Lilly (Eli) Financial Model
Pharmaceuticals Company Financials Example (Free Excel Download)
Eli Lilly is a global pharmaceutical company that discovers, develops, manufactures, and markets human medicines, with a dominant focus on cardiometabolic diseases, oncology, immunology, and neuroscience.
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About this model
This model provides a comprehensive equity valuation and scenario planning tool for Eli Lilly and Company (LLY), enabling an analyst to forecast the rapid scale-up of its incretin franchise (Mounjaro and Zepbound), assess the margin impact of massive manufacturing capacity investments, and determine a sum-of-the-parts or discounted cash flow (DCF) valuation.
- What the company does: Eli Lilly is a global pharmaceutical company that discovers, develops, manufactures, and markets human medicines, with a dominant focus on cardiometabolic diseases, oncology, immunology, and neuroscience.
- Business segments: Lilly operates as a single business segment (Human Pharmaceutical Products), but revenue is driven by key therapeutic areas: Cardiometabolic (approx. 60-65% of revenue, driven by Mounjaro, Zepbound, Jardiance, Trulicity), Oncology (approx. 15-20%, driven by Verzenio), Immunology (approx. 10%), and Neuroscience.
- Key geographies: United States (approx. 60-65% of revenue) and International (approx. 35-40%, with strong growth in Europe and Japan).
- Business model type: Asset-heavy pharmaceutical innovator. Unlike some peers that outsource heavily, Lilly is currently investing billions in internal manufacturing capacity (biologics and peptide synthesis) to meet unprecedented demand for its GLP-1/GIP therapies.
- Competitive position: Lilly is a top-three global pharmaceutical firm by market capitalisation. It operates in a duopoly with Novo Nordisk in the booming obesity and diabetes incretin market.
- Recent major events: The launches of Zepbound (obesity) and Kisunla (Alzheimer's); massive capital expenditure announcements for manufacturing sites in Indiana, North Carolina, Ireland, and Germany; and bolt-on acquisitions to bolster the pipeline (e.g., POINT Biopharma, Morphic, SiteOne Therapeutics).
The downloadable Lilly (Eli) financial model includes SEC-sourced historical financials, forecast assumptions, core operating schedules, and valuation outputs in an Excel workbook built for review and scenario analysis.
A turnkey financial model
Live formulas, no hardcoded values
Outputs are driven by live formulas, so the workbook updates from its assumptions instead of relying on hardcoded results.
All assumptions in one tab
Inputs are clearly marked in the Assumptions tab and separated from calculations, making it clear what to change and what to leave intact.
Statements always balancing
For integrated-statement models, the balance sheet, cash flow, and supporting schedules tie through properly.
Distinct schedules for clarity
Debt, working capital, taxes, and cash flow can get messy quickly. We group calculations in clear schedules, not across disconnected tabs.
No hidden macros or external links
There are no unexplained external workbook links or macros to undermine auditability or portability.
Changes flow through the model
Update a key driver and see the impact carry through the forecast, financing, and return outputs. We never use hardcoded numbers in formulas.
Historicals & AssumptionsLilly (Eli) financial modelCompany, Historicals & Assumptions used
Source: SEC EDGAR · values in USD
| Line item | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Revenue | $28.32B | $28.54B | $34.12B | $45.04B | $65.18B |
| Gross profit | $21.01B | $21.91B | $27.04B | $36.63B | $54.13B |
| Cost of sales | $7.31B | $6.63B | $7.08B | $8.42B | $11.05B |
| Net income | $5.58B | $6.24B | $5.24B | $10.59B | $20.64B |
Forecast assumptions
Defaults used in the downloadable model. Forecast horizon: FY2026–FY2030.
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How to build a detailed financial model for Lilly (Eli)
A complete walkthrough of every driver, margin, working-capital input, and capital-allocation assumption used in the downloadable model.
Revenue Deep Dive
Lilly reports revenue by product rather than traditional business segments.
Incretin Franchise (Mounjaro & Zepbound)
- Segment name: Reported under "New Products" / Cardiometabolic.
- Revenue driver formula: Total Prescriptions (TRx) x Net Realised Price per Prescription.
