Financial Analysis

Acquisitions We engage in various forms of business development activities to enhance or refine our product pipeline, including acquisitions, collaborations, investments, and licensing arrangements. In connection with these arrangements, our partners may be entitled to future royalties and/or commercial milestones based on sales if the products are approved for commercialization and/or milestones based on the successful progress of compounds through the development process. We account for each arrangement as either a business combination or an asset acquisition in accordance with GAAP. Business Combinations When an acquisition met the definition of a business under GAAP, the assets acquired and liabilities assumed were recorded at their respective fair values as of the acquisition date in our consolidated financial statements. The determination of estimated fair value required management to make significant estimates and assumptions. The excess of the purchase price over the fair value of the acquired net assets was recorded as goodwill. The results of operations of the acquisition are included in our consolidated financial statements from the date of acquisition. Verve Acquisition Overview of Transaction In July 2025, we acquired all shares of Verve Therapeutics, Inc. (Verve) for a purchase price of $10.50 per share in cash (or an aggregate of $549 million, net of cash acquired), plus one non-tradeable contingent value right (CVR) per share that entitles the holder to receiv …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

"Contingencies We are and may become involved in various lawsuits, claims, government investigations and other legal proceedings that arise from time to time in the course of our business, including patent, environmental, commercial, contractual, licensing, employment, health and safety, consumer protection, pricing, access, consumer, sales and marketing, product liability, insurance, antitrust, securities, and regulatory compliance matters, among others. Such matters may involve inquiries from or disputes with various types of parties, including governments, regulatory agencies, competitors, customers, suppliers, service providers, licensees, employees, or shareholders, among others. We cannot predict the final outcome of these proceedings, and while we intend to vigorously prosecute or defend our position as appropriate, there can be no assurance that we will be successful or obtain any requested relief. Matters often develop over a long period of time, and expectations can change as a result of new findings, rulings, appeals, settlements, legal or regulatory changes, or other factors. From time to time we may discontinue or settle and compromise matters as appropriate in our best interest. Legal proceedings that we believe are significant or could become significant or material are described below. For proceedings in which we are named as defendants, unless otherwise noted, we cannot reasonably estimate the maximum potential exposure or the range of possible loss in excess …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

Borrowings Debt at December 31 consisted of the following: Stated Interest Rate 2025 2024 Long-term notes: Notes due 2025 2.750% - 7.125% $ $ 778 Notes due 2026 1.625% - 5.000% 1,632 1,529 Notes due 2027 3.100% - 5.500% 2,516 2,516 Notes due 2028 0.450% - 4.550% (1) 3,256 442 Notes due 2029 0.420% - 4.500% 3,077 3,076 Notes due 2030 2.125% - 4.750% 2,132 779 Notes due 2031 - 2040 0.500% - 6.770% 11,582 6,166 Notes due 2041 - 2050 0.970% - 4.650% 4,543 4,381 Notes due 2051 - 2060 1.125% - 5.550% 8,280 5,961 Notes due 2061 - 2070 1.375% - 5.650% 5,824 3,977 Other long term debt and adjustments (339) (298) Short-term commercial paper borrowings 4,338 Total debt 42,503 33,644 Less current portion (1,635) (5,117) Long-term debt $ 40,868 $ 28,527 (1) Included in the 2028 tranche is $750 million of floating-rate notes issued in August 2025, with interest reset and paid quarterly using the Secured Overnight Financing Rate (SOFR) plus .530 percent. The weighted-average effective borrowing rate on short-term commercial paper borrowings was 4.61 percent at December 31, 2024. At December 31, 2025, we had $10.1 billion of unused committed bank credit facilities, which consisted primarily of a $4.0 billion credit facility that expires in December 2029 and a $6.0 billion 364-day facility that expires in August 2026, both of which are available to support our commercial paper program. Below are the details of our issuances of long-term debt for the periods presented, from which the cash proc …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

