(Corrects final paragraph to show product is basal insulin, not
an insulin glargine similar to Lantus)
Jan 7 Eli Lilly and Co on Tuesday
forecast its profit will fall by up to one-third this year, as
cheaper generic forms of its Zyprexa schizophrenia treatment and
Cymbalta depression drug hurt results, but the outlook was in
line with expectations.
The U.S. drugmaker said it expects earnings, excluding
special items, at $2.77 to $2.85 per share in 2014. Analysts, on
average, estimated $2.78 per share, according to Thomson Reuters
The Indianapolis-based company, whose shares were little
changed in late-morning trading, forecast revenue this year
between $19.2 billion and $19.8 billion, also in line with
Atlantic Equities analyst Richard Purkiss said 2014 will be
the "trough year" in Lilly's painful three-year patent cliff,
which began in October 2011, when it lost U.S. patent protection
for Zyprexa, then its biggest product.
Despite lingering skepticism among many investors about
Lilly's prospects, Purkiss said he expects company revenue to
bounce back strongly in 2015, and for the company to have
mid-teens percentage growth in earnings from 2014 to 2017.
"The company with the poorest growth over the last couple of
years will be right at the top of its large-cap peers globally,"
Purkiss predicted. "It will be a top-line recovery, driven by
good growth from existing products and sales of newly approved
In the meantime, JP Morgan analyst Chris Schott said Lilly's
expected gross profit margin this year - 74 percent - is well
below the 79 percent to 80 percent range that Wall Street
expected for 2013, and reflects bigger-than-expected declines
for Cymbalta. Lilly said the weaker margin will be offset by a
$800 million drop in research spending.
Zyprexa, which had annual sales of more than $5 billion at
its peak, now brings in only $1 billion. Rising prices of
Cymbalta have helped cushion Zyprexa's decline, but sales of the
$5 billion-a-year antidepressant are expected to plunge
following the loss of its own patent protection last month.
The company's pain will intensify in March, when Lilly's
Evista osteoporosis drug, with annual sales of $1 billion, goes
up against generics.
Early last year Lilly had projected revenue of $20 billion
for 2014, but in October it said it would be hard-pressed to
reach that goal because of the devaluation of the yen and slower
growth in emerging markets.
The drugmaker said on Tuesday it expects to achieve its
goals for net income of $3 billion and operating cash flow of $4
billion in 2014, and plans to maintain its dividend at the
The company, which reports fourth quarter and 2013 results
on Jan. 30, said its 2013 financial expectations also remained
Lilly's seemingly unending patent cliff has soured many
investors and hurt its stock. Company shares rose only 3 percent
in 2013, woefully underperforming a 27 percent jump in the ARCA
Pharmaceutical Index of large drugmakers.
But other investors have been attracted by the company's
generous dividend, with its 3.8 percent yield, and hopes of a
rebound for its respected research laboratories.
"Investors are largely focused on the company's (drug)
pipeline and less on the near term," said Edward Jones analyst
Judson Clark. He maintained a "hold" rating on Lilly, saying its
stock appeared to be "appropriately valued."
Shares dipped 0.2 percent to $51.45 in late-morning trade.
One of the company's biggest hopes is an experimental drug
called ramucirumab. When used by itself, the drug prolonged
survival of patients with stomach cancer in late-stage trials.
Some analysts believe annual sales could top $1.5 billion by
2020 if it is approved for the hard-to-treat condition, and for
other forms of cancer, including of the lung, liver and colon.
U.S. regulators have assigned a priority review to
ramucirumab and could decide by the second quarter of 2014
whether to approve it.
In a conference call with analysts on Tuesday, Lilly Chief
Executive John Lechleiter said diabetes drugs will remain a
company mainstay and be an "entree" into emerging markets.
He said two experimental Lilly diabetes drugs now in
late-stage trials, an injectable medicine called dulaglutide and
a basal insulin, offer potential advantages over the
(Editing by Jeffrey Benkoe)