Eli Lilly Sales Surge 45%, But Profit Outlook Cut Following Cancer Treatment Deal

Eli Lilly’s first-quarter earnings and revenue exceeded Wall Street expectations, fueled by a significant increase in demand for its weight loss and diabetes drugs, Zepbound and Mounjaro. However, the pharmaceutical giant lowered its full-year profit guidance, citing a substantial charge linked to a recent cancer treatment acquisition.

The company now expects adjusted fiscal 2025 earnings per share (EPS) to fall between $20.78 and $22.28, down from its previous forecast of $22.50 to $24 per share. The revision accounts for a $1.57 billion deal charge related to Eli Lilly’s acquisition of an oral cancer drug from Scorpion Therapeutics. Despite the setback, the company maintained its sales guidance of $58 billion to $61 billion for the year, which remains unaffected by the potential impact of upcoming pharmaceutical tariffs.

Weight Loss and Diabetes Drugs Propel Revenue Growth

Eli Lilly’s blockbuster diabetes treatment, Mounjaro, posted impressive first-quarter results, generating $3.84 billion in revenue, a remarkable 113% increase from the same period last year. The company’s weight loss drug, Zepbound, also surpassed expectations, bringing in $2.31 billion in sales, up significantly from $517.4 million during the same quarter in 2024.

The success of Mounjaro and Zepbound helped drive Eli Lilly’s overall revenue to $12.73 billion, up 45% year-over-year. U.S. sales soared by 49%, reaching $8.49 billion, with a 57% increase in the volume of prescriptions sold for both drugs.

Tariff Concerns and U.S. Manufacturing Investments

In an interview with CNBC, CEO Dave Ricks commented on the broader industry challenges posed by tariffs, particularly those related to pharmaceuticals. He noted that the threat of tariffs has already led to investments in U.S. manufacturing, aligning with the Trump administration’s goals to bring critical supply chains back to the U.S. However, Ricks questioned whether tariffs were truly necessary, emphasizing that these investments are already underway.

Ricks also expressed hope for permanent reductions in U.S. corporate tax rates, particularly a 15% tax rate for domestic production, which could encourage drugmakers to shift manufacturing back to the U.S.

Zepbound and Mounjaro Demand Outpaces Supply

The demand for both Zepbound and Mounjaro continues to outpace supply, leading both Eli Lilly and its competitor Novo Nordisk to invest heavily in expanding manufacturing capacity. The U.S. Food and Drug Administration (FDA) recently confirmed that the shortage of tirzepatide—the active ingredient in both drugs—has been resolved, which should help alleviate supply issues.

Despite the success of these treatments, Eli Lilly faced a setback on Thursday as shares dropped more than 7% following CVS Health’s announcement that it would make Novo Nordisk’s Wegovy the preferred weight loss medication on its formularies instead of Zepbound.

Looking Ahead

While Eli Lilly’s Q1 performance exceeded expectations, the company’s adjusted profit outlook reflects the challenges ahead, including the costs associated with its cancer drug acquisition. Despite these hurdles, Eli Lilly remains confident in its growth prospects, particularly as demand for its weight loss and diabetes treatments continues to rise.