The following table summarizes our revenue recognized in our consolidated statements of operations: 2025 2024 2023 Net product revenue $ 60,958 $ 40,748 $ 28,814 Collaboration and other revenue 4,221 4,295 5,310 Revenue $ 65,179 $ 45,043 $ 34,124 The following table summarizes revenue, including net product revenue and collaboration and other revenue, by product: U.S. Outside U.S. 2025 2024 2023 2025 2024 2023 Cardiometabolic Health: Mounjaro $ 13,651 $ 8,950 $ 4,834 $ 9,315 $ 2,590 $ 329 Zepbound (1) 13,484 4,926 176 58 Trulicity 2,914 3,694 5,433 1,362 1,560 1,699 Jardiance (2) 1,582 1,598 1,600 1,849 1,743 1,144 Other cardiometabolic health 2,233 2,682 2,738 1,773 1,778 1,715 Total cardiometabolic health 33,864 21,850 14,781 14,357 7,671 4,887 Oncology: Verzenio 3,464 3,421 2,509 2,259 1,886 1,354 Other oncology 1,888 1,615 1,288 1,765 1,831 1,507 Total oncology 5,352 5,036 3,797 4,024 3,717 2,861 Immunology: Taltz 2,333 2,152 1,832 1,230 1,108 928 Other immunology 631 306 226 1,053 827 812 Total immunology 2,964 2,458 2,058 2,283 1,935 1,740 Neuroscience 997 780 696 394 694 2,183 Other 304 251 459 639 652 663 Revenue $ 43,481 $ 30,375 $ 21,791 $ 21,698 $ 14,668 $ 12,333 (1) Tirzepatide is marketed for obesity under the brand name Zepbound in Canada, Japan, and the U.S. (2) Jardiance revenue includes Glyxambi, Synjardy, and Trijardy XR. The following table summarizes revenue by geographical area: 2025 2024 2023 Revenue (1) : U.S. $ 43,481 $ 30,375 $ 21,791 Europe 11,558 6, …

DisaggregationOfRevenueTableTextBlock · excerpt; the full note is in the filing

Stock-Based Compensation Our stock-based compensation expense includes restricted stock units (RSUs), relative value awards (RVAs), shareholder value awards (SVAs), and performance awards (PAs). We recognize the fair value of stock-based compensation as expense over the requisite service period of the individual grantees, which generally equals the vesting period. Stock-based compensation expense was as follows: 2025 2024 2023 Stock-based compensation expense $ 626 $ 646 $ 629 As of December 31, 2025, the total estimated remaining unrecognized compensation cost of $554 million was primarily related to 2.3 million of nonvested RSUs and will be amortized over the weighted-average remaining requisite service period of 21 months. We provide newly issued shares of our common stock to satisfy the issuance of shares under our stock-based compensation awards. At December 31, 2025, stock-based compensation awards may be granted under the 2002 Lilly Stock Plan for not more than 42.4 million additional shares. RSUs are granted to certain employees with a vesting period of typically three years. RSU shares are accounted for at fair value based upon the closing stock price on the date of grant. RVAs are granted to officers and management. The number of shares actually issued, if any, varies depending on the growth of our stock price at the end of the three-year vesting period compared to our peers. We measure the fair value of the RVA unit on the grant date using a Monte Carlo simulation …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

Financial Instruments Investments in Equity and Debt Securities Our equity investments are accounted for using three different methods depending on the type of equity investment: Investments in companies over which we have significant influence but not a controlling interest are accounted for using the equity method, with our share of earnings or losses reported in other-net, (income) expense. For equity investments that do not have readily determinable fair values, we measure these investments at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. Any change in recorded value is recorded in other-net, (income) expense. Our public equity investments are measured and carried at fair value. Any change in fair value is recognized in other-net, (income) expense. We record our available-for-sale debt securities at fair value, with changes in fair value reported as a component of accumulated other comprehensive income (loss). Fair Value of Investments The following table summarizes certain fair value information at December 31, 2025 and 2024 for investment assets measured at fair value on a recurring basis, as well as the carrying amount and amortized cost of certain other investments: Fair Value Measurements Using Carrying Amount Cost Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobserv …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

