Anat Ashkenazi
Executive Vice President & Chief Financial Officer at Eli Lilly and Company
Thanks, Dave. Slide six summarizes financial performance in the third quarter of 2023. I'll focus my comments on non-GAAP performance. We're pleased with the strong financial performance this quarter, highlighted by continued acceleration of revenue growth, representing robust momentum in our core business. Q3 revenue increased 37% versus Q3 2022.
Excluding revenue from the olanzapine portfolio and from the COVID-19 antibodies, revenue increased 24% in Q3. This represents a quarter-over-quarter acceleration revenue growth driven by Mounjaro and the continued strong performance of Verzenio and Jardiance. Gross margin as a percent of revenue increased to 81.7%. Gross margin in the quarter benefited from the divestiture of the olanzapine portfolio, the absence of COVID-19 antibody sales in Q3 2023 and higher realized prices, partially offset by increases in manufacturing expenses. Marketing, selling and administrative expenses increased 12%, primarily driven by higher expenses associated with new product launches and additional indications as well as compensation and benefit costs.
R&D expenses increased 34%, primarily driven by higher development expenses for late-stage assets and additional investments in early-stage research. This quarter, we recognized acquired IPR&D charges of $2.98 billion, which negatively impacted EPS by $3.29. In Q3 2022 acquired IPR&D charges totaled $62 million or $0.06 of EPS. Operating income decreased 71% in Q3, driven by acquired IPR&D charges, partially offset by higher revenue associated with the divestiture of the olanzapine portfolio. Operating income as a percent of revenue was approximately 6% for the quarter and reflected a negative impact of approximately 31 percentage points attributable to acquired IPR&D charges. Our Q3 effective tax rate was 84.6%.
This represents an increase of approximately 74 percentage points compared to the same period in 2022. The increase in the effective tax rate was primarily driven by the nondeductible acquired IPR&D charges incurred this quarter. Other than the impact of acquired IPR&D, the underlying tax rate was consistent with previously provided guidance. At the bottom line, we delivered earnings per share of $0.10 in Q3, a 95% decrease versus Q3 2022, inclusive of an increase of $1.22 of EPS associated with the divestiture of the olanzapine portfolio and a negative impact of $3.29 from the acquired IPR&D charges. On Slide eight, we quantify the effect of price, rate and volume and revenue growth.
This quarter, U.S. revenue increased 21%. When excluding revenue from the olanzapine portfolio and COVID-19 antibodies, U.S. revenue grew 32%, driven by robust growth of Mounjaro, Verzenio and Jardiance. Net price in the U.S. increased 13% for the quarter, driven by Mounjaro Access and Saving Cards dynamics. Excluding Mounjaro, net price in the U.S. decreased by high single digits. As mentioned in prior earnings calls, we expected that Mounjaro Access and Saving Card dynamics to have a meaningful impact on reported U.S. price changes in the second half of 2023, which was evident in Q3.
Europe continued to post robust growth again this quarter. Excluding revenue from the olanzapine divestiture, revenue was up 7% in constant currency, driven by volume growth of 11% primarily from Verzenio, Jardiance and Taltz. For Japan, Q3 revenue decreased 16% in constant currency. Excluding Mounjaro, which had a onetime upfront payment associated with the sales collaboration agreement in the base period, revenue in Japan decreased 3% in constant currency, driven primarily by customer buying patterns related to Emgality. Moving to China. Revenue increased 20% in constant currency with volume growth of 25% partially offset by price declines.
Volume growth in Q3 was driven by Tyvyt and Verzenio. We're encouraged by the growth we have seen this year in China, revenue in the rest of the world increased 23% in constant currency as volume growth of 28% was driven by Mounjaro, Verzenio and Jardiance. Slide nine shows the contribution to worldwide volume growth by product category. As you can see, the new products and growth product categories combined contributed approximately 17 percentage points of volume growth for the quarter. The absence of revenue from COVID-19 antibodies compared to the base period was a headwind of nearly six percentage points to volume in Q3.
