How LLY (Eli Lilly and Company) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a leading pharmaceutical innovator like LLY (Eli Lilly and Company) makes money is essential for investors and anyone interested in the business of healthcare and life sciences. In this post, we break down LLY's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick LLY Overview

LLY (Eli Lilly and Company) operates as a global pharmaceutical company focused on discovering, developing, and marketing innovative medicines. Its core business model centers on prescription drug sales, with a portfolio spanning cardiometabolic health, oncology, immunology, and other therapeutic areas. Revenue comes primarily from branded pharmaceuticals, with a strong emphasis on blockbuster drugs in diabetes, obesity, and cancer care. The company is organized into business segments aligned with these therapeutic areas, each contributing distinct revenue streams.

Revenue Breakdown

• Total Revenue (Q3 2025): $17.6B (+53.9% YoY)
  • Cardiometabolic Health Revenue: $13.2B (74.9% of total, +77.9% YoY)
  • Oncology Revenue: $2.41B (13.7% of total, +7.9% YoY)
  • Immunology Revenue: $1.36B (7.7% of total, +14.9% YoY)
  • Other Product Revenue: $337M (1.9% of total, +28.3% YoY)
  • Other: $316M (not specified)
• Growth is powered by explosive demand for cardiometabolic therapies (notably GLP-1 drugs for diabetes and obesity), continued expansion in oncology, and steady immunology sales.

Gross Profit and Margins

• Gross Profit: $14.6B (82.9% gross margin)
  • Cost of Revenue: $3.01B (+38.6% YoY)
  • LLY maintains robust margins due to its high-value, patent-protected drug portfolio and efficient manufacturing.
• Most costs come from manufacturing, supply chain, and royalties associated with product sales.

Operating Income and Expenses

• Operating Income: $7.73B (+74.3% YoY, 43.9% margin)
• Operating Expenses: $6.86B (+42.0% YoY)
  • R&D: $4.12B (+50.7% YoY, 23.4% of revenue) — focused on next-generation diabetes, obesity, oncology, and immunology therapies, as well as pipeline expansion.
  • SG&A: $2.74B (+30.5% YoY, 15.6% of revenue) — includes global salesforce, marketing, and administrative infrastructure to support rapid product launches and market expansion.
  • LLY continues to prioritize innovation with heavy R&D investment while scaling commercial operations to support new blockbuster launches.

Net Income

• Pre-Tax Income: $7.23B (+355.3% YoY, 41.1% margin)
• Income Tax: $1.65B (22.8% effective tax rate)
• Net Income: $5.58B (+475.3% YoY, 31.7% net margin)
• LLY converts a significant portion of sales into profit due to its scalable product portfolio and strong pricing power in high-demand therapeutic areas.

What Drives LLY's Money Machine?

• Cardiometabolic Health: Drives 75%+ of revenue, led by GLP-1 drugs for diabetes and obesity (e.g., tirzepatide, semaglutide franchise).
• Prescription Volume Growth: Q3 2025 saw record prescription growth, especially in obesity and diabetes segments.
• R&D Investment: Over $4.1B invested in Q3 2025 to advance pipeline assets and lifecycle management of existing blockbusters.
• Future Growth Areas: Early-stage neuroscience and next-gen oncology assets, though not yet profitable, represent long-term upside.

Visualizing LLY's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially R&D) taking the largest chunk.
• Even after large investments in research and commercialization, 31.7% of revenue drops to the bottom line.

Key Takeaways

• LLY's money comes overwhelmingly from cardiometabolic health drugs, especially GLP-1 therapies for diabetes and obesity.
• High gross and net margins illustrate the power of LLY's patent-protected, high-demand product portfolio.
• Heavy investment in R&D, balanced by efficiency in operating costs, supports both current and future growth.
• Ongoing growth is driven by blockbuster launches, global expansion, and pipeline innovation.

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FAQ About LLY's Income Statement

1. What is the main source of LLY's revenue in 2025?

LLY generates over 74% of its revenue from cardiometabolic health products, particularly GLP-1 drugs for diabetes and obesity. Oncology and immunology also contribute meaningful revenue.

2. How profitable is LLY in Q3 2025?

LLY reported net income of $5.58B in Q3 2025, with a net margin of approximately 31.7%, reflecting strong profitability driven by blockbuster drug sales and operational leverage.

3. What are the largest expense categories for LLY?

The biggest expenses on LLY's income statement are operating expenses, particularly Research & Development (R&D) at $4.12B in Q3 2025 (23.4% of revenue), as LLY prioritizes pipeline innovation in diabetes, obesity, oncology, and immunology.

4. Why does Immunology operate at a loss?

Immunology, despite generating $1.36B in revenue, posted an operating loss in Q3 2025. This is because LLY aggressively invests in new immunology assets and clinical trials, believing these will drive long-term growth—even if the division is unprofitable today.

5. How does LLY's effective tax rate compare to previous years?

LLY's effective tax rate in Q3 2025 was 22.8%, consistent with previous years. This moderate rate is primarily due to international structuring and tax benefits from share-based compensation.

All data sourced from LLY's Q3 2025 financial statements.
Sankey chart visualizes actual financial flows for maximum clarity.