Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition

**(**Tables present dollars in millions, except per-share data)

General

Management's discussion and analysis of results of operations and financial condition is intended to assist the reader in understanding and assessing significant changes and trends related to our company's results of operations and financial position. This discussion and analysis should be read in conjunction with the consolidated condensed financial statements and accompanying footnotes in Part I, Item 1 of this Quarterly Report on Form 10-Q. Certain statements in this Part I, Item 2 of this Quarterly Report on Form 10-Q constitute forward-looking statements. Various risks and uncertainties, including those discussed in "Forward-Looking Statements" in this Quarterly Report on Form 10-Q and "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, may cause our actual results, financial position, and cash generated from operations to differ materially from these forward-looking statements.

EXECUTIVE OVERVIEW

This section provides an overview of our financial results, late-stage pipeline developments, and other matters affecting our company and the pharmaceutical industry.

Financial Results

The following table summarizes certain financial information:

			Three Months Ended March 31,
			2023						2022						Percent Change
Revenue			$	6,960.0					$	7,810.0					(11)
Net income			1,344.9						1,902.9						(29)
Earnings per share - diluted			1.49						2.10						(29)

Revenue decreased for the three months ended March 31, 2023 driven by lower realized prices, lower volume, and the unfavorable impact of foreign exchange rates. The decline in revenue during the three months ended March 31, 2023 was primarily driven by the significant and complete reduction of sales of COVID-19 antibodies, partially offset by sales of Mounjaro®.

Net income and earnings per share for the three months ended March 31, 2023 decreased primarily due to lower revenue, partially offset by lower net investment losses on equity securities.

See "Results of Operations" for additional information.

Late-Stage Pipeline

Our long-term success depends on our ability to continually discover or acquire, develop, and commercialize innovative new medicines. We currently have approximately 45 new medicine candidates in clinical development or under regulatory review, and a larger number of projects in the discovery phase.

The following certain new molecular entities (NMEs) and new indication line extension (NILEX) products are currently in Phase II or Phase III clinical trials or have been submitted for regulatory review or have received regulatory approval in the United States (U.S.), Europe, or Japan. The table reflects the status of these NMEs and NILEX products, including relevant developments since our Annual Report on Form 10-K for the year ended December 31, 2022.

Compound			Indication			Status			Developments
Diabetes and Obesity
Empagliflozin (Jardiance®)(1)			Chronic kidney disease			Submitted			Granted U.S. Food and Drug Administration (FDA) Fast Track designation(2). Submitted in Japan in 2022 and in the U.S. and Europe in the first quarter of 2023.
Tirzepatide (Mounjaro)			Obesity			Submitted			Submitted in Europe in the first quarter of 2023. Granted FDA Fast Track designation(2). Initiated a rolling submission in the U.S. in 2022. Announced in April 2023 that a Phase III trial met co-primary and all key secondary endpoints. Phase III trials are ongoing.
Heart failure with preserved ejection fraction			Phase III			Phase III trials are ongoing.
Obstructive sleep apnea			Phase III			Granted FDA Fast Track designation(2). Phase III trial is ongoing.
Nonalcoholic steatohepatitis			Phase II			Phase II trial is ongoing.
Insulin Efsitora Alfa (Basal Insulin-Fc)			Type 1 and 2 diabetes			Phase III			Phase III trials are ongoing.
LP(a) siRNA			Cardiovascular disease			Phase II			Phase II trial is ongoing.
Muvalaplin (LP(a) Inhibitor)			Cardiovascular disease			Phase II			Phase II trial is ongoing.
Orforglipron			Obesity			Phase II			Phase II trials were completed.
Type 2 diabetes
Relaxin-LA			Heart failure			Phase II			Phase II trial initiated in the first quarter of 2023.
Retatrutide			Obesity			Phase II			Phase II trials were completed.
Type 2 diabetes
Solbinsiran (ANGPTL3 siRNA)			Cardiovascular disease			Phase II			Phase II trial is ongoing.