"Goodwill and Other Intangibles Goodwill Goodwill results from excess consideration in a business combination over the fair value of identifiable net assets acquired. Goodwill is not amortized but is reviewed for impairment at least annually, or more frequently if impairment indicators are present, by first assessing qualitative factors to determine whether it is more likely than not that the fair value is less than its carrying amount. If we conclude it is more likely than not that the fair value is less than the carrying amount, a quantitative test that compares the fair value to its carrying value is performed to determine the amount of any impairment. The change in goodwill during 2025 was primarily related to our acquisition of Verve. See Note 4 for additional information. No impairments occurred with respect to the carrying value of goodwill for the years ended December 31, 2025, 2024, and 2023. Other Intangibles The components of intangible assets other than goodwill at December 31 were as follows: 2025 2024 Carrying Amount, Gross Accumulated Amortization Carrying Amount, Net Carrying Amount, Gross Accumulated Amortization Carrying Amount, Net Finite-lived intangible assets: Marketed products $ 7,916 $ (2,963) $ 4,952 $ 8,090 $ (2,822) $ 5,269 Indefinite-lived intangible assets: Acquired IPR&D 1,569 1,569 898 898 Other intangibles $ 9,485 $ (2,963) $ 6,521 $ 8,988 $ (2,822) $ 6,166 Marketed products consist primarily of the amortized cost of the rights to assets ac …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

Income Taxes Deferred taxes are recognized for the future tax effects of temporary differences between financial and income tax reporting based on enacted tax laws and rates. Deferred taxes related to global intangible low-taxed income (GILTI) are also recognized for the future tax effects of temporary differences. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position, based on its technical merits, will be sustained upon examination by the taxing authority. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate resolution. Following is the composition of income tax expense: 2025 2024 2023 Current: Domestic $ 4,639 $ 3,343 $ 3,042 Foreign 2,159 1,430 613 Total current tax expense 6,798 4,773 3,655 Deferred: Domestic (1,149) (2,210) (2,375) Foreign (558) (473) 34 Total deferred tax benefit (1,707) (2,683) (2,341) Income taxes $ 5,091 $ 2,090 $ 1,314 Cash payments of U.S. federal, state, and foreign income taxes, net of refunds, were as follows: 2025 2024 2023 Cash payments of income taxes (1) $ 10,814 $ 6,562 $ 5,559 (1) 2025 included U.S. federal cash payments of $3.3 billion and cash payments to Ireland of $6.6 billion. Cash payments of income taxes increased $4.3 billion in 2025 compared with 2024, driven primarily by a $4.2 billion increase in Ireland resulting from highe …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Leases We primarily have leases for corporate offices, research and development facilities, vehicles, and equipment. Information related to operating leases as of December 31 was as follows: 2025 2024 Balance Sheet Classification Operating lease right-of-use assets $ 1,260 $ 1,050 Other noncurrent assets Operating lease liabilities, current portion 222 176 Other current liabilities Operating lease liabilities, noncurrent portion 1,140 971 Other noncurrent liabilities Weighted-average remaining lease term 8 years 9 years Weighted-average discount rate 4.7 % 4.6 % We determine the lease term by assuming the exercise of any renewal and/or early-termination options that are reasonably assured. We generally use our incremental borrowing rate in determining the present value of lease payments.

