Here's How Eli Lilly's Oncology Drugs Are Poised Ahead of Q3 Earnings

While Eli Lilly LLY is a market leader in the GLP-1 segment, thanks to its tirzepatide medicines Mounjaro and Zepbound (for obesity), the company also generates a meaningful portion of revenues from its oncology franchise. Sales from the oncology drugs accounted for more than 15% of Lilly’s first-half 2025 revenues, which grew about 10% year over year.

Our model estimates that third-quarter 2025 sales for the overall oncology unit will be $2.58 billion, representing over 15% year-over-year growth. A significant portion of these revenues is likely to be generated from sales of the company’s blockbuster breast cancer drug, Verzenio. Sales of this drug are expected to have been driven by increased demand and higher realized prices during the period, partially offset by currency headwinds and competitive dynamics.

Sales of RET inhibitor Retevmo and the newer lymphoma drug Jaypirca are also expected to contribute positively to top-line growth during the quarter. However, these gains are likely to have been partially offset by lower sales of older cancer drugs like Alimta and Cyramza, which are being impacted by competition from immuno-oncology agents in the United States.

Though Lilly secured FDA approval for its new breast cancer drug, Inluriyo, in late September, it indicated that the launch would occur in “the coming weeks.” As such, we do not expect the company to generate any sales from the drug in the third quarter.

As markets await another strong quarter from Lilly’s GLP-1 portfolio, attention may gradually shift toward the company’s oncology unit, which is showing consistent double-digit growth. This could help reassure investors that Lilly’s earnings trajectory isn’t solely tied to the obesity segment ahead of the Q3 results on Oct. 30.

Competition in the Oncology Space

Other bigger players in this area include AstraZeneca AZN, Merck MRK and Pfizer PFE.

For AstraZeneca, oncology sales now account for nearly 43% of total revenues. Sales in its oncology segment rose 11% in the first half of 2025. AstraZeneca’s strong oncology performance was driven by medicines such as Tagrisso, Lynparza, Imfinzi, Calquence and Enhertu (in partnership with Daiichi Sankyo).

Merck’s key oncology medicines are PD-L1 inhibitor, Keytruda and PARP inhibitor, Lynparza, which it markets in partnership with AstraZeneca. Keytruda, approved for several types of cancer, alone accounted for more than 48% of Merck’s total revenues in the first half of 2025.

Pfizer’s first-half 2025 oncology revenues grew 9% on an operational basis, driven by drugs like Xtandi, Lorbrena, the Braftovi-Mektovi combination and Padcev. The segment now accounts for over 25% of Pfizer’s overall sales.

LLY’s Price Performance, Valuation and Estimates

Shares of Lilly have outperformed the industry year to date, as seen in the chart below.

From a valuation standpoint, Eli Lilly is expensive. Based on the price/earnings (P/E) ratio, the company’s shares currently trade at 27.99 times forward earnings, higher than its industry’s average of 15.56. However, the stock is trading below its five-year mean of 34.54.

EPS estimates for 2025 have declined from $23.15 to $22.86, while those for 2026 have decreased from $30.82 to $30.78 over the past 30 days.

Eli Lilly currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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