained that orforglipron is expected to provide benefits similar to single GLP-1 therapies, with a focus on patients who have needle fear or do not require the extensive weight loss provided by tirzepatide. Patrik Jonsson added that it offers an opportunity to scale in markets outside the US due to no refrigeration needs.

Q: What gives you confidence in running a wide range of orforglipron studies without initial readouts? A: Daniel Skovronsky noted that confidence grows as trials proceed without safety issues, although they have not yet seen unblinded data. The ongoing trials help build confidence in the molecule's success.

Q: How do you view the sustainability of operating margin expansions, with some forecasts nearing 50% by the end of the decade? A: Lucas Montarce emphasized the importance of reinvesting in R&D for sustainable growth, suggesting that reaching high 40s% or 50% margins may not be ideal for long-term growth. The current low 40s% margin is seen as a balanced approach.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.