Drugmaker Eli Lilly and Co's quarterly revenue fell far less than expected, it reported on Thursday, as plunging sales of its Cymbalta depression treatment were largely offset by higher revenues for most of its other prescription drugs.
The company earned $728 million, or 67 cents per share, in the fourth quarter. That compared with $827 million, or 74 cents per share, in the year-earlier quarter, when Lilly took charges for asset impairments and restructuring.
"Company sales were stronger than thought, but a lot of that upside came from drugs that are already off patent or about to lose patent protection," said Edward Jones analyst Judson Clark.
Excluding special items, Lilly earned 74 cents per share, matching analysts' average forecasts, according to Thomson Reuters I/B/E/S.
Shares in the company dropped 1.4 percent to 53.21, after earlier reaching their lowest in two weeks at $53.05.
Lilly's global sales fell 2 percent to $5.81 billion, but topped Wall Street forecasts of $5.46 billion. Sales would have been flat if not for the stronger dollar, which lowers the value of sales in overseas markets.
Sales of Cymbalta, which lost U.S. patent protection last month, fell 38 percent to $883 million. But they came in about $100 million higher than Wall Street expected, analysts said.
Lilly's sales, earnings, and its share price, have been badly hurt since late 2011, when its Zyprexa schizophrenia drug lost U.S. patent protection.
Once Lilly's biggest product, with annual sales of $5 billion, it now has sales of only $1.5 billion.
The situation worsened last month, when Cymbalta - which also had $5 billion in annual sales at its peak - began facing cheaper generics in the United States.
The company's "patent cliff" will become more daunting in March, when $1 billion-a-year osteoporosis drug Evista faces U.S. generics.
"We haven't wasted the crisis," Chief Executive John Lechleiter said Thursday in a conference call with industry analysts. "We're more agile, we're leaner and I believe we're better operators today."
Lilly has cut more than 5,000 employees from its workforce in order to reduce annual costs by $1 billion over the last three years to deal with patent expirations on its drugs.
It has also restructured itself to focus on cancer and diabetes - lucrative specialties that are two of the company's longstanding strengths.
Clark said sales of Cymbalta could eventually decline 80 percent, which has been the case for many other blockbuster medicines in recent years. He questioned whether gains for other products seen in the fourth quarter will be sustainable.
Sales of many products over the quarter showed double-digit sales increases, including Lilly's Humalog insulin, Cialis anti-impotence treatment, Forteo and Evista osteoporosis drugs, and Straterra for attention deficit disorder.
But price increases in the United States accounted for much of those sales gains.
The Indianapolis drugmaker is expecting a return to company sales growth next year, from increased sales of drugs that still have patent protection and from launches of new treatments for cancer and diabetes.
It hopes to launch three new drugs this year: ramucirumab for stomach cancer, and dulaglutide and empagliflozin for type 2 diabetes - the most common form of the disease, which is closely linked to obesity.
Although analysts have forecast annual sales of more than $650 million for ramucirumab, they are concerned the new diabetes drugs may have a hard time competing with similar drugs already on the market.
The company has introduced no new products in recent years.
In a recent interview, Lechleiter said it was time for Lilly "to go back on offense", helped by a pipeline of nearly 40 medicines in mid- and late-stage studies, compared with only seven in those stages of development a decade ago.
(Reporting by Ransdell Pierson; Editing by Lisa Von Ahn and Sophie Hares)