3 Things Investors Need to Know Ahead of Eli Lilly’s Q3 Earnings Report | Colorful fool

Eli Lilly (LLY 1.00%) is one of the biggest achievements of the pharmaceutical industry in the last few years. In the 18-month period from the end of 2022 to the end of June 2024, its share price rose 147.5% as its weight management drug beat expectations.

Unfortunately, the good times didn’t last forever. Eli Lilly shares fell 10.7% from the end of June 2024 to October 20, 2025, and investors want to know when they can expect a recovery.

On Oct. 30, Eli Lilly will report third-quarter earnings that could lift or push the stock further. Here are three things beyond the headline numbers that investors should know before trying to evaluate the company’s recent performance.

1. All eyes are on tirzepatide

Tirzepatide is a dual agonist of the glucagon-like peptide-1 (GLP-1) and glucose-dependent insulinotropic polypeptide (GIP) receptors. It was first approved for the treatment of diabetes by the Food and Drug Administration (FDA) in 2022 under the brand name Mounjaro. In 2023, the same drug also received FDA approval for chronic weight management under the brand name Zepbound.

By 2024, the combined revenue of Mounjaro and Zepbound has more than tripled to a whopping $16.47 billion. This was enough to increase total sales by 32% last year.

Shares of Eli Lilly have underperformed over the past year as investors worry that unauthorized versions of tirzepatide sold by compounding pharmacies will eat away at its market share. These concerns do not appear to be well founded. In the first half of 2025, total sales of tirzepatide grew by 121% year-over-year to reach $14.7 billion.

2. Eli Lilly is made up of many pieces that move in different directions

While tirzepatide sales are growing, not all of Eli Lilly’s revenue is growing. Trulicity, a GLP-1 treatment first approved to treat diabetes in 2014, has been the company’s biggest source of sales, but is losing ground to Mounjaro. Jardiance is another diabetes treatment that brings in less revenue than before.

When it comes to patent protection, drug patents have a relatively short lifespan. The introduction of generic or biosimilar versions of brand-name drugs can quickly reduce the revenue these brands generate. To offset losses, Eli Lilly and its big pharma peers regularly invest today’s profits in tomorrow’s blockbusters.

Tirzepatid offsets several aging products with declining sales. As a result, total sales for the second quarter increased by 38% year over year. This is an extraordinary growth rate that Eli Lilly could have trouble sustaining in the coming years.

This May, analysts at Goldman Sachs lowered their outlook for global sales of anti-obesity drugs in 2030 to $95 billion a year from a previous estimate of $130 billion.

Tirzepatide has been a big winner in the past few years because its dual GLP-1/GIP mode of action is more effective at reducing appetite than drugs that only act on GLP-1 receptors. Unfortunately, it is also less well tolerated. Many patients looking for weight loss treatment choose Wegos Novo Nordisk because tirzepatide makes them nauseous.

3. Expectations are high

At recent prices, Eli Lilly stock was trading at 35.8 times forward earnings estimates. That’s a rich multiple for most pharmaceutical companies, but Eli Lilly has grown earnings per share by a whopping 122% over the past three years.

If the growth rate of tirzepatide in the first half of 2025 continues for several more years, investors who buy Eli Lilly at recent prices could make market gains. That means they would be taking on a lot more risk than they would with most pharmaceutical stocks.

Eli Lilly could lose market exclusivity for Trulicity, a previously popular GLP-1 drug, in the US starting in 2027. As an approved diabetes treatment, cheap biosimilar versions will more than likely push Mounjaro’s sales. Off-label regulations could pressure Zepbound’s sales.

Now that the GLP-1 treatment market has matured, the rapid growth rate that investors have grown accustomed to seeing from Eli Lilly could be repeated. If tirzepatide sales falter and the market begins to assume the company will return to typical growth rates for its industry, investors buying at today’s prices could be stuck with heavy losses.