This headwind will abate as COVID-19 antibody sales were minimal after the third quarter of 2022. Lastly, revenue from the sales of rights of the olanzapine portfolio delivered nearly 22% points of growth this quarter. Slide 10 provides additional perspective across our product categories. First, I would like to highlight Verzenio, which saw worldwide sales growth of 68% in Q3, driven by robust volume growth. The continued positive momentum is driven by the early breast cancer indication, with steady performance in the metastatic indication. Jardiance continued its strong 2023 performance, with worldwide revenue growth of 22% for the quarter.
As you heard earlier in Q3, Jardiance was approved by the FDA for the treatment of adults with chronic kidney disease at risk of progression. In Q3, we saw worldwide Trulicity revenue declined 10% as volume growth in the U.S. was more than offset by lower prices, driven by changes to estimates for rebates and discounts in both periods as well as unfavorable segment mix and higher contracted rebates. In international markets, Trulicity volume continues to be affected by measures we have taken to minimize potential disruption to existing patients, including communications to health care professionals, not to start new patients on Trulicity. Moving to Slide 11.
We continue to be pleased with the strong performance of Mounjaro as more type two diabetes patients benefit from the medicine. Mounjaro revenue grew to just over $1.4 billion globally this quarter, up from $980 million the previous quarter. In Q3, we continued to make progress in expanding access to Mounjaro. As of October one, access for patients with type two diabetes in the U.S. reached 78% in aggregate across commercial and Part D, including 85% access for commercial patients.
This expanded access gives more patients the opportunity to start therapy on Mounjaro for type two diabetes. As communicated last quarter, since the $25 noncovered co-pay card program expired on June 30, we now consider all prescriptions paid. As a reminder, we define paid scripts as those prescriptions outside of the $25 noncovered co-pay card, but inclusive of the $24 covered co-pay card. We expect Mounjaro net price will continue to benefit from the higher percentage of paid prescriptions, but will also continue to face a headwind from more rebated volume as access improves. Looking forward to the end of the year. With increased access, we expect to continue to see overall growth in prescription trends. In terms of Mounjaro supply, we're continuing to make progress on our manufacturing expansion agenda.
Given strong demand, we continue to experience tight supply throughout most of Q3, which impacted results for the quarter. Most recently, U.S. product shipments have increased and inventory levels of U.S. wholesalers have improved, with all doses of Mounjaro now listed as available on the FDA shortage website. While supply constraints have eased in the U.S. -- outside the U.S., Trulicity and Mounjaro supply is tight, which materially impacted performance in these regions.
With device assembly online at RTP, we are on track to achieve our goals of doubling capacity by the end of this year from where we were a year ago and are gradually increasing production each quarter. We're also continuing to focus on other parts of the supply chain as demand is expected to remain high and production bottlenecks may shift over time. As we mentioned in last quarter's earnings call, we are moving forward with different presentation of Mounjaro to reach more patients around the world faster. We have launched with a single dose vial in Australia and plan to launch in other markets outside the U.S. in the coming weeks and months.
The introduction of a single dose vial presentation in these geographies is intended to serve as a bridge to a multi-dose click pen, which we expect will be available starting in 2024. We're also preparing for a potential launch of tirzepatide for obesity in the U.S. later this year. Our auto-injector capacity and output continues to increase, and we look forward to bringing tirzepatide to more patients in the months and years ahead. On Slide 12, we provide an update on capital allocation. In the first nine months of 2023, we invested nearly $12 billion in our future growth through a combination of R&D expenditures, capital investment and business development outlays.
In addition, we've returned nearly $4 billion to shareholders in dividends and share repurchases. Slide 13 presents our updated 2023 financial guidance. Guidance for the first four line items, including revenue, gross margin percent, marketing and selling and administrative expenses and R&D expense is unchanged. I would note that we are trending towards the higher end of our estimates for gross margin in the top end of our ranges for operating expense categories. You'll see that we've updated guidance for acquired IPR&D charges, OID, tax rate and EPS to reflect the inclusion of IPR&D charges for completed transactions through Q3, and year-to-date results and equity investments in GAAP guidance.
These updates do not include the effect of potential charges associated with pending or future business development transactions after Q3. We will provide our initial 2024 guidance when we report Q4 results. Now I will turn the call over to Dan to highlight our progress in R&D.