LesseeOperatingLeasesTextBlock

Implementation of New Financial Accounting Standards Effective January 1, 2025, we prospectively adopted Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires incremental disaggregation pertaining to the effective tax rate reconciliation and income taxes paid. See Note 14 for the income tax disclosures as required by Topic 740, as amended by ASU 2023-09. ASU 2024-03, Income StatementReporting Comprehensive IncomeExpense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requires disaggregation of specific expense categories in the notes to the financial statements and a qualitative description of the remaining expense amounts not separately disaggregated. This standard is effective for annual reporting periods beginning after December 15, 2026, and requires prospective application with the option to apply it retrospectively. We intend to adopt this standard in our Annual Report on Form 10-K for the year ending December 31, 2027. We are currently evaluating the potential impact of adopting this standard on our disclosures. …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Retirement Benefits We use a measurement date of December 31 to determine the change in benefit obligation, change in plan assets, funded status, and amounts recognized in the consolidated balance sheets at December 31 for our defined benefit pension and retiree health benefit plans, which were as follows: Defined Benefit Pension Plans Retiree Health Benefit Plans 2025 2024 2025 2024 Change in benefit obligation: Benefit obligation at beginning of year $ 13,415 $ 14,258 $ 1,223 $ 1,310 Service cost 324 339 33 35 Interest cost 697 662 64 62 Actuarial (gain) loss 232 (1,084) 33 (97) Benefits paid (661) (634) (88) (82) Foreign currency exchange rate changes and other adjustments 255 (125) 9 (6) Benefit obligation at end of year 14,262 13,415 1,274 1,223 Change in plan assets: Fair value of plan assets at beginning of year 13,658 13,709 2,566 2,580 Actual return on plan assets 1,456 583 283 59 Employer contribution 119 115 14 9 Benefits paid (661) (634) (88) (82) Foreign currency exchange rate changes and other adjustments 248 (115) Fair value of plan assets at end of year 14,820 13,658 2,775 2,566 Funded status 558 243 1,501 1,343 Unrecognized net actuarial loss 2,499 2,663 87 149 Unrecognized prior service (benefit) cost 2 4 (4) (4) Net amount recognized $ 3,059 $ 2,910 $ 1,584 $ 1,489 Amounts recognized in the consolidated balance sheets consisted of: Other noncurrent assets $ 1,857 $ 1,482 $ 1,656 $ 1,485 Other current liabilities (73) (71) (9) (8) Other noncurrent liabilitie …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

Revenue The following table summarizes our revenue recognized in our consolidated statements of operations: 2025 2024 2023 Net product revenue $ 60,958 $ 40,748 $ 28,814 Collaboration and other revenue 4,221 4,295 5,310 Revenue $ 65,179 $ 45,043 $ 34,124 We recognize revenue primarily from two different types of contracts, product sales to customers (net product revenue) and collaborations and other arrangements. Revenue recognized from collaborations and other arrangements includes our share of profits from the collaborations, as well as royalties, upfront and milestone payments we receive under these types of contracts. See Note 3 for additional information related to our collaborations and other arrangements. Collaboration and other revenue disclosed above includes the revenue resulting from our collaboration with Boehringer Ingelheim, as well as the sale of product rights. Substantially all of the remainder of collaboration and other revenue is related to contracts accounted for as contracts with customers. Net Product Revenue Revenue from sales of products is recognized at the point where the customer obtains control of the goods and we satisfy our performance obligation, which generally is at the time we ship the product to the customer. Payment terms differ by jurisdiction and customer, but payment terms in most of our major jurisdictions typically range from 30 to 70 days from date of shipment. Provisions for rebates, discounts, and returns are established in the same …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

Segment Information We operate as a single reportable segment engaged in the discovery, development, manufacturing, marketing, and sales of pharmaceutical products worldwide. A global research and development organization and a supply chain organization are responsible for the discovery, development, manufacturing, and supply of our products. Our commercial organizations market, distribute, and sell the products. The business is also supported by global corporate staff functions. Our determination that we operate as a single segment is consistent with the nature of our operations and the financial information regularly reviewed by the chief executive officer, in his capacity as the chief operating decision maker (CODM), for the purposes of evaluating performance, allocating resources, setting incentive compensation targets, and planning and forecasting for future periods. Our purpose is to unite caring with discovery to create medicines that make life better for people around the world. Our long-term success is significantly dependent on our ability to research and develop innovative medicines. The CODM uses consolidated net income to assess performance of our company, ensuring that we are investing in future research and development while efficiently delivering products to patients. The CODM allocates research and development resources based upon several factors, including the likelihood of technical success, unmet medical needs, and the viability of commercial success. A si …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