- Historical growth rate: >100% YoY (Mounjaro revenue surged 110% YoY in Q4 2025 to $7.4B; Zepbound surged 123% to $4.2B).
- Key growth levers and headwinds: Supply capacity (manufacturing constraints), label expansions (e.g., obstructive sleep apnea, cardiovascular outcomes), and international rollouts. Headwinds include payer pushback and step-therapy requirements.
- Pricing dynamics: High gross-to-net spread. List prices are high, but net realised prices decline over time due to commercial rebates, Medicare Part D redesign, and competitive contracting with PBMs.
- Seasonality: Q1 is typically the weakest due to the reset of patient deductibles in the US (the "donut hole" effect), leading to higher out-of-pocket costs and lower net realised prices.
Oncology (Verzenio, Jaypirca)
- Segment name: Oncology (Growth Products / New Products).
- Revenue driver formula: Patient Volume x Duration of Therapy x Net Price.
- Historical growth rate: Low double-digits (Verzenio grew ~3% YoY in Q4 2025 to $1.6B as it matures).
- Key growth levers and headwinds: Adjuvant breast cancer uptake for Verzenio; pipeline readouts for radiopharmaceuticals.
Legacy Diabetes (Trulicity, Humalog)
- Segment name: Legacy / Established Products.
- Revenue driver formula: Volume x Net Price.
- Historical growth rate: Declining (negative 10-20% YoY).
- Key growth levers and headwinds: Cannibalisation by Mounjaro, biosimilar competition for insulins, and mandated price caps (e.g., $35 out-of-pocket insulin cap in the US).
Cost Structure
Variable Costs / COGS
- Line-by-line breakdown: Manufacturing labour, raw materials (APIs, peptides), device components (autoinjector pens), overhead allocation, and royalties paid to third parties.
- Gross margin range: 81.0% - 83.5% (Q4 2025 GM was 83.2%).
- Key input costs: Peptide synthesis materials, sterile fill-finish capacity.
- How COGS scales: Step-function. As new multi-billion-dollar manufacturing plants come online, unabsorbed overhead temporarily hits COGS until production scales up.
Operating Expenses
- R&D: Typically 20-25% of revenue ($10.99B or 24% in 2024). Covers early discovery, clinical trials (Phase 1-3), and regulatory filings. Excludes Acquired IPR&D.
- SG&A: Typically 15-18% of revenue. Driven by direct-to-consumer (DTC) advertising (especially for Zepbound), sales force deployment, and corporate overhead.
- Acquired IPR&D: Highly volatile. Lilly frequently records large, one-time in-process R&D charges for bolt-on acquisitions and licensing deals. These are excluded from non-GAAP earnings.
- Depreciation & Amortisation: D&A is rising rapidly due to the massive capex cycle. Amortisation relates to acquired intangible assets.
Margin Profile
- Gross margin: 81-83.5%.
- Operating margin: Expanding rapidly from ~30% historically to ~38-42% as incretin revenues scale faster than fixed operating costs.
- Net margin: 23-28%, heavily influenced by the effective tax rate and IPR&D charges.
Balance Sheet Structure
- Total assets: >$60 billion, heavily weighted towards PP&E and Intangibles.
- Goodwill & intangibles: Significant portion of assets due to historical M&A (e.g., Loxo Oncology, Dermira, POINT Biopharma).
- Working capital profile:
- DSO: 60-70 days (standard for pharma wholesalers).
- DIO: 180-220 days. Inventory is structurally high to ensure supply chain resilience for critical medicines and to buffer the complex peptide manufacturing process.
- DPO: 70-90 days.
- Net working capital: Generally positive. The massive scale-up of Mounjaro/Zepbound requires significant inventory builds, acting as a use of cash.
- PP&E: Rapidly expanding. Consists of global manufacturing sites. Useful lives are typically 15-25 years for buildings and 5-15 years for manufacturing equipment.
Capital Expenditure & Investment
- Capex as % of revenue: 15-20% currently (historically 5-8%). Capex was $8.4B in 2024.
