Lilly Profit Misses Estimates as Generic Drugs Cut Sales

Lilly Profit Misses Analyst Estimates as Generic Drugs Cut Sales
Eli Lilly & Co. signage is displayed outside the company's office in La Jolla, California. Photographer: Konrad Fiedler/Bloomberg

Eli Lilly & Co. reported third-quarter earnings that missed analyst estimates after generic competition reduced revenue from the schizophrenia treatment Zyprexa, once the company’s top-selling drug.

Earnings excluding one-time items of 79 cents were 5 cents less than the average estimate of 16 analysts surveyed by Bloomberg. Net income rose 7.3 percent to $1.33 billion, or $1.18 a share, helped by an acquisition-related payment from Bristol-Myers Squibb & Co., Indianapolis-based Lilly said today in a statement.

Revenue fell 11 percent to $5.44 billion, $181 million lower than analysts’ average estimate, as generic copies took sales from schizophrenia treatment Zyprexa, which lost patent protection last October. Chief Executive Officer John Lechleiter has said profit won’t grow again until after 2014 as the company prepares for more drugs losing patent protection.

“Lilly reported a ho-hum quarter,” said Mark Schoenebaum, an analyst with ISI Group in New York, in a note to clients. “Marginally weak financial quarter, but nothing terrible.”

Lilly fell 2.7 percent to $50.50 at the close in New York. The shares have climbed 33 percent over the past 12 months on study results for the company’s experimental Alzheimer’s treatment solanezumab.

Reaffirms Forecast

The drugmaker reaffirmed its full-year forecast of earnings excluding one-time items of $3.30 to $3.40 a share.

Bristol-Myers, based in New York, paid about $1.39 billion to Lilly after it acquired Lilly’s former partner Amylin Pharmaceuticals LLC. Lilly recognized $788 million of that as income in the quarter.

Sales of Zyprexa fell 68 percent to $374.5 million in the quarter. That loss was partly offset by revenue from the antidepressant Cymbalta, which increased 16 percent to $1.24 billion. Several of Lilly’s drugs, including the diabetes treatment Humalog with $575.8 million in sales and the cancer therapy Alimta with $643.6 million, were lower than forecast by Seamus Fernandez, an analyst with Leerink Swann, in a research report on Oct. 15.

Lilly had net income of from $1.24 billion, or $1.11, in last year’s third quarter.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE