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Lilly Reports First-Quarter 2013 Results



                   Lilly Reports First-Quarter 2013 Results

PR Newswire

INDIANAPOLIS, April 24, 2013

INDIANAPOLIS, April 24, 2013 /PRNewswire/ --   

  o Worldwide revenue was flat as growth in key products offset lower Zyprexa
    revenue following patent expirations.
  o Cymbalta revenue increased 19 percent while Cialis increased 11 percent.
  o Expense controls resulted in lower SG&A, offsetting growth in R&D expense.
  o First quarter 2013 results include income of $495 million related to the
    transfer to Amylin of exenatide commercial rights outside of the U.S.
  o Tax rate comparisons benefited from the reinstatement of the U.S. R&D tax
    credit.
  o First quarter earnings per share grew to $1.42 (reported), or $1.14
    (non-GAAP).
  o 2013 earnings per share reconfirmed to be in the range of $4.10 to $4.25
    (reported), or $3.82 to $3.97 (non-GAAP).

Eli Lilly and Company (NYSE: LLY) today announced financial results for the
first quarter of 2013.

$ in millions, except per share data First Quarter      %
                                     2013      2012     Growth
Total Revenue – Reported             $5,602.0  $5,602.0 0%
Net Income – Reported                1,548.0   1,011.1  53%
EPS – Reported
                                     1.42      0.91     56%
 
Net Income – non-GAAP                1,247.7   1,026.9  22%
EPS – non-GAAP                       1.14      0.92     24%

 

Financial results for 2013 and 2012 are presented on both a reported and a
non-GAAP basis. Some numbers in this press release may not add due to
rounding. Reported results were prepared in accordance with generally accepted
accounting principles (GAAP) and include all revenue and expenses recognized
during the period. Non-GAAP results exclude the items described in the
reconciliation tables later in the release. The non-GAAP results are presented
in order to provide additional insights into the underlying trends in the
company's business. The company's 2013 financial guidance is also being
provided on both a reported and a non-GAAP basis.

"Lilly delivered solid financial results in the first quarter of 2013 despite
numerous headwinds, as growth in several key products and regions offset the
post-patent decline in Zyprexa, a weaker Japanese yen and a slowdown in parts
of our animal health business," said John C. Lechleiter, Ph.D., Lilly's
chairman, president and chief executive officer. "We also continued to
maintain strict expense controls this quarter. Most importantly, we have
remained focused on advancing our late-stage pipeline, and are pleased to
announce that we have received Fast Track designation from the FDA and have
initiated a rolling submission for ramucirumab. Together with the recent
submission of empagliflozin, these are the first two of what could be up to
five U.S. regulatory submissions this year."

Key Events Over the Last Three Months

  o The company and its partner, Boehringer Ingelheim, submitted a New Drug
    Application (NDA) for the investigational sodium glucose co-transporter-2
    (SGLT2) inhibitor empagliflozin to the U.S. Food and Drug Administration
    (FDA) for the treatment of type 2 diabetes mellitus in adults. In
    addition, the European Medicines Agency accepted for review a marketing
    authorization application for empagliflozin.
  o The company received Fast Track designation from the FDA and initiated a
    rolling submission for ramucirumab as monotherapy treatment in second-line
    gastric cancer.
  o The company announced that the primary endpoints related to reduction in
    HbA1c were met in the Phase 3 AWARD-2 and AWARD-4 studies for dulaglutide,
    an investigational GLP-1 receptor agonist being studied as a once-weekly
    treatment for type 2 diabetes.
  o The Phase III rheumatoid arthritis (RA) program for tabalumab was
    discontinued due to lack of efficacy. The decision was not based on safety
    concerns. The tabalumab Phase III program for systemic lupus erythematosus
    is ongoing and will continue as planned.
  o The company initiated a significant reduction in its U.S. Bio-Medicines
    sales force to adapt to changing customer requirements, evolutions in the
    U.S. health care environment and the upcoming loss of exclusivity for
    Cymbalta and Evista. Substantially all of the severance costs associated
    with this action were recognized in the fourth quarter of 2012. The
    company will also implement a small increase in its diabetes sales force
    to prepare for the planned launches of late-stage pipeline products. 
  o The commercial rights to exenatide outside of the U.S. were transferred to
    Amylin Pharmaceuticals.
  o The company agreed to end its U.S. co-promotion of Livalo^® and return the
    rights back to its partner, Kowa Pharmaceuticals America, Inc.
  o The Elanco animal health business announced that it will invest
    approximately $100 million USD to purchase a minority equity stake in
    China Animal Healthcare Ltd., one of the leading players in the animal
    health industry in the People's Republic of China. The parties have also
    agreed to a framework to allow for future commercial collaboration
    activities.
  o The company completed its previously-announced $1.5 billion share
    repurchase program.

