Company DCF analysis file
Eli Lilly DCF Analysis
An Eli Lilly DCF must fund manufacturing capacity and research while testing concentrated product demand. Mounjaro and Zepbound account for a large part of FY2025 revenue, but neither product has a disclosed standalone free-cash-flow margin here. Capacity payments, usable output and sales collections occur at different times.
Revenue, expenses and profit on one annual basis
Historical Eli Lilly consolidated comparison, $ millions: FY2024 ended 2024-12-31 and FY2025 ended 2025-12-31. These annual periods are separate from the later interim observation below.
| Measure | FY2024 | FY2025 |
|---|---|---|
| Revenue | 45,043 | 65,179 |
| Cost of sales | 8,418 | 11,052 |
| Research and development | 10,991 | 13,337 |
| Marketing, selling and administrative | 8,594 | 11,094 |
| Acquired in-process R&D | 3,280 | 2,910 |
| Impairment, restructuring and special charges | 861 | 484 |
| Profit before other-net expense and tax: derived | 12,899 | 26,302 |
| Other-net expense | 219 | 571 |
| Income before tax | 12,680 | 25,731 |
| Net income | 10,590 | 20,640 |
Source: Annual financial statements. Annual values are reported unless a row is marked derived.
The derived subtotal subtracts the five displayed cost categories from revenue; it is not labelled an issuer-reported operating-income line. Acquired research is distinct from routine development expense and may have a different cash presentation. Removing an acquired-research charge from earnings does not remove the purchase payment or the future cost of development.
Revenue concentration is not a product cash margin
| Reported FY2025 revenue, $ millions | Amount | Boundary |
|---|---|---|
| Mounjaro | 22,965 | Worldwide product revenue |
| Zepbound | 13,542 | Worldwide product revenue |
| Together: derived | 36,507 | 56.0% of consolidated annual revenue, rounded |
| Consolidated revenue | 65,179 | Annual group denominator |
Source: Annual business disclosures and financial notes. Annual values are reported unless a row is marked derived.
The two medicines sum to $36,507 million. Their shared demand, pricing and supply sensitivities should not be treated as independent diversification merely because there are two brand rows. Use units and realized net pricing, not a guaranteed list-price realization or a product margin inferred from group cash.
Reconcile reported cash before forecasting investor cash
| Measure | FY2024 | FY2025 |
|---|---|---|
| 2025 operating cash | Consolidated inflow | 16,813 |
| 2025 property and equipment purchases | Positive deduction | 7,841 |
| 2025 cash after property investment: derived | Before other investments | 8,972 |
Source: Annual cash-flow statement and related notes. Annual values are reported unless a row is marked derived.
The narrow 2025 cash remainder is 16,813 minus 7,841 = $8,972 million. Separate purchases of in-process research and acquisitions lie outside that property-only deduction. Routine research payments already reflected in operating cash must not be deducted again simply because the forecast calls them investment.
The later interim period stays separate
| Observation | Period-specific evidence |
|---|---|
| Reported period basis | Q2 2026 covers 2026-04-01 through 2026-06-30 and was released 2026-08-05. Revenue was $22,974 million in this quarter. |
| Interpretation boundary | The later quarter includes acquired in-process research charges. Product concentration and supply-capacity investment require separate cases, and ordinary research payments already within operating cash cannot automatically be deducted again. |
Source: official reporting for the stated period. The dated quarter is not annualized here and is not added to either full-year column. Later reporting must be checked before refreshing the valuation date.
Turn the statements into a DCF operating case
Build product demand and realized net prices, then cost of supply, research, selling expense and operating taxes. Connect plant construction, qualification, inventory and usable capacity to the collection schedule. Keep acquired research, later acquisitions, licensing obligations and development spending identifiable. Unresolved legal or product-life risks need explicit scenarios rather than invented expiry paths or damages. Use one compensation and financing convention when moving to equity value.
| Driver | Evidence to carry into the forecast | Downside condition to test |
|---|---|---|
| Product concentration | Net price, demand and shared product sensitivities | A common price or supply shock affects both major brands |
| Manufacturing ramp | Commissioning, qualification and saleable output | Capacity cash is paid before it can fulfill demand |
| Research portfolio | Routine development and acquired-program funding | Earnings adjustments conceal cash still needed for the pipeline |
Compare constrained supply with unchanged construction commitments against a demand slowdown after capacity is commissioned. Keep the later completed acquisition perimeter separate from the FY2025 base. Terminal growth must fund portfolio renewal; it is not justified by extending a recent product-growth rate indefinitely.
Use the Eli Lilly financial analysis for the broader operating context, the company forecast to state the operating assumptions, and the DCF calculator only after defining the investor cash stream. Keep the statement definitions, reporting dates and your own assumptions visible when comparing valuation cases.
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