Lilly (Eli)

Lilly demonstrates meaningful pricing power in the near term due to demand outstripping supply in incretins and the clinical value of weight loss and OSA improvements. However, realized U.S. prices declined modestly in Q2 2025 due to rebate dynamics even as volume surged, indicating payers remain influential.

Over longer horizons, the IRA allows Medicare to negotiate prices for high‑spend drugs after 9 years for small molecules and 13 years for biologics; tirzepatide products are peptides approved as drugs and should be outside negotiation windows until the early 2030s.

Net pricing risk rises as spend concentrates in the class, partially offset by label expansions and next‑gen differentiation (oral and triple‑agonist) that can sustain or segment premium tiers. We therefore view pricing power as solid but regulated, with volume and innovation as the primary value drivers.