Compound			Indication			Status			Developments
Immunology
Mirikizumab (Omvoh®)			Ulcerative colitis			Approved			Approved in Japan in the first quarter of 2023. Submitted in the U.S. and Europe in 2022. Received a complete response letter from the FDA in April 2023. Received a positive opinion from the Committee for Medicinal Products for Human Use (CHMP) in Europe in the first quarter of 2023.
Crohn's Disease			Phase III			Phase III trials are ongoing.
Lebrikizumab(3)			Atopic dermatitis			Submitted			Submitted in the U.S. and Europe in 2022 and in Japan in the first quarter of 2023. Phase III trials are ongoing.
BTLA MAB Agonist			Systemic lupus erythematosus			Phase II			Phase II trial is ongoing.
Eltrekibart (CXCR1/2 Ligands Monoclonal Antibody)			Hidradenitis suppurativa			Phase II			Phase II trial is ongoing.
Peresolimab			Rheumatoid arthritis			Phase II			Phase II trial is ongoing.
Rezpegaldesleukin			Systemic lupus erythematosus			Discontinued			Phase II trial failed to meet primary endpoint in the first quarter of 2023.
Neuroscience
Donanemab			Early Alzheimer's disease			Complete Response Letter			Granted FDA Breakthrough Therapy designation(4). Submitted in the U.S. in 2022 under the accelerated approval pathway. Received a complete response letter from the FDA in the first quarter of 2023 for the accelerated approval submission. Phase III trials are ongoing.
Preclinical Alzheimer's disease			Phase III			Phase III trial is ongoing.
Remternetug			Early Alzheimer's disease			Phase III			Phase III trial is ongoing.
GBA1 Gene Therapy (PR001)			Gaucher disease Type 1			Phase II			Phase II trial initiated in April 2023.
Parkinson's disease			Phase II			Granted FDA Fast Track designation(2). Phase II trial is ongoing.
GRN Gene Therapy (PR006)			Frontotemporal dementia			Phase II			Granted FDA Fast Track designation(2). Phase II trial is ongoing.
O-GlcNAcase Inh			Alzheimer's disease			Phase II			Phase II trial is ongoing.
P2X7 Inhibitor			Pain			Phase II			Phase II trials are ongoing.
SSTR4 Agonist			Pain			Phase II			Phase II trials are ongoing.
Solanezumab			Preclinical Alzheimer's disease			Discontinued			Phase III trial failed to meet primary and secondary endpoints in the first quarter of 2023.
TRPA1 Antagonist			Pain			Discontinued			Phase II trials discontinued in the first quarter of 2023.

Compound			Indication			Status			Developments
Oncology
Pirtobrutinib (Jaypirca®)			Mantle cell lymphoma			Approved(5)			FDA granted accelerated approval(5) in the U.S. in the first quarter of 2023. Submitted in Europe in 2022. Received a positive opinion from the CHMP in Europe in April 2023. Phase III trial is ongoing.
Chronic lymphocytic leukemia			Phase III			Phase III trials are ongoing.
B-cell malignancies			Phase II			Phase II trial is ongoing.
Selpercatinib (Retevmo®)			Lung cancer			Approved(5)			Phase III trials are ongoing.
Thyroid cancer			Approved(5)			Phase III trial is ongoing.
Abemaciclib (Verzenio**®**)			Prostate cancer			Phase III			Phase III trials are ongoing.
Imlunestrant			Adjuvant breast cancer			Phase III			Phase III trial is ongoing.
ER+HER2- metastatic breast cancer			Phase III			Phase III trial is ongoing.

(1) In collaboration with Boehringer Ingelheim.

(2) Fast Track designation is designed to facilitate the development and expedite the review of medicines to treat serious conditions and fill an unmet medical need.

(3) In collaboration with Almirall, S.A. in Europe.

(4) Breakthrough Therapy designation is designed to expedite the development and review of potential medicines that are intended to treat a serious condition where preliminary clinical evidence indicates that the treatment may demonstrate substantial improvement over available therapy on a clinically significant endpoint.

(5) Continued approval may be contingent on verification and description of clinical benefit in confirmatory Phase III trials.

Other Matters

Patent Matters

We depend on patents or other forms of intellectual property protection for most of our revenue, cash flows, and earnings.