- Maintenance vs. growth: >80% is growth capex, specifically dedicated to new active pharmaceutical ingredient (API) and fill-finish facilities for incretins.
- M&A pattern: Serial bolt-on acquirer. Lilly typically buys early-to-mid clinical stage biotech companies for $1B-$5B to replenish its pipeline, rather than engaging in transformational mega-mergers.
Debt & Capital Structure
- Total debt: Net debt was approximately $30.4B at the end of 2024.
- Debt/EBITDA ratio: ~1.5x - 2.0x. S&P rating is A+.
- Key debt instruments: Unsecured senior notes (bonds) and commercial paper for short-term liquidity.
- Interest rate profile: Predominantly fixed-rate long-term bonds.
- Share repurchase programme: Active but secondary to capex and M&A. Lilly uses buybacks primarily to offset dilution from stock-based compensation.
- Dividend policy: Progressive dividend policy. Yield is typically low (~1.0%) due to the massive market capitalisation, but the payout grows annually.
Cash Flow Characteristics
- Operating cash flow conversion: Historically strong, but currently pressured by massive working capital needs (inventory builds) to support the GLP-1 launch.
- Free cash flow margin: Compressed in the near term (FCF was only ~$414M in 2024 despite massive net income) due to the $8.4B capex burden and working capital swings.
- Major non-cash items: Depreciation, amortisation of intangibles, stock-based compensation, and acquired IPR&D charges.
- Cash tax rate: Generally tracks the GAAP effective tax rate (17-19%), benefiting from US R&D tax credits and lower tax jurisdictions for manufacturing (e.g., Ireland).
Sheet Structure
- Assumptions: Hardcoded drivers for macroeconomic factors, tax rates, WACC, and product-level market share/pricing.
- Product Revenue Build: The most critical sheet. Forecasts TRx volumes, gross-to-net pricing discounts, and net revenue for Mounjaro, Zepbound, Verzenio, Jardiance, Trulicity, and "Other". Split by US and International.
- Income Statement: Consolidated view. Links to Revenue Build. Calculates COGS, R&D, SG&A, and Acquired IPR&D to arrive at GAAP and Non-GAAP Operating Income.
- Working Capital: Schedules for Accounts Receivable, Inventory, and Accounts Payable based on DSO, DIO, and DPO.
- Capex & Depreciation: Waterfall schedule for PP&E. Crucial for modelling the $8B+ annual capex spend and the resulting depreciation drag on future earnings.
- Intangibles & Amortisation: Tracks acquired IPR&D and amortisation of marketed products.
- Debt Schedule: Tranches of senior notes, commercial paper, interest expense (fixed/floating), and interest income on cash balances.
- Balance Sheet: Standard format balancing Assets against Liabilities & Equity.
- Cash Flow Statement: Indirect method bridging Net Income to OCF, CFI, and CFF.
- DCF Valuation: Unlevered free cash flow calculation, WACC build, terminal value (using perpetuity growth), and implied share price.
Key Financial Relationships
- `Mounjaro US Revenue = Mounjaro US TRx Volume x Mounjaro US Net Price per TRx`
- `Zepbound US Revenue = Zepbound US TRx Volume x Zepbound US Net Price per TRx`
- `Total Revenue = Sum of Product Revenues (Mounjaro + Zepbound + Verzenio + Trulicity + Jardiance + Taltz + Other)`
- `Gross Profit = Total Revenue - COGS` (Targeting ~83% margin)
- `R&D Expense = Total Revenue x R&D Margin` (Targeting 20-24%)
- `SG&A Expense = Total Revenue x SG&A Margin` (Targeting 15-18%)
- `Non-GAAP Operating Income = Gross Profit - R&D Expense - SG&A Expense` (Excludes Acquired IPR&D)
- `Performance Margin = Non-GAAP Operating Income / Total Revenue` (Guided to 46.0% - 47.5% for 2026)
- `Inventory Balance = (COGS / 365) x DIO`
- `Unlevered Free Cash Flow = Non-GAAP EBIT x (1 - Effective Tax Rate) + D&A - Capex - Change in Net Working Capital`
Cross-Sheet Dependencies
- The Product Revenue Build is the engine of the model; it feeds the top line of the Income Statement.