First-Quarter Reported Results
In the first quarter of 2013, worldwide total revenue was $5.602 billion,
which was flat compared with the first quarter of 2012. An increase of 4
percent due to higher prices was offset by decreases of 3 percent due to lower
volume and 1 percent due to the unfavorable impact of foreign exchange rates.
The decrease in volume was driven primarily by the loss of patent exclusivity
for Zyprexa^® in most major markets, partially offset by volume gains for
certain other products. Total revenue in the U.S. increased 2 percent to
$3.137 billion due primarily to increased prices, partially offset by lower
volume primarily due to the loss of patent exclusivity for Zyprexa. Total
revenue outside the U.S. decreased by 2 percent to $2.465 billion, driven by
the loss of patent exclusivity for Zyprexa in markets other than Japan, the
unfavorable impact of foreign exchange rates (primarily the Japanese yen),
and, to a lesser extent, decreased prices, partially offset by increased
volume in certain products.  

Gross margin increased 1 percent to $4.444 billion in the first quarter of
2013, as growth in other products offset the loss of patent exclusivity for
Zyprexa. Gross margin as a percent of total revenue was 79.3 percent, an
increase of 0.7 percentage points compared with the first quarter of 2012. The
increase in gross margin percent was primarily due to higher prices and
production volumes, partially offset by higher manufacturing expenses.

Total operating expense in the first quarter of 2013, defined as the sum of
research and development, marketing, selling and administrative expenses,
remained flat compared with the first quarter of 2012 at $3.000 billion.
Marketing, selling and administrative expenses decreased 11 percent to $1.652
billion, reflecting the company's cost containment efforts. Research and
development expenses increased 17 percent to $1.348 billion, or 24.1 percent
of total revenue, driven by expenses related to late-stage clinical trials,
including approximately $90 million of milestone payments made to Boehringer
Ingelheim following the regulatory submissions for empagliflozin, and
approximately $60 million in costs related to the discontinuation of the
rheumatoid arthritis program for tabalumab.

In the first quarter of 2013, the company recognized asset impairment,
restructuring and other special charges of $21.7 million, related to severance
costs for actions the company is taking, primarily outside the U.S., to reduce
its cost structure and global workforce. In the first quarter of 2012, the
company recognized asset impairment, restructuring and other special charges
of $23.8 million, primarily related to the withdrawal of Xigris^®.

Operating income in the first quarter of 2013 was $1.422 billion, an increase
of 3 percent compared to the first quarter of 2012, as lower marketing,
selling and administrative expenses, and higher gross margin, were partially
offset by higher research and development expenses.

Other income (expense) was income of $529.2 million in the first quarter of
2013, compared with expense of $46.0 million in the first quarter of 2012.
This increase was primarily related to income of $495.4 million related to the
transfer of exenatide commercial rights outside of the U.S. to Amylin during
the first quarter of 2013.

The effective tax rate was 20.7 percent in the first quarter of 2013, compared
with an effective tax rate of 24.3 percent in the first quarter of 2012. The
decrease in the first quarter 2013 effective tax rate reflects the
reinstatement of the R&D tax credit in the U.S. for the first quarter of 2013
as well as the one-time impact of the R&D tax credit for 2012 that was
recorded in the first quarter of 2013, partially offset by the tax impact of
the transfer of exenatide commercial rights outside of the U.S. to
Amylin.                  

