ELI LILLY & Co

RESULTS OF OPERATIONS

Revenue

The following table summarizes our revenue activity by region:

The following are components of the change in revenue compared with the prior year:

In the U.S. for the three months ended March 31, 2025, the volume increase and the lower realized prices were driven by Zepbound and Mounjaro.

Outside the U.S. for the three months ended March 31, 2025, the increase in volume was driven by Mounjaro and, to a lesser extent, Jardiance. Jardiance revenue included a one-time benefit of $370.0 million associated with an amendment to our collaboration with Boehringer Ingelheim. Pursuant to the amendment, we and Boehringer Ingelheim adjusted commercialization responsibilities for Jardiance within certain markets.

The following table summarizes our revenue, including net product revenue and collaboration and other revenue, by product:

NM - not meaningful

Revenue of Mounjaro increased 75 percent in the U.S. during the three months ended March 31, 2025, reflecting continued strong demand, partially offset by lower realized prices. Revenue outside the U.S. during the three months ended March 31, 2025 was $1.19 billion compared to $286.2 million during the three months ended March 31, 2024, primarily driven by volume growth, including entry into new markets, partially offset by lower realized prices.

Revenue of Zepbound in the U.S. during the three months ended March 31, 2025 was $2.31 billion, compared to $517.4 million for the three months ended March 31, 2024, primarily driven by increased demand, partially offset by lower realized prices.

Revenue of Verzenio increased 3 percent in the U.S. during the three months ended March 31, 2025, driven by higher realized prices. Increased demand was more than offset by wholesaler buying patterns and competitive dynamics. Revenue outside of the U.S. increased 22 percent during the three months ended March 31, 2025, primarily driven by volume growth, partially offset by the unfavorable impact of foreign exchange rates.

Gross Margin, Costs, and Expenses

The following table summarizes our gross margin, costs, and expenses:

NM - not meaningful

Gross margin as a percent of revenue for the three months ended March 31, 2025 increased 1.6 percentage points compared with the three months ended March 31, 2024, primarily driven by improved cost of production and favorable product mix, partially offset by lower realized prices.

Research and development expenses increased 8 percent for the three months ended March 31, 2025, driven by continued investments in our early and late-stage portfolio.

Marketing, selling, and administrative expenses increased 26 percent for the three months ended March 31, 2025, primarily driven by promotional efforts supporting ongoing and future launches.

Acquired IPR&D charges for the three months ended March 31, 2025 were primarily related to the acquisition of Scorpion's PI3Kα inhibitor program STX-478.

The effective tax rate was 20.2 percent for the three months ended March 31, 2025 compared to 11.6 percent for the three months ended March 31, 2024, primarily driven by the unfavorable tax impact of a non-deductible acquired IPR&D charge in 2025. The 2025 and 2024 effective tax rates were impacted by net discrete tax benefits in each period.

For additional information for other-net, (income) expense, see Note 11 to the consolidated condensed financial statements.