- Income Statement COGS drives the Inventory calculations on the Working Capital sheet.
- Capex & Depreciation feeds D&A into the Income Statement and Cash Flow Statement, and updates PP&E on the Balance Sheet.
- Debt Schedule calculates interest expense, which feeds the Income Statement. This creates a circular reference if cash flow shortfalls are funded by a revolving credit facility, requiring an iterative calculation toggle.
- Cash Flow Statement ending cash feeds the Balance Sheet cash line, ensuring the balance sheet balances.
Sign Convention
- Revenue and Assets: Positive.
- Expenses (COGS, R&D, SG&A, Interest, Taxes): Positive inputs in the Assumptions sheet, but subtracted in the Income Statement formulas (e.g., `Gross Profit = Revenue - COGS`).
- Cash Flow: Inflows are positive, outflows (Capex, Dividends, Debt Repayment) are negative.
- Working Capital: An increase in an asset (e.g., Inventory) is a negative adjustment to operating cash flow; an increase in a liability (e.g., Accounts Payable) is a positive adjustment.
Things Most Likely to Go Wrong
- Underestimating Capex: Lilly is in an unprecedented manufacturing build-out. Assuming historical pharma capex levels (5% of revenue) will drastically overstate Free Cash Flow. Model must reflect $8B-$10B+ annual capex.
- Ignoring Gross-to-Net Pricing: List prices for GLP-1s are high, but net prices decline due to rebates and payer mix. Revenue must be modelled on *net* realised price, not list price.
- Misinterpreting IPR&D: Lilly frequently reports large Acquired IPR&D charges that crush GAAP EPS. The model must separate GAAP from Non-GAAP EPS to align with management guidance and consensus estimates.
- Working Capital Drag: The massive volume growth of Mounjaro requires huge inventory builds. Failing to model this will overstate Operating Cash Flow.
- Cannibalisation: Trulicity revenue is falling rapidly as patients switch to Mounjaro. The model must explicitly forecast Trulicity's decline, not hold it flat.
- Tax Rate Volatility: The GAAP tax rate is highly volatile due to non-deductible IPR&D charges. Use the Non-GAAP effective tax rate (18-19%) for core valuation.
- Seasonality in Q1: US pharma revenue dips in Q1 due to deductible resets. Do not straight-line Q4 run-rates into Q1 without a seasonal haircut.
- Foreign Exchange: Lilly generates ~35-40% of revenue outside the US. A strong dollar is a material headwind to reported revenue growth.
Validation Checks
- "Gross margin should be in the 81-84% range; flag if outside this band".
- "Capex as % of revenue should be >10% in the near term due to manufacturing expansion".
- "Non-GAAP Operating Margin (Performance Margin) should expand towards 46-47.5% by 2026".
- "Effective tax rate (Non-GAAP) should be 18-19%; flag if outside this range".
- "Balance sheet must balance: Total Assets = Total Liabilities + Equity in every period."
- "Trulicity revenue growth must be negative YoY."
- "Net Debt / EBITDA should remain below 2.5x to maintain the A+ credit rating".
