By Ransdell Pierson and Bill Berkrot
NEW YORK (Reuters) - Eli Lilly and Co's (LLY.N: Quote, Profile, Research, Stock Buzz) chief executive said on Monday the company will be able to weather the patent expiration on its Zyprexa schizophrenia drug without having to make major acquisitions, thanks to growing sales of other drugs and new products in development.
Sales of $5 billion-a-year Zyprexa are expected to plunge after its U.S. patent lapses in October 2011. Making matters worse, Lilly's Gemzar cancer treatment will face generic competition a year from now, setting the stage for the company's long-feared "patent cliff."
"We are adequately positioned" to deal with the looming challenge, John Lechleiter told the Reuters Health Summit in New York. He cited expectations of growing sales from cancer drug Alimta, antidepressant Cymbalta, anti-impotence treatment Cialis and recently approved blood-clot preventer Effient.
Moreover, he said drugs in late-stage trials, including treatments for cancer, and a longer-acting form of its widely used Byetta diabetes drug now awaiting approval, could help fill the revenue gap.
Lilly shares are trading at only about 8 times expected 2009 per share earnings, well below rival drugmakers, due to investor concern about Lilly's prospects after Zyprexa. Analysts also worry that Lilly will become overly dependent on Cymbalta, which could account for 30 percent of annual profit.
"I don't think we have all our eggs in that Cymbalta basket; I'm not afraid of Cymbalta growing," Lechleiter said of the drug, whose third quarter sales rose 10 percent to $790 million.
"It is proving itself to be a valuable and versatile product," he said of the pill, which is approved to treat depression, anxiety, diabetic nerve pain and fibromyalgia, with hopes of being cleared to treat chronic pain.
Although Alimta sales cannot keep growing at their torrid pace -- 47 percent to $462 million in the third quarter -- Lechleiter said it still has plenty of room to grow. And Cialis could get a whole new revenue stream if it lives up to its potential as a treatment for enlarged prostate, he said.
The company remains highly focused on diabetes and cancer, yet remains open to new disease areas if the right opportunities arise," Lechleiter said.
But Lilly is unlikely to become involved in vaccines. "There are relatively few channels into the business and that's probably beyond our reach right now," he said.
"Today the new frontier is probably autoimmunity," he said, noting Lilly is conducting mid-stage trials of biologic drugs to treat rheumatoid arthritis or psoriasis
Just as Lilly rebounded from the 2002 patent expiration on its top selling Prozac depression drug, it will thrive after Zyprexa goes generic, Lechleiter predicted -- and without the mega-mergers other drugmakers have resorted to in similar circumstances.
Lilly has taken some sizable moves to cushion itself, including the $6.5 billion purchase of ImClone Systems and its cancer drugs now in development. "The reason we were buying ImClone was for the future."
The Indianapolis-based company favors deals of up to $1 billion to $2 billion, and noted that Lilly is watching its cash position as the patent cliff approaches. "We're well positioned to do those deals on the smaller end. We're not interested in large-scale combinations."
But Lechleiter said shareholders should be able to count on getting their dividend -- one of the industry's most generous with a yield of more than 5 percent -- for the foreseeable future. Continued...
© Thomson Reuters 2009. All rights reserved.
| India Investment | Nov 23 - 25, 2009 | Country Summits |
| Global Finance | Nov 16 - 19, 2009 | Financial Services / Exchanges |
| Health | Nov 09 - 12, 2009 | Health |
| Autos | Nov 02 - 4, 2009 | Autos |
| Middle East Investment | Oct 26 - 28, 2009 | Country Summits |
