Oct. 21 (Bloomberg) -- Eli Lilly & Co., maker of the antipsychotic Zyprexa, raised its 2009 forecast after reporting a profit on increased sales of cancer and depression drugs. The results topped analysts’ estimates.

Third-quarter net income was $941.8 million, or 86 cents a share, compared with a loss of $465.6 million, or 43 cents, a year earlier, the Indianapolis-based company said today in a statement. Earnings excluding some items were $1.20, beating by 18 cents the average estimate of 15 analysts surveyed by Bloomberg.

Sales rose 6.8 percent to $5.56 billion, boosted by higher demand and price increases. Revenue from Zyprexa, the antidepressant Cymbalta, the cancer drug Alimta and impotence pill Cialis all increased. Lilly also reiterated plans to reduce costs by $1 billion by the end of 2011 through measures including job cuts.

“They had a great quarter and exceeded expectations, but longer-term they’ve got massive patent losses coming and very little visibility on what may materialize out of the pipeline to replace those lost revenues and earnings,” Deutsche Bank analyst Barbara Ryan said by telephone today.

“They’re probably going to have to continue to make acquisitions such as the one they did with ImClone,” said Ryan, who recommends holding Lilly shares and doesn’t own any.

Lilly boosted its full-year adjusted earnings forecast to $4.30 to $4.40 a share. In July, the company projected 2009 adjusted earnings of $4.20 to $4.30 a share, and “mid-single digit” growth in full-year sales.

Job Cuts

Shares of Lilly fell $1.58, or 4.5 percent, to $33.66 at 4 p.m. in New York Stock Exchange composite trading, widening its losses for the year to 16 percent.

The company said last month it planned to cut 14 percent of its workforce, or about 5,500 jobs, and restructure the business around five units. The moves are aimed to help process Lilly’s 2008 acquisition of ImClone Systems Inc. and offset some losses it expects starting in 2011 from generic competition to Zyprexa. With 2008 sales of $4.7 billion, the antipsychotic is Lilly’s top-selling drug.

Lilly bought ImClone in November, adding the cancer drug Erbitux and experimental treatments to help bolster revenue. Zyprexa faced new competition this year after lower-priced generic copies of Johnson & Johnson’s Risperdal, a rival schizophrenia treatment, went on sale in July 2008. Sales of Zyprexa rose 2.8 percent to $1.22 billion in the quarter.

“Object of our Attention”

“The pipeline is the main object of our attention right now,” Chief Executive Officer John Lechleiter said in an interview with Bloomberg Television today. The company has two medicines for Alzheimer’s disease in advanced human trials, as well as new cancer therapies from ImClone, he said.

Revenue from Cymbalta increased 10 percent to $790.2 million, while Cialis sales rose 5 percent to $397.2 million. Revenue from Alimta, which was approved as a maintenance therapy for some advanced lung cancers in the U.S. last quarter, grew 47 percent to $461.9 million, and sales of the insulin Humalog rose 16 percent to $500.2 million.

“The current business has received a material lift from strong growth of Cymbalta for depression and other indications,” BMO Capital Markets analyst Robert Hazlett wrote in an investment note last week. He also cited Alimta and impotence treatment Cialis as contributors to growth.

Lilly reported 13 cents in charges related to Zyprexa litigation this year, and 26 cents in asset impairments and restructuring costs year-to-date.

To contact the reporter on this story: Meg Tirrell in New York at mtirrell@bloomberg.net.

Last Updated: October 21, 2009 16:21 EDT