Since the expiration of patent exclusivity for Alimta®, we have faced generic competition that has rapidly and severely eroded revenue from prior levels. This decline in revenue will continue to impact period-over-period financial results comparisons, particularly during the first half of 2023. See Note 8 to the consolidated condensed financial statements for a description of legal proceedings currently pending regarding certain of our patents.

Our compound patents for Humalog® (insulin lispro) have expired in the U.S. and major international markets, and we have also introduced lower-priced versions of Humalog as part of our insulin access and affordability solutions. On March 1, 2023, we announced price reductions for Humalog and an expansion of our Insulin Value Program that caps patient out-of-pocket costs at $35 or less per month. A competitor has a similar version of insulin lispro in the U.S. and in certain European markets. Due to the expansion of our insulin access and affordability solutions in the U.S. and the impact of competition and pricing pressure in the U.S. and certain international markets, we expect that lower revenue for Humalog due to realized price decline will continue over time.

Trends Affecting Pharmaceutical Pricing, Reimbursement, and Access

Reforms, including those that may stem from periods of economic downturn or uncertainty, or as a result of high inflation, emergence or escalation of, and responses to, war or unrest (including the Russia-Ukraine war), or government budgeting priorities, may continue to result in added pressure on pricing and reimbursement for our products.

Global concern over access to and affordability of pharmaceutical products continues to drive regulatory and legislative debate and action, as well as worldwide cost containment efforts by governmental authorities. Such measures include the use of mandated discounts, price reporting requirements, mandated reference prices, restrictive formularies, changes to available intellectual property protections, as well as other efforts. In August 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (IRA). Among other measures, the IRA will require the U.S. Department of Health and Human Services to effectively set prices for certain single-source drugs and biologics reimbursed under Medicare Part B and Part D. Generally, these government prices apply nine (medicines approved under a New Drug Application) or thirteen (medicines approved under a Biologics License Application) years following initial FDA approval and will be capped at a statutory ceiling price that is likely to represent a significant discount from average prices to wholesalers and direct purchasers. While the law specifies a ceiling price, it does not set a minimum or floor price. Given our product portfolio, we expect some of our significant products will be selected, which would have the effect of accelerating revenue erosion prior to patent expiry. The effect of reducing prices and reimbursement for certain of our products would significantly impact our business and consolidated results of operations. The establishment of payment limits or other restrictions by drug affordability review boards and other state level actors would similarly impact us.

Other IRA provisions provide for rebate obligations on drug manufacturers that increase prices of Medicare Part B and Part D medicines at a rate greater than the rate of inflation and Part D benefit redesign that includes replacing the Part D coverage gap discount program with a new manufacturer discounting program. Manufacturers that fail to comply with the IRA may be subject to various penalties, including civil monetary penalties, which could be significant.

The IRA takes effect progressively starting in 2023, with the first government-set prices effective in 2026. The IRA may meaningfully influence our business strategies and those of our competitors. In particular, the nine-year timeline to set prices for medicines approved under a new drug application reduces the attractiveness of investment in small molecule innovation. The full impact of the IRA on our business and the pharmaceutical industry, including the implications to us of a competitor's product being selected for price setting, remains uncertain.

Additional policies, regulations, legislation, or enforcement, including those proposed and/or pursued by the U.S. Congress, the current U.S. presidential administration, and regulatory authorities worldwide, could adversely impact our business and consolidated results of operations.

Consolidation and integration of private payors and pharmacy benefit managers in the U.S. has also significantly impacted the market for pharmaceuticals by increasing payor leverage in negotiating manufacturer price or rebate concessions and pharmacy reimbursement rates. Furthermore, restrictive or unfavorable pricing, coverage, or reimbursement determinations for our medicines or product candidates by governments, regulatory agencies, courts, or private payers, such as the Centers for Medicare & Medicaid Services' national coverage determination for monoclonal antibodies for the treatment of Alzheimer's Disease, may adversely impact our business and consolidated results of operations. We expect that these actions may intensify and could particularly affect certain products, such as insulin, which could adversely affect our business. In addition, we are engaged in litigation and investigations related to our 340B program, access to insulin, and other matters that, if resolved adversely to us, could negatively impact our business and consolidated results of operations. It is not currently possible to predict the overall potential adverse impact to us or the general pharmaceutical industry of continued cost containment efforts worldwide.

