Lilly 2nd-Qtr Profit Rises 18% on Prozac, Zyprexa (Update5)
Bloomberg News
July 22, 1998, 3:12 p.m. ET
Lilly 2nd-Qtr Profit Rises 18% on Prozac, Zyprexa (Update5)
(Adds Lilly comment on earnings estimates in 6th paragraph;
updates share price.)
Indianapolis, July 22 (Bloomberg) -- Eli Lilly & Co. said
second-quarter profit rose 18 percent as an advertising campaign
for its top-selling antidepressant, Prozac, boosted revenue at
the world's 10th largest drugmaker.
Net income was $491.3 million, or 44 cents a diluted share.
A year ago, Lilly had profit before charges and gain of $417
million, or 37 cents. Lilly had been expected to earn 43 cents,
according to the average of analysts polled by First Call Corp.
Sales rose 18 percent to $2.34 billion from $1.99 billion.
Lilly is introducing more drugs as Prozac, which generates
more than one-fourth of its revenue, nears the end of its patent
protection early next decade. While sales of Evista, a new drug
to prevent the bone-thinning disease known as osteoporosis, have
disappointed investors, the schizophrenia pill Zyprexa, the
cancer drug Gemzar and clot preventer ReoPro are faring better.
''The company is more than Evista,'' said Anthony Butler, an
analyst with Lehman Brothers, who has a ''buy'' rating on Lilly.
''You'll be hearing more about Gemzar and ReoPro.''
Indianapolis-based Lilly rose 1/8 to 69 in late trading.
In an afternoon conference call, Lilly's chief financial
officer Charles Golden said he was comfortable with analysts'
estimates that peg its 1998 profit at $1.89 to $1.90 a share.
Lilly earned $1.57 a share, or $1.7 billion, after gains and
charges in 1997, said James Kappel, a company spokesman.
Second-quarter sales of 10-year-old Prozac rose 12 percent
to $666.4 million with increased marketing and advertising. Lilly
began advertising the drug in popular magazines, such as Time
Warner Inc.'s Time, in July 1997, said Greg Kueterman, a Lilly
spokesman. Lilly will not disclose how much it is spending on
these ads, he said.
''They've put on a sizable marketing effort and it's paying
off,'' said Hemant Shah, an independent drug industry analyst who
rates the stock ''attractive.''
The world's leading antidepressant accounted for 28 percent
of sales in the period, down from 30 percent a year ago.
Evista
Sales of Evista, introduced in January, fell to $15 million
from $33.4 million in the first quarter. The decline was expected
as many drug wholesalers and pharmacies stock up on new products
as they start sales.
Lilly needs Evista to keep profits growing Prozac goes off
patent, said Alex Zisson, an analyst with Hambrecht & Quist, who
has a ''neutral'' rating on Lilly.
''The prescriptions seem to be going OK, but it's still not
great,'' said Zisson.
Evista had 15 percent of the U.S. market for osteoporosis
drugs in the week ended July 10, according to IMS Health Inc.,
which tracks prescription data. The biggest drug in the market,
Merck & Co.'s Fosamax, had 59 percent, according to IMS. Second-
quarter sales of Fosamax rose 30 percent to $165 million, with
$105 million in U.S. sales.
Sales of Lilly's Zyprexa, a schizophrenia drug introduced in
late 1996, more than doubled to $327.9 million. Gemzar sales more
than doubled to $85 million. Sales of ReoPro, a clot preventer
made by Centocor Inc. and marketed by Lilly, rose 69 percent to
$101 million.
Breast Cancer
Lilly is hoping to boost Evista sales by expanding its uses.
The company is testing the drug to determine whether it can help
prevent heart disease and breast cancer in women after menopause.
Further along are studies intended to show Evista can treat
osteoporosis as well as prevent it.
Evista may be suffering from unfair comparisons to Pfizer
Inc.'s impotence pill Viagra and Warner-Lambert Co.'s cholesterol-
reducer Lipitor, analysts said. Lipitor, introduced in February
1997, had $200 million in the first six months of that year.
Pfizer's Viagra, introduced this April, had $411 million in sales
in its first three months on the market.
''Every drug is supposed to be like Lipitor and Viagra,''
said Jeffrey Kraws, an analyst with Everen Securities, who has an
''outperform'' rating on Lilly. ''It's like comparing every kid
who goes out and picks up a basketball to Michael Jordan.''
In the year-ago quarter, a charge of $2.44 billion, or $2.20
a share, to write down the value of the PCS pharmacy-benefits
unit, and a gain of $296 million, or 27 cents, on the sale of its
DowElanco unit, and a litigation-related charge of 1 cent a
share, resulted in a final loss of $1.73 billion, or $1.57 a
share.
--Kerry Dooley in the Princeton newsroom (609) 279-4000/dd/rjb/dd |