In the first quarter of 2013, net income and earnings per share increased to
$1.548 billion and $1.42, respectively, compared with first-quarter 2012 net
income of $1.011 billion and earnings per share of $0.91. The increases in net
income and earnings per share were primarily driven by higher other income
from the transfer of exenatide commercial rights outside of the U.S. to
Amylin.

First-Quarter 2013 non-GAAP Results
On a non-GAAP basis, first-quarter 2013 operating income increased 3 percent
to $1.444 billion, as lower marketing, selling and administrative expenses and
higher gross margin were partially offset by higher research and development
expenses. The effective tax rate decreased to 15.5 percent, compared with 24.4
percent in the first quarter of 2012, primarily driven by the reinstatement of
the R&D tax credit in the U.S. for the first quarter of 2013 as well as the
one-time impact of the R&D tax credit for 2012 that was recorded in the first
quarter of 2013. Net income and earnings per share were $1.248 billion and
$1.14, respectively, compared with $1.027 billion and $0.92 during the first
quarter of 2012.  These increases were driven by a lower tax rate, higher
other income and higher operating income.

Non-GAAP results in the first quarter of 2013 exclude items totaling $0.28 of
income. For the first quarter of 2012, expenses totaling $0.01 per share were
excluded. For further detail, see the reconciliation below as well as the
footnotes to the non-GAAP income statement later in this press release.

                                                        First Quarter
                                                        2013    2012  % Change
Earnings per share (reported)                           $1.42   $0.91 56%
Asset impairment, restructuring and other special                
charges
                                                        0.01    0.01
Income from the transfer of exenatide commercial rights (0.29)  -
Earnings per share (non-GAAP)                           $1.14   $0.92 24%

 

 

Revenue Highlights
                                         % Change
                                         Over/(Under)
(Dollars in millions) First Quarter
                      2013      2012     2012
Cymbalta^®            $1,328.2  $1,114.9    19%
Humalog^®             632.7     590.3       7%
Alimta^®              616.8     606.8       2%
Cialis                515.0     461.8       11%
Humulin^®             311.9     307.7       1%
Zyprexa               284.8     562.7       (49)%
Forteo^®              281.5     271.3       4%
Evista^®              240.6     256.2       (6)%
Strattera^®           166.7     158.9       5%
Effient^®             115.9     115.8       0%
Animal Health         499.1     490.7       2%
Total Revenue         $5,602.0  $5,602.0    0%

Cymbalta
For the first quarter of 2013, Cymbalta generated $1.328 billion in revenue,
an increase of 19 percent compared with the first quarter of 2012. U.S. sales
of Cymbalta increased 23 percent, to $1.057 billion, driven by higher prices.
Revenue outside the U.S. was $271.3 million, an increase of 5 percent, driven
primarily by increased demand, partially offset by lower prices.

Humalog
For the first quarter of 2013, worldwide Humalog sales increased 7 percent, to
$632.7 million. Sales in the U.S. increased 9 percent to $378.2 million,
driven by the favorable impact of wholesaler buying patterns and higher net
effective selling prices. Sales outside the U.S. increased 5 percent to $254.5
million, due to increased demand, partially offset by the unfavorable impact
of foreign exchange rates.

Alimta
For the first quarter of 2013, Alimta generated sales of $616.8 million, an
increase of 2 percent compared with the first quarter of 2012. U.S. sales of
Alimta increased 2 percent, to $262.1 million, driven by increased volume and
higher prices. Sales outside the U.S. increased 1 percent, to $354.7 million,
driven by increased demand, partially offset by lower prices and, to a lesser
extent, the unfavorable impact of foreign exchange rates.

Cialis
Cialis sales for the first quarter of 2013 increased 11 percent to $515.0
million. U.S. sales of Cialis were $214.2 million in the first quarter, a 20
percent increase compared with the first quarter of 2012, driven primarily by
higher prices. Sales of Cialis outside the U.S. increased 6 percent, to $300.8
million, driven by higher prices and increased demand, partially offset by the
unfavorable impact of foreign exchange rates.

