What a 70% price cut did to Eli Lilly

The brief

For my IB Business Management HL internal assessment I chose the question:

How will Lilly’s decision to lower the price of their insulins (Lispro, Humalog and Humulin) by 70% in the US impact their internal growth and market positioning?

I chose the question because a voluntary price cut on a core product line is unusual for a listed company.

What I did

I worked from primary sources:

• Eli Lilly’s 2022 and 2023 product revenue reports from investor relations, so I could analyse insulin revenue specifically and not just group totals.
• Share-price data from January 2023 to March 2024 (Refinitiv, via Lilly’s investor site), before and after the announcement on 1 March 2023.
• A US Senate report on insulin affordability for uninsured Americans, for the policy context.
• Trade press, for stakeholder views.

Result

I concluded that the price cut was a positioning decision as much as a pricing one: Lilly gave up margin per unit in exchange for political goodwill, volume and market position.

This was my first analysis of a company from its own filings, and part of the reason I later took Engineering Mathematics in Finance.