Lilly Sees 'Independent Cause' as Rivals Merge: Bloomberg Forum
Bloomberg News
February 6, 1999, 10:07 a.m. ET
Lilly Sees 'Independent Cause' as Rivals Merge: Bloomberg Forum
Indianapolis, Feb. 6 (Bloomberg) -- Eli Lilly & Co., maker
of Prozac, the world's best-selling depression drug, said it
isn't seeking a merger partner even as a wave of consolidation
hits rival drugmakers, such as Hoechst AG, in Europe.
Instead, Indianapolis-based Lilly said it will look to its
own laboratories and pacts with biotechnology companies for new
drugs needed to offset the loss of patent protection on Prozac.
Cheaper generic versions of Prozac, which had $2.8 billion in
1998 sales, will hit the market sometime after 2001.
Though the 1998 introduction of its new bone-protecting drug
Evista was a disappointment, Lilly had some successes last year.
Sales of schizophrenia drug Zyprexa almost doubled to
$1.4 billion in 1998. Last year, Lilly also entered agreements
that could give it a potential blockbuster diabetes drug and a
rival to Pfizer Inc.'s anti-impotence pill, Viagra.
''Most of the mergers we've seen are driven by weakness in
the pipeline,'' Sidney Taurel, Lilly's chief executive, chairman
and president, told the Bloomberg Forum. ''Pursuing our
independent cause is ... the best way to go.''
In January, Lilly shares rose 8.9 percent, more than double
the 4.2 percent return of the Standard & Poor's 500 Index.
Lilly rose after a victory in its legal battle against Barr
Laboratories Inc., which intends to make a generic version of
Prozac. Barr agreed to drop some claims against Lilly, though it
will appeal a federal court's rulings for Lilly on other claims.
That process will take at least a year.
Evista Promise
Lilly stock also has been boosted by studies that indicate
Evista, its drug to prevent thinning of bones in older women,
also may help prevent breast cancer.
The U.S. Food and Drug Administration late last year said
Lilly can include some information about this research on the
drug's label. Lilly is continuing studies that someday might
persuade the FDA to add breast-cancer prevention to Evista's
approved uses. Sales of Evista might reach $1 billion eventually
if the FDA approved such a label, analysts have said.
Like Prozac, Evista and Zyprexa are products of Lilly's own
research. To get more potential products, Lilly also has
collaborations with biotechnology companies and drugmakers. In
the next year, Lilly could begin sales of a new diabetes drug,
developed by Takeda Chemical Industries, that could be a rival to
Warner-Lambert Co.'s Rezulin.
Sales of Rezulin rose 78 percent to $748 million in 1998
even as more warnings were added to the drug's label about the
potential to damage the liver.
Rezulin is part of a new class of drugs, the glitazones,
which can help some diabetics manage their blood-sugar levels
without insulin injections. Analysts have said this class of
drugs could produce blockbusters with $1 billion in annual sales,
especially if the newer pills have fewer side effects.
Lilly also is working on a rival to Pfizer's Viagra, which
had the best introduction ever for a new drug, through a
partnership with Icos Corp. Sales of Viagra, introduced in April,
were $788 million for the year.
In contrast, European drugmakers are merging at least partly
because they lack these kinds of blockbusters. Three combinations
were announced late last year, including the planned union of
Germany's Hoechst AG and France's Rhone-Poulenc SA.
Combined, sales of the two companies' biggest drugs,
Hoechst's heart medicine Cardizem and Rhone-Poulenc's cancer drug
Lovenox, are about $1.4 billion. That's half of the 1998 sales of
Lilly's Prozac and about the same as sales of its Zyprexa.
--Kerry Dooley in the Princeton newsroom (609) 279-4000/jcn
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