Eli Lilly Plans 10 Drugs in Final-Stage Trials by Year End

Eli Lilly CEO John Lechleiter
Eli Lilly & Co. Chief Executive Officer John Lechleiter. Photographer: Koichi Kamoshida/Bloomberg

Eli Lilly & Co., the drugmaker slated to lose U.S. patent protection on its biggest-selling medicine Zyprexa in October, said it will have at least 10 new therapies in final-stage studies by year’s end.

Lilly has 33 drugs in the second and third stages of clinical trials, including medicines for cancer, diabetes and Alzheimer’s disease, up from seven in 2005, the Indianapolis-based company said today in a statement. The drugmaker confirmed its forecast of at least $20 billion in annual revenue and $3 billion in full-year net income from 2011 to 2014. Lilly’s 2010 net income was $5.07 billion with sales of $23.1 billion.

Patent expirations on Zyprexa and other drugs are estimated to reduce annual sales by about $7 billion from 2010 to 2014, Lilly said in the statement released before its investor meeting in New York. New products will help growth return after 2014, the company said. Zyprexa had $5.03 billion in sales last year.

“With our pipeline maturing, we will be in a position where we will resume a good growth trajectory as we come out” of the patent-expiration period, Chief Executive Officer John C. Lechleiter said in an interview today.

Growth in the emerging markets, Japan and in Lilly’s Elanco animal-health unit may generate more than $4 billion of additional revenue by 2015, the company said. Earnings per share are expected to decline from 2011 to 2012, rise in 2013 and decline again in 2014, the company said.

Negative View

“Expectations are pretty low,” said Les Funtleyder, a portfolio manager with Miller Tabak & Co., in a telephone interview yesterday. “The street is about as negative as you are going to get for a pharma company.”

Lilly rose 26 cents to $37.53 at 4:01 p.m. in New York Stock Exchange composite trading. The shares have gained 7.1 percent in trading this year.

Growth-oriented investors “have a hard time reconciling” Lilly’s strategy of shrinking first and growing later, he said. “I am looking for an articulation of their strategy.”

Lilly faces generic competition in 2013 for the antidepressant Cymbalta, the company’s second-biggest seller at $3.46 billion, and in 2014 to its $1 billion osteoporosis drug, Evista.

$34 Billion

U.S. drugmakers face patent losses this year to products with $34 billion in yearly sales. Sales at risk from generic rivals will increase to $147 billion by 2015, according to Bloomberg data.

In the statement, Lilly said it had fully enrolled patients in two final-stage trials of solanezumab, the company’s experimental Alzheimer’s drug. The company expects to complete the studies in the first half of 2012.

Three phases of clinical trials are generally required for U.S. regulatory approval of new drugs.

Lechleiter reiterated the company’s opposition to a large merger and said Lilly is seeking smaller deals that would “complement or supplement assets we already have.”

The CEO cited Lilly’s January partnership with German drugmaker Boehringer Ingelheim GmbH to develop and sell diabetes treatments as the type of deals the company favors.

“We see these large-scale combinations as solving short-term problems,” Lechleiter said. “We think they are a distraction.”

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