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 and nine months ended September 30, 2026, the volume increase was primarily driven by Zepbound and Mounjaro. In the U.S. for the three months ended September 30, 2026, the lower realized prices were primarily driven by Zepbound, partially offset by adjustments to estimates for rebates and discounts primarily driven by Mounjaro. In the U.S. for the nine months ended September 30, 2026, the lower realized prices were primarily driven by Zepbound and Mounjaro, partially offset by adjustments to estimates for rebates and discounts primarily driven by Mounjaro, Trulicity, and Zepbound.

Outside the U.S. for the three and nine months ended September 30, 2026, the volume increase was driven by Mounjaro, and the lower realized prices were primarily driven by the inclusion of Mounjaro on the National Reimbursement 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 September 30, 2026 and 2025:

The following table summarizes our revenue, including net product revenue and collaboration and other revenue, by product for the nine months ended September 30, 2026 and 2025:

Revenue of Mounjaro increased 41 percent and 47 percent in the U.S. during the three and nine months ended September 30, 2026, respectively, reflecting strong demand, partially offset by lower realized prices. Lower realized prices in the U.S. were partially offset by adjustments to estimates for rebates and discounts during the three and nine months ended September 30, 2026. Revenue of Mounjaro increased 93 percent and 153 percent outside the U.S. during the three and nine months ended September 30, 2026, respectively, primarily driven by volume growth, partially offset by lower realized prices driven by the inclusion of Mounjaro on the NRDL in China.

Revenue of Zepbound increased 48 percent and 54 percent in the U.S. during the three and nine months ended September 30, 2026, respectively, primarily driven by strong demand, partially offset by lower realized prices. Lower realized prices were partially offset by adjustments to estimates for rebates and discounts during the nine months ended September 30, 2026.

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 increased 1.0 percentage point and 0.7 percentage points for the three and nine months ended September 30, 2026, respectively, primarily driven by improved cost of production and favorable product mix, partially offset by lower realized prices.

Research and development expenses increased 23 percent and 21 percent for the three and nine months ended September 30, 2026, respectively, driven by continued investments in our early and late-stage portfolio.

Marketing, selling, and administrative expenses increased 14 percent and 19 percent for the three and nine months ended September 30, 2026, respectively, primarily driven by promotional efforts supporting ongoing and planned launches.

Acquired IPR&D charges for the three months ended September 30, 2026 were primarily related to the acquisitions of AtaiBeckley and Curevo. Acquired IPR&D charges for the nine months ended September 30, 2026 were primarily related to the acquisitions of AtaiBeckley, Orna, Curevo, and Ajax. Acquired IPR&D charges for the three months ended September 30, 2025 were primarily related to the acquisition of SiteOne. Acquired IPR&D charges for the nine months ended September 30, 2025 were primarily related to the acquisitions of Scorpion's PI3Kα inhibitor program STX-478 and of SiteOne. See Note 4 to the consolidated condensed financial statements for additional information.

Asset impairment, restructuring, and other special charges for the three and nine months ended September 30, 2026 included a partial impairment of an intangible asset associated with a molecule in development. Asset impairment, restructuring, and other special charges for the nine months ended September 30, 2026 and for the three and nine months ended September 30, 2025 included charges related to acquisition and integration costs associated with the closing of our acquisitions and charges related to litigation matters. See Note 4 and Note 9 to the consolidated condensed financial statements for additional information.

The effective tax rates were 23.3 percent and 21.0 percent for the three and nine months ended September 30, 2026, respectively, compared to 22.8 percent and 19.8 percent for the three and nine months ended September 30, 2025, respectively, primarily driven by the unfavorable tax impact of nondeductible acquired IPR&D charges, with a larger impact occurring in 2026. The 2025 effective tax rates were also unfavorably impacted by U.S. tax law changes.