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, 2026, the volume increase was primarily driven by Zepbound and Mounjaro, and the lower realized prices were primarily driven by Zepbound and Taltz.

Outside the U.S. for the three months ended March 31, 2026, the volume increase was driven by Mounjaro, and the lower realized prices were primarily driven by the addition of Mounjaro to the National Reimbursed Drug List (NRDL) in China.

The following table summarizes our revenue, including net product revenue and collaboration and other revenue, by product for the three months ended March 31, 2026 and 2025:

(1)Tirzepatide is marketed for obesity under the brand name Zepbound in Canada, Japan, and the U.S.

(2)Jardiance revenue includes Glyxambi, Synjardy, and Trijardy XR.

Revenue of Mounjaro increased 59 percent in the U.S. during the three months ended March 31, 2026, reflecting strong demand, partially offset by lower realized prices. Lower realized prices in the U.S. were partially offset by a favorable one-time adjustment to estimates for rebates and discounts during the three months ended March 31, 2026. Revenue outside the U.S. during the three months ended March 31, 2026 was $4.4 billion compared to $1.2 billion during the three months ended March 31, 2025, primarily driven by volume growth, partially offset by lower realized prices driven by the addition of Mounjaro to the NRDL in China.

Revenue of Zepbound increased 79 percent in the U.S. during the three months ended March 31, 2026, primarily driven by strong demand, partially offset by lower realized prices, including previously announced reductions in cash pay prices. Lower realized prices were partially offset by a favorable one-time adjustment to estimates for rebates and discounts during the three months ended March 31, 2026.

Gross Margin, Costs, and Expenses

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

Gross margin as a percent of revenue decreased 0.6 percentage points for the three months ended March 31, 2026, primarily driven by lower realized prices.

Research and development expenses increased 28 percent for the three months ended March 31, 2026, driven by continued investments in our early and late-stage portfolio.

Marketing, selling, and administrative expenses increased 19 percent for the three months ended March 31, 2026, primarily driven by promotional efforts supporting ongoing and planned launches.

Acquired IPR&D charges for the three months ended March 31, 2025 were primarily related to the acquisition of Scorpion Therapeutics, Inc.'s PI3Kα inhibitor program STX-478. See Note 4 to the consolidated condensed financial statements for additional information.

The effective tax rate was 16.4 percent for the three months ended March 31, 2026, compared to 20.2 percent for the three months ended March 31, 2025, primarily driven by the unfavorable tax impact of a non-deductible acquired IPR&D charge in 2025. The 2026 and 2025 effective tax rates were impacted by net discrete tax benefits in each period.