Eli Lilly Swings to Loss on Zyprexa Probe Charges
By MIKE BARRIS
OCTOBER 23, 2008, 7:55 A.M. ET
Eli Lilly & Co. swung to a third-quarter net loss, as charges related to government investigations into the pharmaceutical company's marketing of antipsychotic drug Zyprexa offset strong sales of its Cymbalta antidepressant.
The company also raised its 2008 forecast for earnings before items.
Lilly reported a net loss of $465.6 million, or 43 cents a share, compared with net income of $926.3 million, or 85 cents a share, a year earlier. Excluding a $1.48 billion charge for the Zyprexa probes and other charges in the quarter and prior-year insurance recoveries, the company would have reported that earnings rose to $1.04 a share from 91 cents a share.
Revenue rose 14% to $5.21 billion from $4.59 billion, with the weaker dollar adding 4 percentage points. On average, analysts surveyed by Thomson Reuters had expected earnings of $1.02 a share on revenue of $5.09 billion.
Gross margin rose to 77.8% from 77% amid price increases for the company's products.
Insurers, pension funds and unions have been among those seeking compensation from Lilly, accusing it of concealing Zyprexa's tendency to cause weight gain and diabetes and of marketing the drug for unapproved uses. Lilly said Tuesday that it has started a program that aims to ensure the company's marketing and promotional practices comply with laws and regulations.
In the quarter, Zyprexa sales rose 2%, with U.S. sales rising 3% and international sales rising 1%.
Cymbalta sales rose 40%, up 34% in the U.S. and 73% internationally. Sales of erectile-dysfunction drug Cialis rose 21%, with 20% growth in the U.S. and 22% internationally.
Lilly 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. Early this month, it agreed to acquire ImClone Systems Inc., beating out Bristol-Myers Squibb Co. with a $6.5 billion bid. The deal, expected to close by early 2009, will increase Lilly's presence in selling cancer treatments and developing biotech drugs.
For 2008, Lilly now forecasts earnings of $3.97 to $4.02 a share, on revenue growth in the high-single to low double digits. Previously, Lilly forecast $3.85 to $4 a share. Analysts were looking for $3.95 a share on revenue of $20.55 billion.
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