Lilly's Deal Spree Is Eating Its Weight-Loss Windfall
Revenue jumped 48% and full-year guidance rose again, but $2.8 billion in one quarter of deal write-offs is quietly trimming the world's biggest pharmaceutical cash machine.
Eli Lilly's second-quarter report read like a generational commercial win. Worldwide revenue reached $22.97 billion, up 48% from $15.56 billion a year earlier, Lilly reported, powered by the blockbuster GLP-1 medicines reshaping its business. Underneath that number sits a quieter story: a record dealmaking spree whose accounting charges are trimming the bottom line even as the top line explodes.
Lilly booked $2.8 billion of acquired in-process research and development charges in the quarter, $3.03 a share, mainly from the purchases of Orna Therapeutics and Ajax Therapeutics, as detailed in its quarterly filing. That single line was large enough to more than offset the $2.78 per share underlying earnings uplift the company baked into its full-year guidance.
A boom built on volume, not price
The growth is real demand rather than sticker-price inflation. Volume rose 60% worldwide in the quarter, partially offset by a 13% decline in realized prices. In the U.S. the split was starker: revenue up 33% to $14.4 billion on a 37% volume gain, against a price decline that Lilly said would have been about 9% excluding rebate and discount estimate adjustments.
That volume is concentrated in two names. Mounjaro worldwide revenue climbed 91% to $9.94 billion, Zepbound rose 46% to $4.93 billion, and the newly launched oral pill Foundayo recorded $98 million in its first quarter of sales. Outside the U.S., revenue jumped 80% to $8.6 billion, helped by Mounjaro being added to China's National Reimbursement Drug List.
Spending the windfall before it is booked
The deal charges are the point. Lilly raised its full-year revenue guidance to $85 billion to $87 billion, and updated non-GAAP EPS guidance to $35.50 to $36.50 from $35.50 to $37.00. The company said the underlying business improved by $2.78 per share at the midpoint, a gain more than offset by the $3.03 in second-quarter IPR&D charges.
The dealmaking has not paused. During the quarter Lilly closed Orna, Ajax, Centessa Pharmaceuticals, and Kelonia Therapeutics. After the quarter ended it completed three acquisitions to build an infectious-disease portfolio and agreed to buy AtaiBeckley, a psychedelics drugmaker, while committing another $4.5 billion to expand its Indiana manufacturing sites.
A trade-off that is now explicit
The buying spree is the deliberate cost of defending a lead. Lilly holds about 60.9% of U.S. obesity and diabetes drug revenue versus 38.8% for Novo Nordisk, according to its earnings presentation, a position it is spending heavily to widen through access deals that trade per-unit price for volume. Medicare's new obesity coverage, launched in July with a $50 monthly copay, is meant to tilt that same trade toward scale, with Lilly expecting global GLP-1 use to roughly double from about 20 million patients at the end of 2025 to 30 million by the end of 2026, chief executive David Ricks told CNBC.
The math for a mega-cap trying to stay one
Reported EPS still rose 26% to $7.94, and non-GAAP EPS rose 33% to $8.38, on a gross margin of 85.8% reported and 86.3% non-GAAP. The franchise itself is enormously profitable. But acquired IPR&D is a non-operating write-off tied to the value assigned at purchase to programs that have not yet generated revenue. It does not drain cash the way capital spending does, yet it subtracts directly from the earnings figure investors lean on between now and the day those programs mature, including retatrutide, Lilly's triple-agonist obesity drug, for which it plans a Biologics License Application in the first quarter of 2027.
Lilly reports third-quarter results Thursday, October 29, before the open, its next chance to show whether the deal cadence stays elevated and whether a booming top line keeps arriving beside episodic, deal-driven hits to the bottom. The revenue boom is real. So is the bill for turning it into a wider pipeline and manufacturing base, and in the second quarter that bill was large enough to wash out most of the profit progress the top line otherwise implied.