In addition, regulatory issues concerning compliance with current Good Manufacturing Practices, quality assurance, evolving standards, and increased scrutiny around excipients and potential impurities such as nitrosamines, and similar regulations and standards (and comparable foreign regulations and standards) for our products can lead to regulatory and legal actions, product recalls and seizures, fines and penalties, interruption of production leading to product shortages, import bans or denials of import certifications, delays or denials in new product approvals or line extensions or supplemental approvals of current products pending resolution of the issues, and reputational harm, any of which would adversely affect our business. Moreover, increased focus on business combinations across industries and jurisdictions can lead to impediments to the completion of business combinations.

See "Business—Regulations and Private Payer Actions Affecting Pharmaceutical Pricing, Reimbursement, and Access" in Part I, Item 1 and "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022. See also Note 8 to the consolidated condensed financial statements.

Product Supply

We have faced challenges, and expect to continue to face challenges, meeting strong demand for our incretin products. In the U.S., given very strong uptake of Mounjaro following its launch in the U.S. for type 2 diabetes in the second quarter of 2022, and as demand for Trulicity® has remained strong, we have experienced intermittent delays in fulfilling certain U.S. orders for these products. Outside the U.S., we have implemented certain actions to minimize the impact on existing Trulicity patients, but we expect to continue to experience intermittent disruptions in our supply of Trulicity in international markets.

We anticipate tight supplies of our incretin products will persist until additional manufacturing capacity is operationalized. We expect additional internal and contracted manufacturing capacity will become fully operational around the world in the next several years, with significant expansion in 2023, as part of our ongoing efforts to meet the significant demand for our incretin medicines.

Tax Matters

We are subject to income taxes and various other taxes in the U.S. and in many foreign jurisdictions; therefore, changes in both domestic and international tax laws or regulations have affected and may affect our effective tax rate, results of operations, and cash flows. The U.S. and countries around the world are actively proposing and enacting tax law changes. Further, actions taken with respect to tax-related matters by associations such as the Organisation for Economic Co-operation and Development and the European Commission could influence tax laws in countries in which we operate. Tax authorities in the U.S. and other jurisdictions in which we do business routinely examine our tax returns and are intensifying their scrutiny and examinations of profit allocations among jurisdictions. Changes to existing U.S. and foreign tax laws and increased scrutiny by tax authorities in the U.S. and other jurisdictions could adversely impact our future consolidated results of operations and cash flows.

Foreign Currency Exchange Rates and Other Impacts

As a global company, we face foreign currency risk exposure from fluctuating currency exchange rates, primarily the U.S. dollar against the euro, Japanese yen, and Chinese yuan. While we seek to manage a portion of these exposures through hedging and other risk management techniques, significant fluctuations in currency rates can have a material impact, either positive or negative, on our consolidated results of operations in any given period. During the three months ended March 31, 2023, revenue was unfavorably impacted by 2 percent due to foreign exchange rates compared to the three months ended March 31, 2022. There is uncertainty in the future movements in foreign exchange rates, and fluctuations in these rates could adversely impact our consolidated results of operations and cash flows.

In addition, cost inflation, the strain on global transportation, logistics, and labor markets (including as exacerbated by the COVID-19 pandemic and the emergence or escalation of, and responses to, war or unrest, including the Russia-Ukraine war), global economic downturns or uncertainty, and an increase in overall demand in our industry for certain products and materials have had, and may continue to have, a number of impacts on our business, including increased costs and disruptions in the supply of our medicines.

Acquisitions

We invest in external research and technologies that we believe complement and strengthen our own efforts. These investments can take many forms, including acquisitions, collaborations, investments, and licensing arrangements. We view our business development activity as a way to enhance our pipeline and strengthen our business.

See Note 3 to the consolidated condensed financial statements for further discussion regarding our recent acquisitions.

COVID-19 Pandemic

As the effects of the COVID-19 pandemic have evolved, we remain focused on protecting the health, safety, and well-being of our employees; supporting the medical system and our communities; and affordability of and access to our medicines. At the outset of the COVID-19 pandemic, we also focused on researching, developing, and supplying COVID-19 therapies. During 2022, we recognized $2.02 billion in revenue from COVID-19 antibodies and do not anticipate any revenue from COVID-19 antibodies in 2023.

