Two of the biggest names in pharma delivered better-than-expected third-quarter results on Thursday, as demand for their flagship treatments remained robust. Eli Lilly and Merck both topped Wall Street's forecasts, sending a clear signal that the market for chronic-disease and weight-loss drugs is still expanding.
Lilly's weight-loss franchise keeps growing
Eli Lilly's numbers were the standout. Adjusted earnings per share came in at $7.48, up from $7.02 a year earlier, while revenue jumped 39% to about $24.4 billion. Both figures beat the consensus estimates compiled by FactSet.
The growth was driven by the company's diabetes and weight-loss shots. Mounjaro, used for type 2 diabetes, saw sales surge 65% to $10.72 billion. Zepbound, the weight-loss version, brought in $5.35 billion in revenue, even as the company noted "lower realized prices" weighed on that product.
That momentum encouraged Lilly to raise its 2026 revenue forecast to $91–92 billion, up from its previous range of $85–87 billion. However, it slightly trimmed its 2026 adjusted earnings per share outlook to $35–36, after taking a $4.57-per-share charge related to acquired in-process research and development in the quarter.
For context, in-process R&D charges are accounting adjustments that occur when a company buys another firm and writes off the value of research that hasn't yet produced a marketable product. They don't reflect ongoing operational performance, but they do hit the bottom line in the quarter they're recorded.
Merck's steady growth on Keytruda and Gardasil
Merck's quarter was less flashy but still ahead of expectations. Adjusted earnings per share slipped 3% to $2.49, while sales rose 5% to $18.09 billion. The growth came from its two biggest products: Keytruda, the cancer immunotherapy, and Gardasil, the HPV vaccine.
Merck responded by lifting its full-year adjusted EPS outlook to $2.77–2.82 and raising the low end of its sales guidance. The company's performance underscores the durability of its oncology and vaccine franchises, even as it faces patent cliffs on some older drugs.
Keytruda has long been one of the best-selling drugs in the world, and Gardasil continues to see strong uptake in international markets. Merck's ability to keep both growing is a key reason investors have remained confident in the stock.
What it means for investors
For markets, the most important takeaway from Lilly's report is the revenue guidance. Sales forecasts are often a cleaner signal of demand than earnings per share, which can be distorted by one-off accounting items like the in-process R&D charge.
Lilly's $91–92 billion revenue target for 2026 suggests the company expects its weight-loss and diabetes drugs to keep winning prescriptions. The EPS trim, by contrast, is largely a bookkeeping matter. It doesn't change how many patients are taking Mounjaro or Zepbound, nor does it affect how much supply Lilly can bring online as it expands manufacturing capacity.
So analysts are more likely to adjust their models around volume growth and pricing assumptions than to interpret the EPS cut as a sign that demand is cooling. The key debate for Lilly's valuation shifts back to the durability of its top line and how much profit it can eventually squeeze out as it scales.
For everyday investors, the broader lesson is that blockbuster drugs can drive outsized returns for pharmaceutical companies, but they also come with risks. Patent expirations, pricing pressure, and competition from rivals can quickly change the picture. That's why it's important to look beyond a single quarter's headline numbers and consider the long-term drivers of demand.
Both Lilly and Merck have shown they can navigate these challenges for now. But as with any stock, past performance isn't a guarantee of future results, and the market will be watching closely to see whether these growth trends continue.
For more on how these companies are positioning themselves, check out our coverage of Lilly's sales team restructuring and Merck's quarterly performance.
