(Corrects 10th paragraph to show Pfizer bought Warner Lambert,
Pharmacia and Wyeth (not Pfizer)
By Ransdell Pierson
July 24 Eli Lilly and Co's quarterly
revenue plunged due to generic competition for its Cymbalta
depression drug and its Evista osteoporosis treatment, but cost
controls helped earnings beat forecasts.
Lilly on Thursday said it had earned 68 cents per share in
the second quarter, above the analysts' average forecast of 65
cents, according to Thomson Reuters I/B/E/S.
Sales of Cymbalta, which lost U.S. patent protection in
December, tumbled 73 percent to $401 million. Evista, which
began facing cheaper generics in March, had a sales drop of 61
percent to $108 million.
The Indianapolis drugmaker's sales and earnings have been
badly hurt since late 2011, when its top-selling Zyprexa
schizophrenia drug lost U.S. patent protection and faced
competition from cheaper generics.
The expiration of patents and resulting decline in revenue
have been a problem for most U.S. drugmakers and are among the
reasons for a surge in mergers and acquisitions in the sector.
But rather than attempt to merge with another big drugmaker,
Lilly has vowed to remain independent and rely on its own
product lineup to get back on track.
Chief Executive Officer John Lechleiter told CNBC on
Thursday that he planned to stick with that strategy and
selectively make small or mid-size acquisitions to bolster
Lilly's drug pipeline.
By contrast, Pfizer Inc, which faces looming patent
expirations on several big drugs and has developed few top
sellers in recent years, has tried several times since November
to buy AstraZeneca Plc. It officially abandoned that
quest in May, but under British takeover law could make renewed
overtures to its smaller rival in November.
Pfizer has said it would lower its tax rate considerably by
buying AstraZeneca and domiciling the combined company in the
United Kingdom, a maneuver known as a tax inversion. Other
healthcare companies are pursuing similar deals.
Pfizer, in seeking mega-mergers in the past, has focused on
big U.S. rivals, having bought Warner Lambert, Pharmacia and
Wyeth since 2000. These deals provided huge cost cuts that have
propped up its earnings.
Lechleiter, in the television interview, said Lilly had not
been approached by Pfizer and did not "intend to be anyone's
But he said high U.S. corporate taxes put U.S. companies at
a disadvantage. "Companies doing inversions are simply trying to
level the playing field," he added.
Lilly said it had earned $734 million, or 68 cents per
share, in the second quarter. That compared with $1.21 billion,
or $1.11 per share, a year earlier, when the company took
charges for closing a distribution center and other costs.
Although revenue fell 17 percent to $4.94 billion, it topped
Wall Street expectations of $4.90 billion.
Lilly said it still expected earnings this year of $2.72 to
$2.80 per share, excluding special items.
Shares of Lilly were down 2 cents at $64.23 in early
(Reporting by Ransdell Pierson, Editing by Franklin Paul and
Lisa Von Ahn)