The COVID-19 pandemic has adversely impacted and may continue to adversely impact our business and operations across markets to varying and fluctuating degrees, including as a result of cost inflation and strain on the global transportation, manufacturing, and labor markets, fewer in-person interactions among patients and healthcare providers and our employees with healthcare professionals in certain markets, pricing pressures, rebates, clawbacks, and other changes in reimbursement policies resulting from the financial strain of the COVID-19 pandemic on government-funded healthcare systems, and risks related to our COVID-19 therapies. The degree to which the COVID-19 pandemic could continue to affect us will depend on developments that are highly uncertain and beyond our knowledge or control.

See "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022 for additional information on risk factors that could impact our business and operations.

RESULTS OF OPERATIONS

Revenue

The following table summarizes our revenue activity by region:

			Three Months Ended March 31,
			2023						2022						Percent Change
U.S.			$	4,436.2					$	5,174.6					(14)
Outside U.S.			2,523.9						2,635.4						(4)
Revenue			$	6,960.0					$	7,810.0					(11)

Numbers may not add due to rounding.

The following are components of the change in revenue compared with the prior year:

			Three Months Ended March 31,
			2023 vs. 2022
			U.S.			Outside U.S.			Consolidated
Volume			(10)		%	7		%	(4)		%
Price			(5)			(5)			(5)
Foreign exchange rates			—			(6)			(2)
Percent change			(14)		%	(4)		%	(11)		%

Numbers may not add due to rounding.

In the U.S. for the three months ended March 31, 2023, the decrease in volume was primarily driven by COVID-19 antibodies and, to a lesser extent, Alimta following the entry of multiple generics in the first half of 2022, partially offset by increased volume for Mounjaro, Trulicity, and Verzenio. In the U.S. for the three months ended March 31, 2023, the decrease in realized prices was primarily driven by Humalog, due to unfavorable segment mix, and Trulicity, due to higher contracted rebates as well as unfavorable segment mix.

Outside the U.S. for the three months ended March 31, 2023, the increase in volume was primarily driven by Verzenio, Jardiance, Taltz®, and Trulicity, partially offset by the decrease in volume due to the sales of our rights to Cialis® in Taiwan and Saudi Arabia during the three months ended March 31, 2022. Outside the U.S. for the three months ended March 31, 2023, the decrease in realized prices was primarily driven by the impact of government pricing in China from volume-base procurement for Humalog.

The following table summarizes our revenue activity by product for the three months ended March 31, 2023 and 2022:

			Three Months Ended March 31,																								Percent Change
			2023																		2022
Product			U.S.						Outside U.S.						Total						Total
Trulicity			$	1,547.4					$	429.7					$	1,977.1					$	1,741.3					14
Verzenio			461.1						289.8						750.9						469.4						60
Jardiance(1)			329.4						248.1						577.5						419.4						38
Mounjaro			536.4						32.0						568.5						—						NM
Taltz			312.2						214.8						527.0						488.1						8
Humalog(2)			271.6						189.3						460.9						618.2						(25)
Humulin®			198.8						53.2						252.0						273.2						(8)
Cyramza®			100.6						136.1						236.8						230.3						3
Olumiant® (3)			42.3						186.5						228.9						255.6						(10)
Basaglar®			135.4						73.9						209.3						191.5						9
Emgality®			108.7						45.6						154.3						149.3						3
Erbitux®			118.8						11.1						129.9						122.7						6
Forteo®			70.7						51.7						122.3						137.4						(11)
Cialis			7.6						92.7						100.3						217.7						(54)
Alimta			20.1						38.1						58.2						343.9						(83)
COVID-19 antibodies(4)			—						—						—						1,469.8						(100)
Other products			175.1						431.3						606.1						682.2						(11)
Revenue			$	4,436.2					$	2,523.9					$	6,960.0					$	7,810.0					(11)

Numbers may not add due to rounding.

NM - not meaningful

(1) Jardiance revenue includes Glyxambi®, Synjardy®, and Trijardy® XR.