Shareholders' Equity In 2025, 2024, and 2023, we repurchased $4.1 billion, $2.5 billion, and $750 million, respectively, of shares associated with our share repurchase programs. As of December 31, 2025, we had $10.9 billion remaining under our $15.0 billion share repurchase program authorized in December 2024. We retire shares once we repurchase them. We have 5 million authorized shares of preferred stock. As of December 31, 2025 and 2024, no preferred stock was issued. We have an employee benefit trust that hel d 50 million shares of our common stock at both December 31, 2025 and 2024, to provide a source of funds to assist us in meeting our obligations under various employee benefit plans. The cost basis of the shares held in the trust was $3.0 billion at both December 31, 2025 and 2024, and is shown as a reduction of shareholders' equity. Any dividend transactions between us and the trust are eliminated. Stock held by the trust is not considered outstanding in the computation of EPS. The assets of the trust were not used to fund any of our obligations under these employee benefit plans during the years ended December 31, 2025, 2024, and 2023. The following table summarizes the activity related to each component of accumulated other comprehensive income (loss): Foreign Currency Translation (1) Retirement Benefit Plans Other Accumulated Other Comprehensive Loss Beginning balance at January 1, 2023 $ (1,874) $ (2,062) $ 91 $ (3,845) Other comprehensive income (loss) 55 (635) …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing

Acquisitions We engage in various forms of business development activities to enhance or refine our product pipeline, including acquisitions, collaborations, investments, and licensing arrangements. In connection with these arrangements, our partners may be entitled to future royalties and/or commercial milestones based on sales if the products are approved for commercialization and/or milestones based on the successful progress of compounds through the development process. We account for each arrangement as either a business combination or an asset acquisition in accordance with GAAP. Business Combinations When an acquisition met the definition of a business under GAAP, the assets acquired and liabilities assumed were recorded at their respective fair values as of the acquisition date in our consolidated condensed financial statements. The determination of estimated fair value required management to make significant estimates and assumptions. The excess of the purchase price over the fair value of the acquired net assets was recorded as goodwill. The results of operations of the acquisition are included in our consolidated condensed financial statements from the date of acquisition. For the six months ended June 30, 2026 and 2025, our significant acquisitions that were accounted for as business combinations were Kelonia Therapeutics, Inc. (Kelonia), Centessa Pharmaceuticals plc (Centessa), and Ventyx Biosciences, Inc. (Ventyx) and are summarized in the following table: Kelon …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

"Contingencies We are and may become involved in various lawsuits, claims, government investigations and other legal proceedings that arise from time to time in the course of our business, including patent, environmental, commercial, contractual, licensing, employment, health and safety, consumer protection, pricing, access, consumer, sales and marketing, product liability, insurance, antitrust, securities, and regulatory compliance matters, among others. Such matters may involve inquiries from or disputes with various types of parties, including governments, regulatory agencies, competitors, customers, suppliers, service providers, licensees, employees, or shareholders, among others. We cannot predict the final outcome of these proceedings, and while we intend to vigorously prosecute or defend our position as appropriate, there can be no assurance that we will be successful or obtain any requested relief. Matters often develop over a long period of time and expectations can change as a result of new findings, rulings, appeals, settlements, legal or regulatory changes, or other factors. From time to time we may discontinue or settle and compromise matters as appropriate in our best interest. Legal proceedings that we believe are significant or could become significant or material are described below. For proceedings in which we are named as defendants, unless otherwise noted, we cannot reasonably estimate the maximum potential exposure or the range of possible loss in excess …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

