Q2 2026 Earnings Call

GLP-1 Momentum Meets Pricing Reality

Eli Lilly enters 2026 riding extraordinary momentum from its incretin portfolio, particularly tirzepatide-based Mounjaro for type 2 diabetes and Zepbound for obesity. In Q4 2025 results released February 4, 2026, revenue jumped 43% to $19.3 billion, driven by volume growth in these drugs, which together accounted for a massive share of total sales in 2025. The company issued ambitious 2026 guidance projecting $80 billion to $83 billion in revenue and non-GAAP EPS of $33.50 to $35.00, surpassing analyst expectations and signaling confidence in continued demand despite challenges.

The stakes for the Q2 update are high because several key changes are converging mid-year. Medicare is anticipated to broaden access to obesity treatments by July 1, 2026, potentially unlocking millions more patients and boosting volumes significantly. Around the same time, Lilly plans to launch orforglipron, an oral GLP-1 candidate, pending FDA approval, which could capture market share from injectable competitors by offering greater convenience.

Yet countervailing forces loom large. Lilly anticipates low- to mid-teens global pricing declines in 2026, stemming from U.S. government access agreements, new direct-to-patient pricing for Zepbound, Mounjaro reimbursement in China, and Medicaid impacts. R&D spending is accelerating to fund late-phase programs and manufacturing scale-up, which could pressure margins even as gross margins remain relatively stable. Competition from Novo Nordisk remains fierce, though Lilly's outlook diverges positively while Novo's projects a potential sales drop.

Non-obvious tensions include the balance between short-term pricing concessions to secure broader coverage and long-term profitability, plus the risk that supply constraints or regulatory delays could blunt the impact of new launches and access expansions. Investors will scrutinize whether volume gains can outrun price erosion and whether pipeline progress justifies elevated investment levels.