(2) Humalog revenue includes insulin lispro.

(3) Olumiant revenue includes sales for baricitinib that were made pursuant to Emergency Use Authorization (EUA) or similar regulatory authorizations.

(4) COVID-19 antibodies include sales for bamlanivimab administered alone, for bamlanivimab and etesevimab administered together, and for bebtelovimab and were made pursuant to EUAs or similar regulatory authorizations.

Revenue of Trulicity increased 18 percent in the U.S. during the three months ended March 31, 2023, driven by increased demand and, to a lesser extent, wholesaler buying patterns, partially offset by lower realized prices driven by higher contracted rebates as well as unfavorable segment mix. We experienced intermittent delays in fulfilling certain U.S. Trulicity orders during the fourth quarter of 2022. These delays persisted through the first quarter of 2023, but at a reduced level. Revenue outside the U.S. increased 1 percent during the three months ended March 31, 2023, driven by increased volume, largely offset by the unfavorable impact of foreign exchange rates and lower realized prices. Actions to manage strong demand across our incretin portfolio, including measures to minimize existing patient impact in international markets, also affected volume.

Revenue of Verzenio increased 53 percent in the U.S. during the three months ended March 31, 2023, primarily driven by increased demand, partially offset by customer buying patterns. Revenue outside the U.S. increased 73 percent during the three months ended March 31, 2023, driven by increased demand, partially offset by the unfavorable impact of foreign exchange rates and lower realized prices.

Revenue of Jardiance increased 43 percent in the U.S. during the three months ended March 31, 2023, primarily driven by increased demand. Revenue outside the U.S. increased 31 percent during the three months ended March 31, 2023, primarily driven by increased volume, partially offset by the unfavorable impact of foreign exchange rates. See Note 4 to the consolidated condensed financial statements for information regarding our collaboration with Boehringer Ingelheim involving Jardiance.

Revenue of Mounjaro in the U.S. during the three months ended March 31, 2023 was $536.4 million. Mounjaro launched in the U.S. for the treatment of type 2 diabetes in June of 2022.

Revenue of Taltz increased 2 percent in the U.S. during the three months ended March 31, 2023, driven by increased demand, largely offset by lower realized prices. Revenue outside the U.S. increased 19 percent during the three months ended March 31, 2023, driven by increased volume, partially offset by the unfavorable impact of foreign exchange rates.

Gross Margin, Costs, and Expenses

The following table summarizes our gross margin, costs, and expenses:

			Three Months Ended March 31,
			2023						2022						Percent Change
Gross margin			$	5,333.3					$	5,737.9					(7)
Gross margin as a percent of revenue			76.6		%				73.5		%
Research and development			$	1,985.1					$	1,610.1					23
Marketing, selling, and administrative			1,749.2						1,557.9						12
Acquired in-process research and development (IPR&D)			105.0						165.6						(37)
Other–net, (income) expense			(35.7)						350.7						NM
Income taxes			184.8						150.7						23
Effective tax rate			12.1		%				7.3		%

NM - not meaningful

Gross margin as a percent of revenue for the three months ended March 31, 2023 increased 3.1 percentage points compared with the three months ended March 31, 2022, primarily driven by sales of COVID-19 antibodies during the three months ended March 31, 2022, partially offset by lower realized prices.

Research and development expenses increased 23 percent for the three months ended March 31, 2023, primarily driven by higher development expenses for late-stage assets.

Marketing, selling, and administrative expenses increased 12 percent for the three months ended March 31, 2023, primarily driven by costs associated with launches of new products and indications.

We recognized $105.0 million of acquired IPR&D for the three months ended March 31, 2023. We recognized $165.6 million of acquired IPR&D for the three months ended March 31, 2022, primarily related to a purchase of a Priority Review Voucher. See Note 3 to the consolidated condensed financial statements for additional information.

Other–net, (income) expense included net investment losses on equity securities of $13.7 million and $425.4 million for three months ended March 31, 2023 and 2022, respectively. See Note 10 to the consolidated condensed financial statements for additional information.

