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

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Understanding how a global pharmaceutical leader like Eli Lilly and Company (LLY) makes money is essential for investors and anyone interested in the business of healthcare innovation. 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 Eli Lilly and Company Overview

Eli Lilly and Company operates as a leading pharmaceutical innovator, developing and marketing prescription medicines across cardiometabolic, oncology, immunology, and other therapeutic areas. Revenue comes primarily from branded drug sales, with a focus on blockbuster therapies in diabetes, obesity, cancer, and autoimmune diseases. The business is organized into segments including Cardiometabolic Health, Oncology, Immunology, and Other Products, each contributing to a diversified revenue base.

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
• Growth is powered by explosive demand for cardiometabolic therapies (notably diabetes and obesity drugs), as well as steady expansion in oncology and immunology portfolios.

Gross Profit and Margins

• Gross Profit: $14.6B (82.9% gross margin)
  • Cost of Revenue: $3.01B (+38.6% YoY)
  • Eli Lilly 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 late-stage clinical trials, next-generation diabetes/obesity drugs, oncology pipeline, and immunology innovation.
  • SG&A: $2.74B (+30.5% YoY, 15.6% of revenue) — Includes global salesforce, marketing for new launches, and administrative infrastructure.
  • Eli Lilly continues to prioritize innovation and invest aggressively in R&D while maintaining operational efficiency and scaling commercial operations.

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)
• Eli Lilly converts a significant portion of sales into profit due to its scalable business model, strong pricing power, and operational leverage.

What Drives Eli Lilly's Money Machine?

• Cardiometabolic Health: 75%+ of revenue, driven by blockbuster diabetes and obesity drugs (e.g., tirzepatide/Mounjaro, Zepbound).
• Prescription Volume Growth: Record patient adoption and expanded indications, especially in metabolic and endocrine diseases.
• R&D Investment: $4.1B in Q3 2025, fueling a robust pipeline in obesity, diabetes, oncology, and immunology.
• Future Growth Areas: Next-generation obesity therapies, Alzheimer’s disease treatments, and novel cancer immunotherapies — high investment now, with profitability expected in future years.

Visualizing Eli Lilly'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

• Eli Lilly's money comes overwhelmingly from cardiometabolic therapies, especially diabetes and obesity drugs.
• High gross and net margins illustrate the power of Eli Lilly’s innovative, patent-protected business model.
• Heavy investment in R&D, balanced by efficiency in operating costs.
• Ongoing growth is driven by blockbuster drug launches, pipeline innovation, and global market expansion.

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FAQ About Eli Lilly's Income Statement

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

Eli Lilly generates over 74.9% of its revenue from Cardiometabolic Health, primarily blockbuster diabetes and obesity drugs. Other significant sources include oncology 13.7% and immunology 7.7%.

2. How profitable is Eli Lilly in Q3 2025?

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

3. What are the largest expense categories for Eli Lilly?

The biggest expenses on Eli Lilly's income statement are operating expenses, particularly Research & Development (R&D) at $4.12B in Q3 2025 (23.4% of revenue), as the company prioritizes late-stage clinical trials and pipeline expansion. SG&A costs were $2.74B (15.6% of revenue), supporting global sales and marketing.

4. Why does Immunology operate at a loss?

Immunology, despite generating $1.36B in revenue, posted an operating loss due to aggressive investment in new therapies and clinical trials, as Eli Lilly believes these will drive long-term growth—even if the division is unprofitable today.

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

Eli Lilly'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.