Patents, economies of scale, and a powerful distribution network support Eli Lilly's wide moat. Lilly's patent-protected drugs carry strong pricing power, which enables the firm to generate returns on invested capital in excess of its cost of capital. Further, the patents give the company time to develop the next generation of drugs before generic competition arises. Lilly's diversified product portfolio means the company's top drugs represent only a moderate amount of total sales, with the largest drug, Trulicity, representing almost 20% of total sales, which sets up manageable cash flow declines as new products mitigate the generic competition. Also, Lilly's operating structure allows for cost-cutting after patent losses to reduce the margin pressure from lost high-margin drug sales.