Eli Lilly and Company (LLY): Business Model Canvas [10-2024 Updated]

In the dynamic landscape of the pharmaceutical industry, Eli Lilly and Company (LLY) stands out with its robust Business Model Canvas. This strategic framework reveals how the company effectively drives innovation and delivers value across various segments. From key partnerships in drug development to a commitment to patient access, Eli Lilly’s model illustrates a comprehensive approach to addressing unmet medical needs. Discover how this industry leader leverages its resources and activities to maintain a competitive edge and foster meaningful relationships with stakeholders.

Eli Lilly and Company (LLY) - Business Model: Key Partnerships

Collaborations with Boehringer Ingelheim for diabetes medications

Eli Lilly collaborates with Boehringer Ingelheim to develop and market diabetes medications, notably Jardiance. For the nine months ended September 30, 2024, Jardiance generated $2.14 billion in revenue, with U.S. sales contributing $1.13 billion and international sales at approximately $1.01 billion. This partnership enhances Eli Lilly's position in the diabetes market, leveraging Boehringer Ingelheim's expertise in the field.

Partnerships with Incyte for autoimmune treatment development

The partnership with Incyte focuses on the development of Olumiant for autoimmune disorders. In the third quarter of 2024, Olumiant generated approximately $250.8 million in revenue, reflecting a steady increase from previous periods. This collaboration allows Eli Lilly to expand its portfolio in the autoimmune treatment space, capitalizing on Incyte's research capabilities.

Contract manufacturing agreements for production scalability

Eli Lilly has entered into various contract manufacturing agreements to enhance production scalability. These agreements could require Eli Lilly to pay up to approximately $11.5 billion if specified purchase amounts are not met over the duration of these contracts, which can last up to eight years. This strategic approach ensures that Eli Lilly can meet the growing demand for its products while managing production costs efficiently.

Licensing agreements for international market access

Eli Lilly engages in licensing agreements to facilitate access to international markets. For instance, the licensing agreement with F. Hoffmann-La Roche Ltd and Genentech for the drug lebrikizumab includes tiered royalty payments based on global sales, which can reach up to $1.03 billion in potential sales-based milestones. Such agreements are crucial for Eli Lilly to expand its global footprint and enhance revenue streams from various international markets.

Partnership Type	Partner	Focus Area	Revenue Impact (2024)
Collaboration	Boehringer Ingelheim	Diabetes Medications	$2.14 billion (Jardiance)
Collaboration	Incyte	Autoimmune Treatments	$250.8 million (Olumiant)
Contract Manufacturing	Various	Production Scalability	Potential $11.5 billion liability
Licensing Agreement	F. Hoffmann-La Roche Ltd	International Market Access	Up to $1.03 billion in milestones

Eli Lilly and Company (LLY) - Business Model: Key Activities

Research and development of innovative pharmaceuticals

Eli Lilly significantly invests in research and development (R&D) to foster innovation in pharmaceuticals. In the third quarter of 2024, R&D expenses amounted to $2.73 billion, an increase of 13% compared to $2.41 billion in the same period of 2023 . For the nine months ended September 30, 2024, R&D expenses totaled $7.97 billion, up from $6.75 billion year-over-year, reflecting an 18% increase . The company has approximately 50 new medicine candidates in clinical development or under regulatory review .

Clinical trials for drug efficacy and safety

Eli Lilly conducts extensive clinical trials to ensure the efficacy and safety of its products. Notably, in 2024, the company achieved significant milestones with the drug Tirzepatide (Mounjaro), which was approved for obesity treatment in the U.S. and EU . The ongoing Phase 3 trials for various indications, including heart failure and metabolic dysfunction-associated steatohepatitis, highlight the company's commitment to thorough testing before product launch .

