Eli Lilly (LLY) Q1 FY26 earnings call: guidance and Q&A

How does Lilly view pricing dynamics for incretins, particularly the impact of price reductions on volume and the company's margin sensitivity given manufacturing investments?

David Ricks explained that the obesity and weight loss category exhibits a unique dynamic where price reductions often lead to a non-linear expansion in volume, unlike other pharmaceutical categories. He noted that unit economics are driven by fixed costs, providing latitude for pricing adjustments. He also highlighted that negotiated outcomes with governments, like the MFN package and China's NRDL, have led to strong volume growth despite price concessions, and Lilly will continue to invest in R&D.

“But pretty much every time we reduce pricing, we see a pretty large expansion. You also see built into this, the primary pricing effect in Q1 are actually negotiated outcomes with governments.”

asked by Jeff Meacham · answered by David Ricks

What are the key learnings from the international Mounjaro launch, and what impact, if any, is expected from the entry of generic semaglutide in select markets?

Patrik Jonsson stated that Mounjaro has seen strong growth and rapid market share gains across over 55 countries, with an estimated market share of 60% in Korea and over 53% OUS on average. He noted that generic semaglutide in India appears to be stimulating overall obesity market growth, with Mounjaro holding its market share and even seeing increased prescriptions, suggesting dual agonists outperform single agonists. He expects continued strong year-on-year growth driven by patient activation.

“When we look at the generics, we only have a few weeks of data from India, but it seems like it's really stimulating the growth in the overall obesity market. And that includes our product. And the Mounjaro has actually been holding market share quite nicely.”

asked by Christopher Schott · answered by Patrik Jonsson

How does Lilly envision the market segmenting with the introduction of Foundayo, Retatrutide, and Eloralintide, and how will these assets address different patient needs?

Ken Custer explained that the large and growing obesity market will require different medicines tailored to individual needs. Retatrutide, with its potential for greater weight loss, could appeal to certain individuals. Eloralintide is positioned as a non-GLP-1 based mechanism for patients with tolerability concerns or as an add-on therapy for incremental weight lowering. Lilly is investing in various approaches, including less frequent dosing and genetic medicine, to address diverse patient preferences.

“I think it's reasonable to expect in this large and growing market and opportunity in obesity that was the number of patients around the world living with over later of ECD numbering perhaps in the billions, but many of them are going to want different types of medicines that are tailored to their individual needs and preferences.”

asked by Seamus Fernandez · answered by Kenneth Custer

What is Lilly's strategy to activate Medicare patients for obesity medicines, the expected timeline for impact, and how will the attractive price point affect persistence?

Ilya Yuffa stated that the Part D access starting in July, running through 2027, will be a gradual path requiring education for physicians, pharmacies, and consumers. The $50 per month co-pay is a crucial affordability element for seniors, which is expected to enhance persistence, building on the already observed good persistence for Zepbound and Mounjaro. He anticipates continued growth in 2027 as the program matures.

“And obviously, the $50 month co-pay is an important element of affordability for seniors. We've already seen for Zepbound as well as Mounjaro. We've had wind persistency overall relative to other chronic conditions.”

asked by Alexandria Hammond · answered by Ilya Yuffa

With a few weeks of Foundayo launch data, what is the confidence level in its trajectory, and what contribution was factored into the revised guidance?

Ilya Yuffa expressed satisfaction with Foundayo's early trajectory, noting over 8,000 prescribers (one-third new to oral GLP-1s) and over 20,000 patients treated, with 80% being new to class. He highlighted improving access and planned full-scale DTC in Q3. Lucas Montarce added that the guidance increase was driven by the overall portfolio strength, and while Foundayo is tracking to expectations, it's still very early days, with only three weeks of data.

“And then on the third piece on consumer front, we now have just over 20,000 patients treated to date. And what important element there is that 80% of those found prescriptions are new to class.”

asked by Asad Haider · answered by Ilya Yuffa

Given Zepbound's Q1 U.S. sales of $4.1 billion and estimated 7 million prescriptions, implying a price of ~$580 per Rx, what explains the delta from the cash-pay price of ~$450?

Lucas Montarce confirmed the analyst's math was 'pretty spot on' and attributed the difference to the commercial business, as Lilly Direct prices have been stable since December. David Ricks added that a 'reasonable amount of medical exception and OSA usage' moves across channels at close to an undiscounted price, which likely contributes to the higher average.

“Maybe just 1 add, I think it isn't widely appreciated is there is a reasonable amount of medical exception and OSA usage that moves across channels at close to an undiscounted price.”

asked by Umer Raffat · answered by David Ricks

How does the Foundayo launch compare to a traditional primary care launch, specifically regarding acceleration or holding back certain elements, given the pre-prepared inventory?

Ilya Yuffa stated that Foundayo's launch is following an accelerated path compared to traditional primary care, particularly in gaining early access with PBMs and Medicare. While digital and social media DTC efforts began immediately, full-scale TV advertising is planned for Q3 to ensure physicians have familiarity with Foundayo's profile first. David Ricks emphasized that Foundayo is a new brand and molecule, starting from a lower awareness baseline than line extensions, but expressed confidence in building it successfully, similar to past new primary care drug launches.

“But overall, this is following an accelerated path in primary care. And if I compare, we've had the opportunity to launch many brands within primary care with Trulicity, with Mounjaro, Zepbound, Jardiance, all of which have gone towards leadership in those categories in a competitive space.”

asked by Courtney Breen · answered by Ilya Yuffa

What is Lilly's vision for employer coverage of obesity medications in the U.S., considering the role of regular employer insurance versus greater cost-sharing through Lilly Direct?

David Ricks stated that obesity medications should be broadly covered as a policy matter, viewing the Medicare Part D access as a significant step that could spill over into commercial coverage. He acknowledged that achieving broad coverage will be incremental due to the broad prevalence of obesity and the financial strain on the healthcare system. Lilly Direct aims to create alternate pathways for employers, and the company will continue to publish data demonstrating the cost-effectiveness of these drugs, expecting the market to eventually resemble other chronic medication markets.

“I think a big step in this journey is actually the July 1 Medicare. There's often spillover benefits into commercial from there. And I think setting a standard that people in America should expect if they've paid into their insurance program or their employer has that will cover their health needs.”

asked by David Risinger · answered by David Ricks