Lilly(LLY) - 2024 Q4 - Earnings Call Transcript

Financial Performance - In 2024, Eli Lilly's full-year revenue grew by 32% compared to 2023, exceeding initial guidance by $4 billion [8] - Q4 revenue increased by 45%, driven by strong uptake of newly launched products [9][19] - Gross margin as a percentage of revenue rose to 83.2% in Q4, influenced by a favorable product mix [20] - Operating income more than doubled to$ 5.6 billion, with earnings per share reaching $5.32, compared to$ 2.49 in Q4 2023 [22] Business Line Performance - New products generated over $5.6 billion in Q4, with Mounjaro and Zepbound leading the growth [27] - The non-incretin portfolio grew by 20% in Q4, excluding one-time business development payments [20][13] - Trulicity revenue declined by 25%, primarily due to switches to Mounjaro [31] Market Performance - U.S. revenue increased by 40% in Q4, with volume growth of 45% [23] - European revenue grew by 82% in constant currency, benefiting from a one-time payment related to Jardiance [24] - Japan revenue rose by 27% in constant currency, driven by Mounjaro and other products [24] - Revenue in China increased by 13% in constant currency, with Mounjaro recently launched [26] Company Strategy and Industry Competition - Eli Lilly is focusing on expanding its pipeline through acquisitions and collaborations, including a partnership with OpenAI [10] - The company is investing over$ 23 billion in manufacturing facilities since 2020 to meet increasing demand [11] - The strategic focus includes launching Mounjaro in new markets and expanding access to existing products [34] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory for 2025, anticipating revenue between $58 billion and$ 61 billion [33] - The company expects continued growth in oncology, neuroscience, and immunology sectors [35] - Management acknowledged potential headwinds from foreign exchange and pricing pressures but remains optimistic about long-term growth [35] Other Important Information - Eli Lilly returned $3 billion to shareholders through dividends and share repurchases, alongside a new$ 15 billion share repurchase program [17] - The company plans to initiate new Phase III programs in 2025, including trials for Orforglipron in hypertension [48] Q&A Session Summary Question: 2025 guidance and prescription uptake trends - Management confirmed that the 2025 guidance is based on the continuation of total prescription growth seen in 2024 [66][68] Question: Zepbound payer dynamics and access - Management indicated strong commercial access and anticipated Medicare coverage for OSA by the second half of the year [75] Question: Orforglipron positioning and efficacy - Management clarified that Orforglipron is expected to provide important benefits similar to existing GLP-1 therapies, particularly for patients with needle fear [86] Question: Sustainability of operating margin expansions - Management emphasized the importance of reinvesting in R&D to drive sustainable growth, indicating that high operating margins may not be realistic long-term [106] Question: Kisunla launch and market readiness - Management reported positive momentum in the Kisunla launch, focusing on system readiness and partnerships with healthcare providers [112] Question: Concerns about the obesity market size - Management reassured that the obesity market presents a significant opportunity, emphasizing ongoing demand and the need for further capacity building [126][128]