(Adds analyst comment, details on sales, 2014 revenue forecast)
By Ransdell Pierson
April 24 Eli Lilly and Co reported
lower-than-expected quarterly revenue on Thursday, hurt by
disappointing sales of its cancer and diabetes drugs, and its
shares fell more than 3 percent.
Indianapolis-based Lilly, which is trying to regain its
footing after three years of patent expirations on its biggest
prescription drugs, on Tuesday agreed to buy Novartis'
animal health unit for $5.4 billion to bolster its own
fast-growing Elanco business for farm animals and pets.
Elanco sales rose 6 percent to $527 million in the first
quarter, Lilly said on Thursday. That was slightly below Wall
The company's net earnings fell to $728 million, or 68 cents
per share, from $1.55 billion, or $1.42 per share, a year
earlier due to generic competition for its Cymbalta depression
Excluding special items, Lilly earned 70 cents per share,
matching the analysts' average estimate compiled by Thomson
Revenue fell 16 percent to $4.68 billion. Wall Street was
expecting $4.8 billion.
"Overall, (it) was not a great quarter," ISI Group analyst
Mark Schoenebaum said in a research note. But he said investors
were far more focused on promising new and experimental drugs
that could revive Lilly's fortunes.
BMO Nesbitt Burns analyst Alex Arfaei said lower research
spending and a tax benefit had enabled Lilly to meet its
first-quarter profit forecast despite disappointing revenue.
"We believe the quarter reflects weakening core franchises,"
Arfaei said, adding that lower sales of drugs for diabetes,
cancer, osteoporosis and other conditions increase the
importance of Lilly's experimental drugs.
Lilly's sales and earnings have been badly hurt since late
2011, when its Zyprexa schizophrenia drug lost U.S. patent
protection and was slammed by cheaper generics. Cymbalta, which
had $5 billion in annual sales at its peak, began facing
generics in December. And the company's Evista osteoporosis drug
lost U.S. marketing exclusivity last month.
First-quarter sales of Cymbalta fell 64 percent to $478
million, while Evista's dropped 38 percent to $150 million.
Lilly is counting on new drug approvals to put its sales and
earnings back on track. Among those approvals may be two new
diabetes treatments later this year.
U.S. regulators on Monday approved the company's new Cyramza
(ramucirumab) treatment for gastric cancer. Analysts expect the
product to become a blockbuster brand, especially if it proves
effective later against lung cancer.
Lilly is testing other cancer drugs, as well as treatments
for Alzheimer's disease, arthritis and psoriasis.
Global sales of lung cancer drug Alimta rose 2 percent to
$632 million. Sales of Humalog, a leading insulin brand, rose 3
percent to $650 million, while those of Humulin, another type of
insulin, rose 1 percent to $316 million. But combined sales of
the three products were about $50 million below expectations.
For all of 2014, Lilly said it still expected earnings of
$2.72 to $2.80 per share, excluding items. It forecast full-year
revenue of $19.4 billion to $20 billion, slightly above its
Shares of Lilly were down 3.3 percent at $57.59 on the New
York Stock Exchange.
(Reporting by Ransdell Pierson; Editing by Jeffrey Benkoe and
Lisa Von Ahn)