The effective tax rate was 12.1 percent for the three months ended March 31, 2023, reflecting the tax impact of the new Puerto Rico tax regime, partially offset by a net discrete tax benefit. The effective tax rate was 7.3 percent for the three months ended March 31, 2022, reflecting the favorable tax impact of net investment losses on equity securities.

FINANCIAL CONDITION AND LIQUIDITY

We believe our available cash and cash equivalents, together with our ability to generate operating cash flow and our access to short-term and long-term borrowings, are sufficient to fund our existing and planned capital requirements. For a discussion of our capital requirements, see "Management's Discussion and Analysis of Results of Operations and Financial Condition" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022.

We have announced additional investment commitments in new facilities in Indiana, North Carolina, and Limerick, Ireland to manufacture existing and future products. We expect that these investments will result in higher capital expenditures in excess of $8 billion over the next several years.

Cash and cash equivalents increased to $3.55 billion as of March 31, 2023, compared with $2.07 billion as of December 31, 2022. Refer to the consolidated condensed statements of cash flows for additional information on the significant sources and uses of cash for the three months ended March 31, 2023 and 2022.

In addition to our cash and cash equivalents, we held total investments of $2.87 billion and $3.05 billion as of March 31, 2023 and December 31, 2022, respectively. See Note 5 to the consolidated condensed financial statements for additional information.

As of March 31, 2023, total debt was $18.88 billion, an increase of $2.65 billion compared with $16.24 billion as of December 31, 2022. In February 2023, we issued $750.0 million of 5.000 percent fixed-rate notes due in 2026, which are callable at par after one year, $1.00 billion of 4.700 percent fixed-rate notes due in 2033, $1.25 billion of 4.875 percent fixed-rate notes due in 2053, and $1.00 billion of 4.950 percent fixed-rate notes due in 2063, all with interest to be paid semi-annually. We used the net cash proceeds from the offering of $3.96 billion for general business purposes, including the repayment of outstanding commercial paper. See Note 5 to the consolidated condensed financial statements for additional information.

As of March 31, 2023, we had a total of $7.33 billion of unused committed bank credit facilities, $7.00 billion of which is available to support our commercial paper program. We believe that amounts accessible through existing commercial paper markets should be adequate to fund short-term borrowing needs.

During the three months ended March 31, 2023, we repurchased $750.0 million of shares under our $5.00 billion share repurchase program authorized in May 2021. As of March 31, 2023, we had $2.50 billion remaining under this program.

During the three months ended March 31, 2023, we paid dividends of $1.02 billion, or $1.13 per share, to our shareholders.

See "Executive Overview—Other Matters—Patent Matters" for information regarding recent losses of patent protection.

Both domestically and abroad, we continue to monitor the potential impacts of the economic environment; the creditworthiness of our wholesalers and other customers, including foreign government-backed agencies and suppliers; the uncertain impact of healthcare legislation; various international government funding levels; and fluctuations in interest rates, foreign currency exchange rates (see "Executive Overview—Other Matters—Foreign Currency Exchange Rates and Other Impacts"), and fair values of equity securities.

CRITICAL ACCOUNTING ESTIMATES

For a discussion of our critical accounting estimates, refer to "Management's Discussion and Analysis of Results of Operations and Financial Condition" in Part II, Item 7 and the notes to our consolidated financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022. See also Note 1 to the consolidated condensed financial statements. There have been no material changes to our critical accounting estimates since our Annual Report on Form 10-K for the year ended December 31, 2022.

AVAILABLE INFORMATION ON OUR WEBSITE

We make available through our company website, free of charge, our company filings with the Securities and Exchange Commission (SEC) as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC. The reports we make available include annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, registration statements, and any amendments to those documents.

The website link to our SEC filings is investor.lilly.com/financial-information/sec-filings.

We routinely post important information for investors in the “Investors” section of our website, www.lilly.com. We may use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the “Investors” section of our website, in addition to following our press releases, filings with the SEC, public conference calls, presentations, and webcasts. We may also use social media channels to communicate with investors and the public about our business, products and other matters, and those communications could be deemed to be material information. The information contained on, or that may be accessed through, our website or social media channels, is not incorporated by reference into, and is not a part of, this Quarterly Report on Form 10-Q.