BRUSSELS (Reuters) - Eli Lilly and Co will maintain its dividend despite the erosion of its earnings by generic copies of blockbuster drugs and should be well placed by the end of 2013 to assess the potential of its future medicines, its chief executive said.
The U.S. drugmaker suffered a 7 percent drop in revenue last year and a 6 percent decline in net profit after it lost U.S. patent protection of top-selling schizophrenia drug Zyprexa.
Conversely, the company that brought Prozac to the world has 13 drug candidates in phase III trials, the most in its history.
Major U.S. drug companies lost a total of about $21 billion in revenue last year from lucrative medicines coming off patent, while the hit for European businesses is about $10 billion, according to Standard & Poor‘s.
However, the industry won 39 new drug approvals in 2012 -- a record only beaten in 1996.
Chief Executive John Lechleiter told Reuters that Lilly had pledged in 2009 to maintain its dividend at $0.49 per quarter.
“We’ve stayed with that and that’s still our guidance,” he said on Tuesday during a trip to Brussels.
In recent months, Lilly has reported positive Phase III test results for ramucirumab to treat gastric cancer and for two diabetes medicines and results showing its Alzheimer disease drug solanezumab may be effective in treating mild sufferers.
Ramucirumab will undergo a further test for gastric cancer along with Bristol-Meyers Squibb’s chemotherapy drug paclitaxel and studies in breast, lung, colorectal and liver cancers.
“We sort of have a lot of shots on goal. We are hopeful that we can establish efficacy in several of these tumors,” Lechleiter said.
Lilly believes it will be able to report Phase III trial results for eight drug candidates and file for approval for five this year.
“We’ll have a very good sense of where we stand by the end of this year,” Lechleiter said.
The Lilly chief said drug launches could come as early as late 2014 or into 2015. A ramp-up of sales can take around five years from launch.
Lilly has said revenue in 2014 would be no lower than $20 billion with net profit of at least $3 billion.
Lechleiter said developed world governments, many forced into budget cuts, needed to balance short-term budgetary considerations and long term economic and social benefits.
Lechleiter said the industry had to acknowledge health budget and reimbursements cuts in struggling European countries such as Greece, Portugal and Spain, but conditions in other nations, such as Germany and Britain, were very different.
The European Union also needed to put itself in a position to profit from what he forecast would be the “biomedical century”.
State-sponsored initiatives such as more funding for research and the region’s 2020 goals might help. But ultimately, governments needed to pay up for new medicines.
“When I joined Lilly in 1970s.. more than 50 percent of the medicines in that decade originated in Europe. Around 30 percent came from the U.S. Now those figures are reversed.”
“With all due respect to the push initiatives... there needs to be a pull mechanism. Innovation needs to be rewarded.”
Editing by David Cowell