[Ip-health] Lilly Profit Skids as It Prepares for Patent Expirations (AP)

Manon Ress manon.ress at keionline.org
Mon Jul 25 11:06:36 PDT 2011

Lilly Profit Skids as It Prepares for Patent Expirations
Published: July 21, 2011

The drug maker Eli Lilly said second-quarter earnings fell 11 percent
as it spent more on marketing and research to prepare for a wave of
patent expirations.

The company said on Thursday that marketing, selling and
administrative expenses climbed 16 percent to $2.04 billion as the
company supported introductions of Tradjenta and Bydureon, both type 2
diabetes treatments. Research expenses also rose because of a
collaboration agreement with a German drug maker.

A 9 percent revenue increase buoyed by strong sales from several drugs
blunted some of those expenses, and Lilly raised its 2011 earnings

Lilly said it earned $1.2 billion, or $1.07 a share, in the three
months that ended June 30. That’s down from the $1.35 billion, or
$1.22 a share, Lilly earned in the same quarter last year. Revenue
rose 9 percent to $6.25 billion.

Excluding restructuring charges, the company’s profit was $1.18 a
share. Analysts surveyed by FactSet expected, on average, earnings of
$1.19 a share on $6.01 billion in revenue.

Lilly said the health care overhaul reduced earnings by about 12 cents
a share in the quarter. Sales for Lilly’s best-selling drugs, the
antipsychotic Zyprexa and the antidepressant Cymbalta, climbed.

But sales for the cancer treatment Gemzar tumbled 62 percent to $112.4
million, including a 91 percent drop in the United States, after it
lost patent protection.

Patent expirations will sweep over the pharmaceutical industry in the
next few years and hit Lilly especially hard. The drug maker loses
American patent protection of Zyprexa in October, a month after it
loses protection in most of Europe. Lilly said it expected a “rapid
and severe” sales decline for the drug, which generated $5 billion
last year.

By 2014, Lilly will have lost patents protecting drugs that generated
64 percent of its American product sales last year.

Lilly also plans to cut costs by $1 billion by the end of this year.

For 2011, Lilly now expects adjusted earnings of $4.25 to $4.35 a
share, up from $4.15 to $4.30 a share. Analysts expect $4.29 a share.

    * Sign In to

Manon Anne Ress
Knowledge Ecology International
1621 Connecticut Ave, NW, Suite 500
Washington, DC 20009 USA
manon.ress at keionline.org

More information about the Ip-health mailing list