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(Reuters) - Drugmaker Eli Lilly and Co, which faces revenue pressure from patent expirations of top products, said it was resuming its program to buy back its stock.
The Indianapolis-based company had not bought back its shares since 2006, choosing to use its cash for other purposes. Lilly's board authorized the company to resume a share repurchase program that had begun in 2000, under which it had spent $2.58 billion of a total authorization of $3 billion.
Lilly said it expects to buy the remaining $420 million by the end of the year - which equates to about 1 percent of outstanding shares, according to ISI Group analyst Mark Schoenebaum - and anticipates resuming share repurchases following the completion of the current program.
Lilly Chief Executive Officer John Lechleiter said in a statement that based on current market valuations and the company's confidence in its prospects, it was an "excellent opportunity to resume buying back Lilly shares even as we maintain the dividend at least at its current level."
Lilly is coping with the patent expiration of its one-time top-selling medicine, anti-psychotic Zyprexa, which is now seeing fierce competition from low-cost generic versions. It also faces the loss of exclusivity of antidepressant Cymbalta next year.
Data is expected soon on Lilly's experimental Alzheimer's treatment, which is considered a long shot to succeed but could drive the shares significantly higher should it work.
Lilly shares were up 1 percent at $42.45 on Tuesday morning on the New York Stock Exchange.
Reporting by Lewis Krauskopf in New York; Editing by Gerald E. McCormick and Matthew Lewis