Humulin
Worldwide Humulin sales increased 1 percent in the first quarter of 2013, to
$311.9 million. U.S. sales increased 5 percent to $163.4 million, driven by
higher prices, largely offset by lower demand. Sales outside the U.S.
decreased 3 percent, to $148.5 million, driven primarily by the unfavorable
impact of foreign exchange rates and decreased demand.

Zyprexa
In the first quarter of 2013, Zyprexa sales totaled $284.8 million, a decrease
of 49 percent compared with the first quarter of 2012 due to the loss of
patent exclusivity in 2011 in the U.S. and most major international markets.
U.S. sales of Zyprexa decreased 84 percent to $32.0 million. Zyprexa sales in
international markets decreased 30 percent, to $252.8 million. Zyprexa sales
in Japan were approximately $115 million and were negatively affected by the
weakening Japanese yen.

Forteo
First-quarter 2013 sales of Forteo were $281.5 million, a 4 percent increase
compared with the first quarter of 2012. U.S. sales of Forteo decreased 9
percent to $111.5 million, driven primarily by lower net effective selling
prices. Sales outside the U.S. increased 14 percent, to $170.0 million, due
primarily to increased demand in Japan, partially offset by the unfavorable
impact of foreign exchange rates.

Evista
Evista sales for the first quarter of 2013 decreased 6 percent to $240.6
million.  U.S. sales of Evista remained relatively flat at $171.6 million,
driven by decreased demand, offset by higher prices. Sales outside the U.S.
decreased 18 percent to $69.0 million, driven by lower volume and, to a lesser
extent, the unfavorable impact of foreign exchange rates and lower prices.

Strattera
During the first quarter of 2013, Strattera generated $166.7 million of sales,
an increase of 5 percent compared with the first quarter of 2012. U.S. sales
increased 1 percent to $105.5 million, due to the favorable impact of
wholesaler buying patterns. Sales outside the U.S. increased 13 percent to
$61.2 million driven by increased demand in Japan, partially offset by lower
prices and the unfavorable impact of foreign exchange rates.

Effient
Effient sales were $115.9 million in the first quarter of 2013, which were
relatively flat with the first quarter of 2012. U.S. Effient sales decreased 7
percent to $83.7 million, driven by the unfavorable impact of wholesaler
buying patterns, and lower net effective selling prices. Sales in the U.S.
were also negatively affected by increased market pressure due to the generic
entry of a competitor's product. Sales outside the U.S. increased 24 percent
to $32.2 million driven by higher demand. 

Animal Health
Worldwide sales of animal health products in the first quarter of 2013 were
$499.1 million, an increase of 2 percent compared with the first quarter of
2012. U.S. sales grew 9 percent, to $295.2 million, due primarily to increased
demand for Trifexis, partially offset by lower demand for food animal
products. Sales outside the U.S. decreased 8 percent, to $203.9 million,
driven primarily by decreased volume in food animal products. The volume
decrease in food animal products outside the U.S. was due to transition
stocking in 2012 associated with the Janssen acquisition, as well as weakness
in demand in many emerging markets consistent with broader industry trends.

2013 Financial Guidance
The company reconfirmed most of its 2013 financial guidance and still expects
full-year 2013 earnings per share to be in the range of $4.10 to $4.25 on a
reported basis, or $3.82 to $3.97 on a non-GAAP basis.

                                           2013            2012      

                                           Expectations    Results  % Change
Earnings per share (reported)              $4.10 to $4.25  $3.66    12% to 16%
Asset impairment, restructuring and other                   
special charges
                                           .01             0.16
Income from the transfer of exenatide                       
commercial rights
                                           (0.29)          (0.43)
Earnings per share (non-GAAP)              $3.82 to $3.97  $3.39    13% to 17%

 

The company still anticipates 2013 revenue of between $22.6 billion and $23.4
billion. Despite the initial impact of the U.S. Cymbalta patent expiration in
the fourth quarter of 2013 and the loss of the anticipated 15 percent revenue
sharing obligation on worldwide exenatide sales, the company expects overall
revenue growth, driven by a portfolio of products including Humalog, Humulin,
Cialis, Strattera, Forteo, Alimta, Cymbalta outside the U.S., Effient,
Tradjenta^® and Axiron^®, as well as animal health products. In addition,
significant revenue growth is expected in the emerging markets, particularly
China, while a continued weakening of the yen could dampen revenue growth in
Japan.