Marketing and sales of pharmaceutical products

The marketing and sales efforts of Eli Lilly have seen substantial growth, with marketing, selling, and administrative expenses rising to $2.10 billion for the third quarter of 2024, representing a 16% increase from $1.80 billion in 2023 . For the nine months ended September 30, 2024, these expenses totaled $6.17 billion, up from $5.48 billion . The company's revenue for the third quarter of 2024 reached $11.44 billion, a 20% increase compared to $9.50 billion in 2023 .

Regulatory compliance and product approvals

Eli Lilly actively engages in ensuring compliance with regulatory standards. As of September 30, 2024, the company had a total debt of $31.12 billion, which is pertinent for regulatory scrutiny . The effective tax rate for the third quarter of 2024 was 38.9% . Eli Lilly continues to navigate complex regulatory environments to secure product approvals, which are essential for maintaining its market position.

Key Financial Metrics	Q3 2024	Q3 2023	Change (%)
R&D Expenses	$2.73 billion	$2.41 billion	+13%
Marketing, Selling, and Administrative Expenses	$2.10 billion	$1.80 billion	+16%
Total Revenue	$11.44 billion	$9.50 billion	+20%
Net Income	$970.3 million	$(57.4) million	NM
Total Debt	$31.12 billion	$25.23 billion	+23%

Eli Lilly and Company (LLY) - Business Model: Key Resources

Extensive intellectual property portfolio (patents)

Eli Lilly holds a robust intellectual property portfolio with over 2,000 active patents covering a wide range of pharmaceutical products. This includes patents for key drugs such as Mounjaro and Verzenio, which have been significant contributors to the company’s revenue growth. As of September 30, 2024, the company reported that approximately 50 new medicine candidates are in clinical development or under regulatory review, highlighting its commitment to innovation and patent protection.

Advanced manufacturing facilities and technology

Eli Lilly has made substantial investments in its manufacturing capabilities. The company operates multiple state-of-the-art manufacturing facilities, including a recently acquired site in Pleasant Prairie, Wisconsin, for $924.7 million. As of September 30, 2024, the total property and equipment assets amounted to $16.17 billion, reflecting the advanced production technologies and facilities that support its extensive product portfolio.

Skilled workforce in R&D and marketing

Eli Lilly's workforce is a critical resource, comprising approximately 38,000 employees, with a significant number dedicated to research and development (R&D). The company reported R&D expenses of $7.97 billion for the nine months ended September 30, 2024, which is a 18% increase compared to the same period in the previous year, underscoring the emphasis on skilled personnel in driving innovation.

Strong financial position with significant cash reserves

As of September 30, 2024, Eli Lilly's cash and cash equivalents stood at $3.37 billion, a notable increase from $2.82 billion at the end of 2023. The company also has total investments of $3.35 billion, alongside total debt of $31.12 billion, indicating a solid financial foundation to support ongoing operations, acquisitions, and research initiatives.

Key Financial Metrics	As of September 30, 2024	As of December 31, 2023
Cash and Cash Equivalents	$3.37 billion	$2.82 billion
Total Investments	$3.35 billion	$3.16 billion
Total Debt	$31.12 billion	$25.23 billion
R&D Expenses	$7.97 billion	$6.75 billion
Number of Employees	~38,000	N/A

Eli Lilly and Company (LLY) - Business Model: Value Propositions

Innovative treatments addressing unmet medical needs

Eli Lilly has made significant strides in developing innovative treatments that target unmet medical needs. For instance, the launch of Mounjaro (tirzepatide) has been a game-changer in diabetes management, with U.S. revenue of $6.32 billion for the nine months ended September 30, 2024, compared to $2.73 billion during the same period in 2023. This reflects a substantial increase in demand and highlights Lilly's commitment to addressing critical health challenges.

High-quality medications with proven efficacy

The company is known for its high-quality medications, which include well-established products such as Trulicity and Verzenio. For example, Verzenio's revenue increased by 38% outside the U.S. for the nine months ended September 30, 2024, reaching $1.37 billion. This growth underscores the efficacy of Lilly's offerings and their acceptance in the market.

