(Adds CFO comment, updates shares)
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 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.
Lilly on Thursday said it plans to stick with that strategy
and selectively make small or mid-size acquisitions.
By contrast, Pfizer Inc, which faces looming patent
expirations on big drugs, earlier this year tried but failed to
buy British rival AstraZeneca Plc in a deal valued at
Pfizer hoped to slash its tax rate by buying AstraZeneca and
domiciling the combined company in Britain, a maneuver known as
a tax inversion. Other healthcare companies are pursuing similar
Pfizer, with three mega-mergers since 2000, has focused on
U.S. rivals, largely for huge cost cuts that boosted earnings.
Lilly Chief Executive John Lechleiter, appearing on CNBC on
Thursday, said Lilly had not been approached by Pfizer and did
not "intend to be anyone's target."
Later, in a conference call with investors, Lechleiter said
tax reform is needed in the United States to create a lower
corporate tax rate, so U.S. companies can better compete with
"It's time for Congress to step up to the plate to get this
thing done," he said during the call.
Company Chief Financial Officer Derica Rice said Lilly would
never pursue tax inversions as a "primary driver" of deals,
although they could be a secondary benefit.
Lilly 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 expects earnings this year of $2.72 to
$2.80 per share, excluding special items.
Shares of Lilly edged 0.6 percent higher to $64.62 in midday
(Reporting by Ransdell Pierson, Editing by Andrea Ricci)