The company still anticipates that gross margin as a percent of revenue will
be approximately 78 percent.

Marketing, selling and administrative expenses are still expected in the range
of $7.1 billion to $7.4 billion. Research and development expenses are now
expected to be in the range of $5.3 billion to $5.6 billion.

On a reported basis, other income and deductions is now expected to be in a
range between $440 million and $590 million of income in 2013. On a non-GAAP
basis, other income and deductions is now expected to be in a range between
$50 million of expense to $100 million of income, which excludes $495.4
million of exenatide-related income recognized upon the transfer of exenatide
commercial rights outside the U.S. to Amylin.

On a reported basis, the 2013 tax rate is now expected to be approximately
20.5 percent. On a non-GAAP basis, the 2013 tax rate is now expected to be
approximately 19.0 percent. Both tax rates for 2013 include the one-time
impact associated with the R&D tax credit for 2012 that was recorded in 2013
resulting from the delay in the enactment of the American Taxpayer Relief Act
of 2012.

Operating cash flows are still expected to be more than sufficient to allow
for capital expenditures of approximately $900 million, fund potential
business development activity and pay the company's dividend. In addition, the
company has completed its previously-announced $1.5 billion share repurchase
program.

Webcast of Conference Call
As previously announced, investors and the general public can access a live
webcast of the first-quarter 2013 financial results conference call through a
link on Lilly's website at www.lilly.com. The conference call will be held
today from 9:00 a.m. to 10:00 a.m. Eastern Daylight Time (EDT) and will be
available for replay via the website.

Lilly, a leading innovation-driven corporation, is developing a growing
portfolio of pharmaceutical products by applying the latest research from its
own worldwide laboratories and from collaborations with eminent scientific
organizations. Headquartered in Indianapolis, Ind., Lilly provides answers –
through medicines and information – for some of the world's most urgent
medical needs. Additional information about Lilly is available at
www.lilly.com.

F-LLY

This press release contains management's current intentions and expectations
for the future, all of which are forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The words "estimate", "project", "intend", "expect",
"believe", "target" and similar expressions are intended to identify
forward-looking statements. Actual results may differ materially due to
various factors. There are significant risks and uncertainties in
pharmaceutical research and development. There can be no guarantees with
respect to pipeline products that the products will receive the necessary
clinical and manufacturing regulatory approvals or that they will prove to be
commercially successful. Pharmaceutical products can develop unexpected safety
or efficacy concerns. The company's results may also be affected by such
factors as competitive developments affecting current products; market uptake
of recently launched products; the timing of anticipated regulatory approvals
and launches of new products; regulatory actions regarding currently marketed
products; issues with product supply; regulatory changes or other
developments; regulatory compliance problems or government investigations;
patent disputes; changes in patent law or regulations related to data-package
exclusivity; other litigation involving current or future products; the impact
of governmental actions regarding pricing, importation, and reimbursement for
pharmaceuticals, including U.S. health care reform and deficit-reduction
measures; changes in tax laws, including the American Taxpayer Relief Act of
2012; asset impairments and restructuring charges; acquisitions and business
development transactions; and the impact of exchange rates and global
macroeconomic conditions. For additional information about the factors that
could cause actual results to differ materially from forward-looking
statements, please see the company's latest Form 10-Q and Form 10-K filed with
the U.S. Securities and Exchange Commission. You should not place undue
reliance on forward-looking statements, which speak only as of the date of
this release. Except as is required by law, the company expressly disclaims
any obligation to publicly release any revisions to forward-looking statements
to reflect events after the date of this release.