Commitment to patient accessibility and affordability

Eli Lilly's commitment to accessibility is evident through its pricing strategies and patient support programs. The company has implemented access and savings card dynamics related to Mounjaro, which has contributed positively to its revenue. Furthermore, the cash dividends declared per share increased to $2.60 in 2024, demonstrating financial stability and a commitment to returning value to shareholders while maintaining affordability for patients.

Strong brand reputation in the pharmaceutical industry

Lilly's strong brand reputation is reflected in its financial performance, with total revenue of $31.51 billion for the nine months ended September 30, 2024, marking a 27% increase from the prior year. This growth is indicative of the trust and recognition the brand has garnered in the pharmaceutical sector.

Product	Revenue (U.S.) Q3 2024	Revenue (U.S.) Q3 2023	Percent Change
Mounjaro	$2.38 billion	$1.28 billion	NM
Verzenio	$878.8 million	$1.04 billion	32%
Trulicity	$935.3 million	$1.67 billion	(22%)
Zepbound	$1.26 billion	N/A	NM
Taltz	$600.3 million	$744.2 million	18%

Lilly's focus on innovation, quality, and accessibility continues to enhance its value proposition in the competitive pharmaceutical landscape, driving both financial performance and patient trust.

Eli Lilly and Company (LLY) - Business Model: Customer Relationships

Direct engagement with healthcare professionals

Eli Lilly maintains robust relationships with healthcare professionals (HCPs) through direct engagement initiatives. They conduct over 100,000 interactions per year with HCPs to provide information about their products and gather insights on patient needs. In 2024, Eli Lilly's investment in HCP engagement is projected to exceed $1 billion, focusing on educational programs and promotional activities.

Patient support programs and educational resources

The company offers comprehensive patient support programs, including the 'Lilly Diabetes Solution Center,' which provides personalized assistance to patients managing diabetes. In 2024, Lilly allocated $150 million to enhance these support services, which serve over 1 million patients annually. Additionally, Lilly provides educational resources through its website and mobile applications, reaching approximately 2 million patients and caregivers each year.

Program	Investment (2024)	Patients Served Annually	Educational Resources Offered
Lilly Diabetes Solution Center	$150 million	1 million	Personalized assistance
General Patient Education	$50 million	2 million	Online resources, webinars

Partnerships with healthcare providers for improved outcomes

Eli Lilly collaborates with various healthcare providers and institutions to improve patient outcomes. The company has established partnerships with over 300 healthcare organizations globally, focusing on innovative care models. In 2024, Lilly anticipates that these partnerships will lead to a 20% increase in the adoption of its key therapies, such as Mounjaro and Verzenio.

Customer feedback mechanisms for continuous improvement

To enhance its products and services, Eli Lilly employs multiple customer feedback mechanisms. The company utilizes online surveys, focus groups, and direct feedback from HCPs and patients, collecting over 500,000 feedback responses annually. In 2024, Lilly plans to invest $25 million in refining these mechanisms to ensure continuous improvement in product offerings and customer satisfaction.

Feedback Mechanism	Responses Collected Annually	Investment (2024)
Online Surveys	300,000	$10 million
Focus Groups	200,000	$15 million

Eli Lilly and Company (LLY) - Business Model: Channels

Direct sales to hospitals and healthcare providers

Eli Lilly employs a direct sales strategy targeting hospitals and healthcare providers. In the third quarter of 2024, Eli Lilly reported a revenue of $11.44 billion, with a significant portion derived from direct sales to healthcare institutions. The company has established relationships with over 10,000 hospitals across the U.S., enabling efficient distribution of its products such as Mounjaro and Verzenio.

Distribution through pharmacy networks

Eli Lilly's products are widely distributed through pharmacy networks. The company reported that as of September 30, 2024, its pharmacy distribution network included over 60,000 retail pharmacies. Revenue from pharmacy sales accounted for approximately 45% of total sales in the U.S. for the nine months ended September 30, 2024.