Key Assumptions (Default Values)
| Assumption | Default Value | Unit | Rationale |
|---|---|---|---|
| 2026 Total Revenue Guidance | 81,500 | $ Millions | Midpoint of management's 2026 guidance ($80B - $83B). |
| Mounjaro YoY Volume Growth | 45.0 | % | Continued aggressive uptake and global rollout, decelerating slightly from 2025's >100% growth. |
| Zepbound YoY Volume Growth | 60.0 | % | Massive unmet need in obesity and expanding supply capacity. |
| Trulicity YoY Revenue Growth | -20.0 | % | Cannibalisation by Mounjaro and competitive pressures. |
| Gross Margin | 83.2 | % | Based on Q4 2025 actuals; reflects favourable product mix offset by lower net prices. |
| R&D as % of Revenue | 22.0 | % | Elevated to support massive Phase 3 pipeline (orforglipron, retatrutide). |
| SG&A as % of Revenue | 16.0 | % | Scaling down as a % of revenue due to top-line leverage, despite absolute dollar increases in DTC marketing. |
| Non-GAAP Effective Tax Rate | 18.5 | % | Midpoint of 2026 guidance (18% - 19%). |
| Days Sales Outstanding (DSO) | 65 | Days | Standard pharmaceutical wholesale collection terms. |
| Days Inventory Outstanding (DIO) | 200 | Days | Structurally high to support GLP-1 supply chain resilience. |
| Days Payable Outstanding (DPO) | 80 | Days | Standard vendor payment terms. |
| Capex | 9,000 | $ Millions | Continued heavy investment in global manufacturing sites. |
| Cost of Debt | 4.5 | % | Weighted average interest rate on long-term senior notes. |
| WACC | 7.5 | % | Standard discount rate for large-cap, low-beta pharmaceutical company. |
| Terminal Growth Rate | 2.0 | % | Long-term GDP growth proxy. |
Data Sources & Benchmarks
- Filings: SEC EDGAR (10-K, 10-Q, 8-K) and the Eli Lilly Investor Relations website (investor.lilly.com) for earnings presentations and guidance updates.
- Peers for Benchmarking: Novo Nordisk (NVO) for direct incretin duopoly comparison; Johnson & Johnson (JNJ), Merck (MRK), and AbbVie (ABBV) for general large-cap pharma margin and multiple benchmarking.
- Industry Data: IQVIA (for weekly TRx and NRx prescription data in the US), Symphony Health.
- Consensus Estimates: Bloomberg, FactSet, or Visible Alpha for consensus revenue builds by product.
Sources
- Eli Lilly Q4 2025 Earnings Press Release and 2026 Guidance (Feb 4, 2026)
- Eli Lilly Q4 2024 Earnings Press Release and 2025 Guidance (Feb 6, 2025)
- S&P Global Ratings: Eli Lilly & Co. Credit Rating Update
- Fierce Biotech: Top 10 pharma R&D budgets in 2024
- The Motley Fool: Eli Lilly Q4 2024 Earnings Call Transcript
- Monexa AI: Eli Lilly Financial Analysis (Growth, Margins & Cash Flow)
- Porter's Five Forces: Competitive Landscape of Eli Lilly Company
Do more with the Lilly (Eli) model
Frequently asked
What does Eli Lilly (LLY) do?+
Eli Lilly is a global pharmaceutical company that discovers, develops, manufactures, and markets human medicines. It primarily focuses on cardiometabolic diseases, oncology, immunology, and neuroscience, operating as an asset-heavy innovator.
What are the primary revenue drivers for Eli Lilly?+
Eli Lilly's revenue is predominantly driven by its cardiometabolic franchise, including Mounjaro, Zepbound, Jardiance, and Trulicity, which accounts for 60-65% of total revenue. Oncology, immunology, and neuroscience therapeutic areas also contribute significantly to its sales.
Why is Eli Lilly's capital expenditure currently so high?+
Eli Lilly's capital expenditure is currently 15-20% of revenue, significantly higher than its historical 5-8%. Over 80% of this spending is growth capex, specifically dedicated to new manufacturing facilities for its incretin therapies like Mounjaro and Zepbound to meet unprecedented demand.
What are the key cost assumptions in Eli Lilly's financial model?+
Key cost assumptions in Eli Lilly's financial model include COGS at approximately 22.66% of revenue, R&D at about 24.71% of revenue, and SGA at roughly 23.95% of revenue. These reflect the company's significant investment in research and development and its asset-heavy manufacturing strategy.
What is the purpose of the Eli Lilly financial model?+
The Eli Lilly financial model provides a comprehensive tool for equity valuation and scenario planning for LLY. It enables analysts to forecast the rapid scale-up of its incretin franchise, assess the margin impact of manufacturing investments, and determine a sum-of-the-parts or discounted cash flow (DCF) valuation.
Can I download an Excel financial model for Eli Lilly (LLY)?+
Yes, an Excel financial model for Eli Lilly (LLY) is available for download. This model offers a forecast horizon from FY2026 to FY2030, allowing for detailed analysis of the company's future financial performance and valuation.
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