----------------------------------------------------------------------------------------------

Alimta^® (pemetrexed, Lilly)
Axiron^® (testosterone, Acrux Corp.)
Cialis^® (tadalafil, Lilly)
Cymbalta^® (duloxetine hydrochloride, Lilly)
Effient^® (prasugrel, Lilly)
Evista^® (raloxifene hydrochloride, Lilly)
Forteo^® (teriparatide of recombinant DNA origin injection, Lilly)
Humalog^® (insulin lispro injection of recombinant DNA origin, Lilly)
Humulin^® (human insulin of recombinant DNA origin, Lilly)
Livalo^® (pitavastatin, Kowa Pharmaceuticals)
Strattera^® (atomoxetine hydrochloride, Lilly)
Tradjenta^® (linagliptin, Boehringer Ingelheim)
Trifexis^® (spinosad + milbemycin oxime, Lilly)
Xigris^® (drotrecogin alfa (activated), Lilly)
Zyprexa^® (olanzapine, Lilly)

-----------------------------------------------------------------------

Eli Lilly and Company Employment Information
                                                  March 31,      December 31,
                                               2013           2012
Worldwide Employees                            38,100         38,350
    

 

Eli Lilly and Company
Operating Results (Unaudited) – REPORTED
(Dollars in millions, except per share data)

                                                   Three Months Ended
                                                            March 31
                                        2013         2012      % Chg.
Total Revenue                         $ 5,602.0   $  5,602.0   0%
Cost of sales                           1,158.3      1,197.9   (3)%
Research and development                1,348.1      1,151.5   17%
Marketing, selling and administrative   1,652.0      1,847.5   (11)%
Asset impairments, restructuring                                

   and other special charges            21.7         23.8      (9)%
Operating income                        1,421.9      1,381.3   3%
Net interest income (expense)           (16.7)       (19.2)
Other income (expense) – Special        495.4        -
    Net other income (expense)          50.5         (26.8)
Other income  (expense)                 529.2        (46.0)    NM
Income before income taxes              1,951.1      1,335.3   46%
Income taxes                            403.1        324.2     24%
Net income                            $ 1,548.0   $  1,011.1   53%
Earnings per share – diluted          $ 1.42      $  0.91      56%
Dividends paid per share              $ 0.49      $  0.49      0%
Weighted-average shares
                                        1,091,876    1,116,983
   outstanding (thousands) – diluted
 

NM – not meaningful

 

 

Eli Lilly and Company
Operating Results  (Unaudited) – Non-GAAP
(Dollars in millions, except per share data)
                                                Three Months Ended
                                                         March 31
                                            2013(a)   2012(b)   % Chg.
Total Revenue                        $ 5,602.0     $  5,602.0   0%
Cost of sales                          1,158.3        1,197.9   (3)%
Research and development               1,348.1        1,151.5   17%
Marketing, selling and                 1,652.0        1,847.5   (11)%
administrative
Operating income                       1,443.6        1,405.1   3%
Net interest income (expense)          (16.7)         (19.2)
    Net other income (expense)         50.5           (26.8)
Other income  (expense)                33.8           (46.0)    NM
Income before income taxes             1,477.4        1,359.1   9%
Income taxes                           229.7          332.2     (31)%
Net income                           $ 1,247.7     $  1,026.9   22%
Earnings per share – diluted         $ 1.14        $  0.92      24%
Dividends paid per share             $ 0.49        $  0.49      0%
                                                       

Weighted-average shares                                

   outstanding (thousands) – diluted   1,091,876      1,116,983

(a) The first-quarter 2013 financial statements have been adjusted to
eliminate asset impairments, restructuring and other special charges totaling
$21.7 million (pretax), or $0.01 per share (after-tax), related to severance
costs from actions the company is taking, primarily outside the U.S., to
reduce its cost structure and global workforce. Additionally, they have been
adjusted to eliminate income totaling $495.4 million (pretax), or $0.29 per
share (after-tax), related to the transfer of exenatide commercial rights
outside the U.S. to Amylin.

(b) The first-quarter 2012 financial statements have been adjusted to
eliminate asset impairments, restructuring and other special charges totaling
$23.8 million (pretax), or $0.01 per share (after-tax), primarily related to
the withdrawal of Xigris.

(Logo: http://photos.prnewswire.com/prnh/20031219/LLYLOGO )

Refer to: (317) 276-5795 – Mark Taylor (Media)
(317) 655-6874 – Philip Johnson (Investors)

SOURCE Eli Lilly and Company

Website: http://www.lilly.com
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