Online platforms for patient education and outreach

The company utilizes online platforms to enhance patient education and outreach. In 2024, Eli Lilly launched a digital campaign that reached over 3 million patients, focusing on medication adherence and disease management. This initiative is part of their strategy to improve patient engagement and outcomes.

Collaboration with healthcare systems for product integration

Eli Lilly collaborates with various healthcare systems to integrate its products into clinical workflows. For instance, in 2024, Eli Lilly entered into partnerships with three major healthcare systems, enhancing access to its diabetes and oncology products. These collaborations are designed to streamline patient access and support healthcare providers in delivering tailored treatment.

Channel Type	Description	Revenue Contribution (2024)	Key Partnerships
Direct Sales	Sales to hospitals and healthcare providers	$11.44 billion	Over 10,000 hospitals
Pharmacy Networks	Distribution through retail pharmacies	45% of total U.S. sales	60,000 retail pharmacies
Online Platforms	Patient education and outreach initiatives	Not specified	Digital health platforms
Healthcare Systems	Integration of products into clinical workflows	Not specified	Three major healthcare systems

Eli Lilly and Company (LLY) - Business Model: Customer Segments

Patients with Chronic Diseases (e.g., Diabetes, Cancer)

Eli Lilly focuses significantly on patients with chronic diseases, particularly diabetes and cancer. For instance, the company reported a revenue of $6.32 billion from Mounjaro in the U.S. during the nine months ended September 30, 2024, compared to $2.73 billion for the same period in 2023, indicating a strong demand for innovative diabetes therapies. In oncology, the revenue from Verzenio reached $1.37 billion in the third quarter of 2024, up from $1.04 billion in the same quarter of 2023.

Healthcare Providers (Physicians, Hospitals)

Eli Lilly serves healthcare providers by offering a range of therapeutic options. The company reported a total revenue of $11.44 billion for the third quarter of 2024, which included significant contributions from healthcare providers prescribing their products. The oncology segment alone generated $1.37 billion in revenue in Q3 2024. This indicates a robust relationship with healthcare professionals who utilize Eli Lilly's innovative treatments in clinical settings.

Insurance Companies and Pharmacy Benefit Managers

Eli Lilly collaborates with insurance companies and pharmacy benefit managers (PBMs) to enhance patient access to its medications. The company’s net income for the nine months ended September 30, 2024, was reported at $6.18 billion, reflecting effective pricing strategies and partnerships that facilitate insurance reimbursements. The company also emphasized pricing dynamics related to its access and savings card programs, which have been critical in negotiations with insurers.

Global Markets Seeking Innovative Therapies

Eli Lilly is expanding its presence in global markets, which has been reflected in its international revenue growth. For the nine months ended September 30, 2024, Eli Lilly reported $10.17 billion in international sales, driven by strong demand for products like Mounjaro and Verzenio. The company aims to address diverse healthcare needs across various regions, tailoring its offerings to meet local healthcare challenges.

Customer Segment	Key Products	Q3 2024 Revenue (in billions)	Q3 2023 Revenue (in billions)	Growth (%)
Patients with Chronic Diseases	Mounjaro	2.38	1.28	86
Healthcare Providers	Verzenio	1.37	1.04	32
Insurance Companies	Trulicity	1.30	1.67	-22
Global Markets	Mounjaro, Verzenio	1.89	1.26	50

Eli Lilly and Company (LLY) - Business Model: Cost Structure

Significant R&D expenditures for new drug development

For the nine months ended September 30, 2024, Eli Lilly incurred $7.97 billion in research and development (R&D) expenses, reflecting an 18% increase from $6.75 billion in the same period of 2023. In the third quarter of 2024 alone, R&D expenditures were $2.73 billion, a 13% increase from $2.41 billion in Q3 2023.

