Eli Lilly & Co. 2026 Q2 Earnings Call

Good morning. Thank you for joining us for Eli Lilly and Company's Q2 2026 earnings call. I'm Mike Czapar, Senior Vice President of Investor Relations. Joining me on today's call are Dave Ricks, Lilly's Chair and CEO, Lucas Montarce, Chief Financial Officer, Dan Skovronsky, Chief Scientific and Product Officer, Adrienne Brown, President of Lilly Immunology, Carole Ho, President of Lilly Neuroscience, Ilya Yuffa, President of Lilly USA and Global Customer Capabilities, Jacob Van Naarden, President of Lilly Oncology and Head of Business Development, Patrik Jonsson, President of Lilly International, and Ken Custer, President of Lilly Cardiometabolic Health. During this call, we anticipate making projections and forward-looking statements based on our current expectations. Our actual results could differ materially due to various factors, including those listed on slide four.

Additional information concerning factors that could cause actual results to differ materially is contained in our latest Form 10-K and subsequent filing with the SEC. The information we provide about our products and pipeline is for the benefit of the investment community. It is not intended to be promotional or otherwise influence prescribing decisions. Our commentary today will focus on our non-GAAP financial measures. I'll turn the call over to Dave.

Thanks, Dave. As shown on slide seven, Q2 was another strong quarter of financial performance. Revenue grew 48% compared to Q2 2025, driven by Zepbound and Mounjaro, with strong momentum across all therapeutic areas and geographies. Gross margin as a percentage of revenue was 86.3% in Q2, an increase of approximately 1.3 percentage points versus the same quarter last year. The change was driven primarily by favorable product mix and improved cost of production. Marketing, selling, and administrative expenses increased 25%, as we invested in promotional activities to support current and planned product launches. R&D expenses increased 14%, driven by continued investment in our pipeline, including more than 40 active phase III programs. Our non-GAAP performance margin was 54.8%, an increase of nine percentage points from Q2 2025, driven by revenue growth. Non-GAAP earnings per share were $8.38, including acquired IPR&D charges of $3.03.

This compares to earnings per share of $6.31 in Q2 2025, inclusive of $0.14 of acquired IPR&D charges. On slide eight, we quantify the effect of price, rate, and volume on revenue growth. U.S. revenue increased 33% in Q2, primarily driven by volume growth, Zepbound and Mounjaro, as well as contributions from our Lilly Immunology, Lilly Oncology, and Lilly Neuroscience portfolio. U.S. price declined by 3%, driven by Zepbound and Mounjaro. In Q2, U.S. price benefited from a change to estimates for rebates and discounts. Excluding these adjustments, U.S. price declined by 9%. Europe revenue grew 55% in constant currency, driven by sustained strong volume growth of Mounjaro. Europe revenue also benefited from a $250 million Jardiance milestone payment. In Japan, revenue grew 30% in constant currency, driven by Mounjaro and Kisunla. In China, revenue grew by 93% in constant currency, driven by the uptake of Mounjaro.

In the rest of the world, revenue grew 136% in constant currency, driven by Mounjaro, primarily in Latin America and Asia. On slide nine, we provide an update on the performance of our key products. Within Lilly Immunology, Ebglyss worldwide sales more than doubled compared to Q2 2025. In the U.S., Ebglyss continued to gain share of new prescriptions, increasing by approximately four percentage points in the specialty dermatology market since last year. In Lilly Oncology, Jaypirca had another strong quarter of growth, and worldwide sales increased 56% compared to Q2 2025. As we continue to generate positive clinical trial data and expand the label, we believe Jaypirca has the potential to be a foundational therapy across multiple settings and regimens within CLL. Inluriyo continued strong uptake in the metastatic breast cancer oral SERD market.

After only two full quarters, Inluriyo in the U.S. is leader in new prescriptions, with more than 50% share. We look forward to the readout of EMBER-4 in the adjuvant setting to see if Inluriyo can help even more people with breast cancer. In Lilly Neuroscience, Kisunla posted strong revenue growth, expanding its leadership position in the U.S. anti-amyloid target therapy market. Diagnostic testing momentum also continued to build, and the number of p-tau217 blood tests more than doubled compared to Q2 2025. This is translating to more people being diagnosed with Alzheimer's disease and accessing treatment. Outside the U.S., solid performance in China and Japan contributed to growth as well. Finally, in Lilly Cardiometabolic Health, Mounjaro and Zepbound had another strong quarter combining for $14.9 billion of revenue and contributing $6.3 billion of growth compared to Q2 2025.

As seen on slide 10, total prescriptions in the U.S. incretin analog market grew 31% compared to Q2 2025. The early uptake of oral GLP-1s has been encouraging, expanding the market of people who are taking incretin therapy. Additionally, injectable incretins continue to be an important growth driver and account for three out of four new patient starts. Within the U.S. incretin analogs obesity market, total prescription grew by 78% in Q2, and the Lilly anti-obesity portfolio continues to lead. In Q2, approximately six out of 10 total prescription and approximately seven out of 10 injectable prescriptions were for a Lilly medicine. Self-pay continued to be an important segment within obesity and accounted for approximately 45% of total Zepbound prescriptions in Q2 and approximately 55% of new prescriptions.

In the U.S., type 2 diabetes incretin analogs market, total prescriptions grew 9% compared to Q2 2025, reflecting a more mature market compared to obesity. The Lilly portfolio continues to lead here as well, as more than six out of 10 prescriptions for an incretin were for a Lilly medicine. Outside the U.S., Lilly's portfolio is also performing well in the incretin analogs market. Slide 11 shows aggregate trends in the international incretin analogs market, which has increased by 74% since the same period last year, as measured by IQVIA gross sales. Lilly is the global market leader, and we strengthen that position, gaining almost two percentage points of share compared to Q1 2026, reaching approximately 55%. Mounjaro Q2 revenue growth was robust, driven by China, Korea, Germany, the U.K., and Mexico.

We expect continued strong performance outside the U.S. With market share leadership already established, market expansion will be key to driving sustainable growth. We also saw incremental progress on securing reimbursed access as Mounjaro is now reimbursed for both type 2 diabetes and obesity in France. Slide 12 provides an update on the Foundayo launch and the cadence of anticipated upcoming catalysts. The U.S. launch is progressing well. Total prescription and share of new patients continue to grow as we are increasing our investment to drive brand awareness among physicians and consumers. The recent launch of the Medicare GLP-1 Bridge program is an opportunity to expand the oral market, unlocking access for eligible seniors with a low out-of-pocket cost. We are pleased to receive the first international approval for obesity in UAE and Saudi Arabia, and in Mexico for obesity and type 2 diabetes.