The following table summarizes our revenue recognized in our consolidated condensed statements of operations: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net product revenue $ 21,403 $ 14,726 $ 39,856 $ 26,327 Collaboration and other revenue 1,571 832 2,917 1,959 Revenue $ 22,974 $ 15,558 $ 42,773 $ 28,286 The following table summarizes revenue, including net product revenue and collaboration and other revenue, by product for the three months ended June 30, 2026 and 2025: Three Months Ended June 30, 2026 2025 U.S. Outside U.S. Total U.S. Outside U.S. Total Cardiometabolic Health: Mounjaro $ 4,791 $ 5,152 $ 9,943 $ 3,302 $ 1,897 $ 5,199 Zepbound (1) 4,873 55 4,928 3,380 2 3,381 Jardiance (2) 616 615 1,232 382 308 690 Trulicity 908 312 1,219 744 348 1,092 Other cardiometabolic health 554 477 1,031 556 425 980 Total cardiometabolic health 11,742 6,611 18,353 8,363 2,980 11,343 Oncology: Verzenio 845 629 1,474 929 560 1,489 Other oncology 628 468 1,096 490 434 924 Total oncology 1,473 1,097 2,570 1,419 994 2,414 Immunology: Taltz 539 317 856 549 299 848 Other immunology 251 310 561 152 256 408 Total immunology 790 627 1,417 701 555 1,256 Neuroscience 325 104 429 248 96 344 Other 84 122 205 83 119 202 Revenue $ 14,413 $ 8,561 $ 22,974 $ 10,814 $ 4,743 $ 15,558 (1) Tirzepatide is marketed for obesity under the brand name Zepbound in Canada, Japan, and the U.S. (2) Jardiance revenue includes Glyxambi, Synjardy, and Trijardy XR. The following table summa …

DisaggregationOfRevenueTableTextBlock · excerpt; the full note is in the filing

Financial Instruments Investments in Equity and Debt Securities The following table summarizes certain fair value information at June 30, 2026 and December 31, 2025 for investment assets measured at fair value on a recurring basis, as well as the carrying amount and amortized cost of certain other investments: Fair Value Measurements Using Carrying Amount Cost Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value June 30, 2026 Cash equivalents (1) $ 4,410 $ 4,410 $ 4,410 $ $ $ 4,410 Short-term investments: Available-for-sale debt securities (2) $ 14 $ 14 $ 5 $ 9 $ $ 14 Other securities 46 46 12 34 46 Short-term investments $ 60 Noncurrent investments: Available-for-sale debt securities (2) $ 367 $ 379 $ 67 $ 300 $ $ 367 Other securities 83 52 2 81 83 Marketable equity securities 796 527 796 796 Equity investments without readily determinable fair values (3) 1,073 Equity method investments (3) 1,537 Noncurrent investments $ 3,856 December 31, 2025 Cash equivalents (1) $ 4,392 $ 4,392 $ 4,392 $ $ $ 4,392 Short-term investments: Available-for-sale debt securities (2) $ 16 $ 16 $ 9 $ 7 $ $ 16 Other securities 89 89 12 78 89 Short-term investments $ 105 Noncurrent investments: Available-for-sale debt securities (2) $ 360 $ 368 $ 69 $ 291 $ $ 360 Other securities 85 54 2 83 85 Marketable equity securities 223 292 223 223 Equity investments without readily determinable fair va …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Income Taxes The effective tax rates were 23.3 percent and 16.5 percent for the three months ended June 30, 2026 and 2025, respectively. The higher tax rate for the three months ended June 30, 2026 was primarily driven by the unfavorable tax impact of nondeductible acquired IPR&D charges and, to a lesser extent, a mix of earnings in higher tax jurisdictions and the unfavorable tax impact of asset impairment, restructuring, and other special charges. The effective tax rates were 19.9 percent and 17.7 percent for the six months ended June 30, 2026 and 2025, respectively. The higher tax rate for the six months ended June 30, 2026 was primarily driven by a mix of earnings in higher tax jurisdictions and the unfavorable tax impact of asset impairment, restructuring, and other special charges. The effective tax rates in both periods were unfavorably impacted by nondeductible acquired IPR&D charges. At June 30, 2026 and December 31, 2025, prepaid expenses included prepaid taxes of $13.6 billion and $12.9 billion, respectively. The U.S. examination of tax years 2019-2021 remains ongoing. For tax years 2016-2018, we are pursuing competent authority assistance through the Mutual Agreement Procedure (MAP) process for the pricing of certain intercompany transactions. The resolution of both audit periods will likely extend beyond the next 12 months.