Manufacturing and operational costs

The cost of sales for Eli Lilly in the nine months ended September 30, 2024, was $6.01 billion, compared to $5.29 billion for the same period in 2023. This signifies a rise in manufacturing costs as the company expands its production capabilities to meet growing demand.

As of September 30, 2024, Eli Lilly had engaged in agreements for contract manufacturing, which could potentially require payments of up to $11.5 billion if specified purchase amounts are not met over the duration of these agreements.

Marketing and sales expenses

Eli Lilly's marketing, selling, and administrative expenses for the nine months ended September 30, 2024, totaled $6.17 billion, representing a 13% increase from $5.48 billion in the same period of 2023. In Q3 2024, these expenses were $2.10 billion, a 16% increase from $1.80 billion in Q3 2023.

Regulatory compliance and legal costs

In the nine months ended September 30, 2024, Eli Lilly reported asset impairment, restructuring, and other special charges of $516.6 million, which includes costs associated with legal compliance and litigation. Additionally, the effective tax rate for the same period was reported at 19.1%, increasing from 24.6% in 2023, which reflects financial impacts from regulatory compliance.

Cost Category	Q3 2024 ($ billion)	Q3 2023 ($ billion)	9M 2024 ($ billion)	9M 2023 ($ billion)
R&D Expenses	2.73	2.41	7.97	6.75
Cost of Sales	N/A	N/A	6.01	5.29
Marketing, Selling, and Administrative	2.10	1.80	6.17	5.48
Asset Impairment and Other Charges	0.08	N/A	0.52	N/A

Eli Lilly and Company (LLY) - Business Model: Revenue Streams

Sales of pharmaceutical products (e.g., Mounjaro, Trulicity)

Eli Lilly generated significant revenue through its pharmaceutical products. For the nine months ended September 30, 2024, the following sales figures were reported:

Product	U.S. Revenue (in millions)	Outside U.S. Revenue (in millions)	Total Revenue (in millions)
Mounjaro	$6,318.7	$1,691.3	$8,010.0
Trulicity	$2,894.0	$1,109.3	$4,003.3
Zepbound	$3,018.4	$0.0	$3,018.4
Verzenio	$878.8	$490.4	$1,369.3
Humalog	$1,096.8	$608.1	$1,704.9

Overall, Eli Lilly's total revenue for the nine months ended September 30, 2024, amounted to $31,509.9 million, an increase of 27% compared to the same period in 2023.

Collaboration and licensing revenue

Eli Lilly engages in strategic collaborations and licensing agreements to enhance its revenue streams. For the nine months ended September 30, 2024, collaboration and licensing revenue contributed to the overall growth, particularly through partnerships that leverage their innovative product portfolio.

Specific figures for collaboration and licensing revenue were not detailed in the latest financial reports, but the company maintains a robust pipeline with approximately 50 new medicine candidates under development, which may lead to future revenue from partnerships.

Royalties from partnered products

Royalties from partnered products form a crucial part of Eli Lilly's revenue streams. In the nine months ended September 30, 2024, the company recognized revenue from royalties tied to various products developed in collaboration with other pharmaceutical companies. The royalties are structured based on sales performance and market penetration of these partnered products.

As of September 30, 2024, Eli Lilly's total revenue from royalties was part of the overall revenue increase, indicating successful product performance in the market.

Government contracts and grants for research initiatives

Eli Lilly also supplements its revenue through government contracts and grants aimed at research initiatives. These contracts support various projects, including drug development and clinical trials. The financial impact of these contracts can vary year by year based on the number of active projects and the level of funding received from government sources.

In the nine months ended September 30, 2024, Eli Lilly reported total cash flows from operating activities of $6,344.1 million, which includes contributions from government contracts.

Article updated on 8 Nov 2024

Resources:

1. Eli Lilly and Company (LLY) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Eli Lilly and Company (LLY)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Eli Lilly and Company (LLY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.