Eli Lilly's Net Income Surges
By DONNA KARDOS
January 29, 2008 9:26 a.m.
Eli Lilly & Co.'s fourth-quarter net income rose sixfold amid year-earlier charges as the pharmaceuticals company's surging sales helped offset pressures of increasing generic competition.
Eli Lilly posted net income of $854.4 million, or 78 cents a share, up from $132.3 million, or 12 cents a share, a year earlier. The latest quarter's results included 12 cents in acquisition and restructuring-related charges, while the prior year had 73 cents per share in charges from restructuring and product liability. The company in October said it expected earnings excluding items between 86 and 91 cents a share. Revenue rose 22% to $5.19 billion from $4.25 billion. The mean estimates of analysts polled by Thomson Financial were for earnings of 89 cents a share on $4.81 billion in revenue.
World-wide sales volume increased 15%, with exchange rates contributing 4 percentage points of the gain. Gross margin decreased by 0.5 percentage point to 75.5%, largely due to the impact of foreign exchange rates and expenses related to the ICOS acquisition, offset in part by manufacturing expenses growing at a slower rate than sales.
Sales of schizophrenia drug Zyprexa, Eli Lilly's best seller, rose 10% to $1.27 billion, with U.S. sales increasing 11% due to higher prices and international sales climbing 10% amid the weaker dollar. Global demand was flat.
Antidepressent Cymbalta sales jumped 48% to $628.3 million. International growth of 70% on higher demand and favorable foreign-exchange rates outpaced U.S. gains of 45%.
Sales of Cialis, the company's erectile-dysfunction drug, rose sixfold to $346.2 million, excluding sales from the joint-venture countries prior to the ICOS acquisition last January. Lilly acquired all the rights to Cialis when it bought business partner and Cialis developer ICOS. Including the joint-venture countries, worldwide sales increased 29%. U.S. sales rose 24% on higher prices and demand.
Chief Executive Sidney Taurel said the company's performance "provided the financial flexibility we sought to make appropriate investments in research and development, resulting in an unprecedented 16 new candidates entering the clinic in 2007 and the execution of several strategic in-licensing transactions."
Eli Lilly, which is set to replace Mr. Taurel in April with John Lechleiter, its president and chief operating officer, has been struggling to produce enough new drugs to replace a wave of older blockbuster drugs set to lose patent protection over the next few years. The company in December said it expects to launch six new drugs through 2011, the same year Zyprexa's patent is set to expire. Shortly thereafter, the company will face generic threats to several drugs that currently account for at least a third of sales.
A spotlight has been placed on prasugrel, an anticlotting drug that would compete with Bristol-Myers Squibb Co. and Sanofi-Aventis's Plavix. Eli Lilly, which teamed up with Daiichi-Sankyo Co. on the drug, applied Dec. 26 for Food and Drug Administration approval, and has said it hopes to start selling it by early next year.
Looking ahead, Eli Lilly confirmed its prior forecast for 2008 profit to rise as much as 14%, fueled by higher sales of drugs for depression, diabetes and erectile dysfunction. The company had also projected overall sales would grow in the mid- to high-single digits on a percentage basis, with earnings excluding items at $3.85 to $4 a share. Analysts' mean estimates were for 2008 earnings of $3.88 a share on $19.62 billion in revenue.
Shares of Eli Lilly closed Monday at $51.40. There was no premarket activity.
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