IncomeTaxDisclosureTextBlock

Implementation of New Financial Accounting Standards Accounting Standards Update 2024-03, Income StatementReporting Comprehensive IncomeExpense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , requires disaggregation of specific expense categories in the notes to the financial statements and a qualitative description of the remaining expense amounts not separately disaggregated. This standard is effective for annual reporting periods beginning after December 15, 2026, and requires prospective application with the option to apply it retrospectively. We intend to adopt this standard in our Annual Report on Form 10-K for the year ending December 31, 2027. We are currently evaluating the potential impact of adopting this standard on our disclosures. …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Revenue The following table summarizes our revenue recognized in our consolidated condensed statements of operations: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net product revenue $ 21,403 $ 14,726 $ 39,856 $ 26,327 Collaboration and other revenue 1,571 832 2,917 1,959 Revenue $ 22,974 $ 15,558 $ 42,773 $ 28,286 We recognize revenue primarily from two different types of contracts, product sales to customers (net product revenue) and collaborations and other arrangements. Revenue recognized from collaborations and other arrangements includes our share of profits from the collaborations, as well as royalties, upfront, and milestone payments we receive under these types of contracts. See Note 3 for additional information related to our collaborations and other arrangements. Collaboration and other revenue disclosed above includes the revenue resulting from our collaboration with Boehringer Ingelheim, as well as the sale of product rights. Substantially all of the remainder of collaboration and other revenue is related to contracts accounted for as contracts with customers. Adjustments to Revenue Adjustments to revenue recognized as a result of changes in estimates for our most significant United States (U.S.) sales returns, rebates, and discounts liability balances for products shipped in previous periods were 3 percent and 2 percent of U.S. revenue during the three and six months ended June 30, 2026, respectively, and 1 percent and less than 1 pe …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

Segment Information We operate as a single reportable segment engaged in the discovery, development, manufacturing, marketing, and sales of pharmaceutical products worldwide. A global research and development organization and a supply chain organization are responsible for the discovery, development, manufacturing, and supply of our products. Our commercial organizations market, distribute, and sell the products. The business is also supported by global corporate staff functions. Our determination that we operate as a single segment is consistent with the nature of our operations and the financial information regularly reviewed by the chief executive officer, in his capacity as the chief operating decision maker (CODM), for the purposes of evaluating performance, allocating resources, setting incentive compensation targets, and planning and forecasting for future periods. Our purpose is to unite caring with discovery to create medicines that make life better for people around the world. Our long-term success is significantly dependent on our ability to research and develop innovative medicines. The CODM uses consolidated net income to assess performance of our company, ensuring that we are investing in future research and development while efficiently delivering products to patients. The CODM allocates research and development resources based upon several factors, including the likelihood of technical success, unmet medical needs, and the viability of commercial success. A si …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

Equity The following table summarizes components of equity with significant changes during the three months ended June 30, 2026 and 2025: Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Shares Amount Balance at March 31, 2026 943.5 $ 590 $ 6,921 $ 29,514 $ (2,833) Net income 7,095 Other comprehensive income, net of tax 72 Cash dividends declared per share: $3.46 (3,088) Purchases of common stock (2.0) (2) (1,628) Issuance of stock under employee stock plans, net (5) Stock-based compensation 201 Balance at June 30, 2026 941.5 $ 588 $ 7,117 $ 31,893 $ (2,761) Balance at March 31, 2025 948.1 $ 593 $ 6,910 $ 15,100 $ (3,775) Net income 5,661 Other comprehensive income, net of tax 59 Cash dividends declared per share: $3.00 (2,692) Purchases of common stock (0.9) (1) (692) Issuance of stock under employee stock plans, net (6) Stock-based compensation 185 Balance at June 30, 2025 947.2 $ 592 $ 7,089 $ 17,376 $ (3,716) The following table summarizes components of equity with significant changes during the six months ended June 30, 2026 and 2025: Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Shares Amount Balance at December 31, 2025 944.8 $ 590 $ 7,346 $ 24,470 $ (2,880) Net income 14,491 Other comprehensive income, net of tax 119 Cash dividends declared per share: $3.46 (3,088) Purchases of common stock (4.4) (3) (3,984) Issuance of stock under employee stock plans, net 1.1 1 (591) Stock …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing