Eli Lilly’s first-quarter revenue grew 56% to $19.8bn, mainly driven by volume growth in its obesity and diabetes medicines Mounjaro and Zepound. Average US prices fell by 7%, with regulatory changes in China driving a larger 25% drop in overseas markets.
Underlying operating profit was up 142% to $9.3bn, despite gross margins falling 0.9 percentage points to 82.6%.
The 2026 sales guidance range has been raised by $2bn to $82bn-$85bn. Underlying earnings per share guidance now stands at $35.50-$37.00, a 6% raise at the mid-point.
The shares were up 7.1% in pre-market trading.
Our view
Eli Lilly’s first quarter was impressive on every level, beating revenue forecasts by a bigger margin than it did in any quarter last year, and accelerating growth to levels rarely seen in a company of this size. The achievement is all the more impressive given political and competitive pressure to make its best-selling medicines more affordable. It’s early days, but there are clear signals that the lower price point is having the desired effect on volumes.
The global pharmaceutical company is one of the trailblazers helping to revolutionise treatments for hormone deficiencies such as diabetes. But sales of GLP-1 treatments have also been grabbing attention for their effectiveness as a weight management tool. Its injectable medications stack up well against the competition, which has helped the group gain a dominant market share.
The boom in demand led to pressure on the firm’s manufacturing facilities, but this now looks to be resolved, with the addition of new US facilities a positive when it comes to staying on the right side of tariffs. Launches in new markets and approvals for use in other disease areas are significant opportunities for Lilly’s lead GLP-1 compound. But both of these growth levers carry a high level of execution risk.
Lilly’s weight-loss pill, Foundayo, which launched in April 2026 is another attractive growth opportunity. The initial uptake has been strong, but seemingly not as strong as it was for Novo Nordisk’s Wegovy pill. This race still has a long way to run but there is some evidence to suggest that the patient appeal of Lilly’s oral product doesn’t match up to its rival’s alternative.
The company’s generous Research & Development budget has helped to create a robust pipeline, not only in cardiometabolic health, on which GLP-1s focus, but also in cancer, neuroscience and auto-immune conditions.
While research success is never guaranteed, it does provide a route to mitigate the industry-wide pressure of patent expirations, where manufacturers eventually lose exclusivity over medicines.
We remain excited by the company's growth prospects, which merit a valuation at the top of the peer group. Concerns about competitive pressures had been weighing on sentiment, but the company’s brushed that off with another guidance upgrade. Either earnings growth or a revival in investor confidence could drive upside from here. However, established and emerging competitive threats as well as regulatory risk remain obstacles to watch out for.
Environmental, social and governance (ESG) risk
The pharmaceuticals sector is relatively high-risk in terms of ESG. Product governance, particularly with safety and marketing, and affordable access to treatment are the key risk drivers. Labour relations, business ethics and bribery and corruption are also contributors to ESG risk.
According to Sustainalytics, Eli Lilly’s management of ESG risks is strong. Executive pay is linked to climate-related targets, but the exact mechanism is unclear. Similarly, there are no targets or deadlines set for improving employee diversity and engagement. Its initiatives related to value-based healthcare, as well as ensuring access to its medicine in developing countries, are considered adequate. Disclosure of clinical trial data is strong, but information about quality control in medical manufacturing could be clearer. The company is the subject of several lawsuits alleging anti-competitive practices in the pricing of insulin.
Eli Lilly key facts
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This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
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