Friday, October 21, 2005

Lilly's quarterly profit climbs 5% Sales of newer drugs, rebounding Zyprexa power 10 percent surge in revenues

Lilly's quarterly profit climbs 5% Sales of newer drugs, rebounding Zyprexa power 10 percent surge in revenues
October 21, 2005
With its top drug Zyprexa eking out a sales gain for the first time in five quarters, Eli Lilly and Co. on Thursday reported solid third-quarter financial results that included a 10 percent jump in sales and 5 percent rise in profit from a year ago.
The drug Lilly relies on for almost a third of its revenue, the antipsychotic Zyprexa, posted a 1 percent sales uptick, aided by a major new study that found the drug has advantages over its rivals.  It was the first sales gain since the second quarter of 2004 for Zyprexa, which faces vigorous new competition and charges that it causes weight gain.  Lilly's jump in earnings to $794 million, or 73 cents a share, topped the 71-cent expectation of stock analysts polled by Thomson Financial.  The Indianapolis drug maker also reconfirmed its earnings guidance for the year of $2.80 to $2.86 a share, excluding $1 billion set aside for settlements of Zyprexa lawsuits. That would be about 10 percent growth over last year's adjusted profit.
Lilly's healthy financial performance in the quarter comes as many of its competitors report unimpressive or disappointing sales and profit numbers and scaled-back earnings expectations.
The world's largest drug maker, Pfizer Inc., on Thursday reported drops of 52 percent in profit and 5 percent in sales in the second quarter. The New York drug maker also withdrew its 2006 financial outlook because of uncertainty.  And Illinois-based Baxter International Inc., a maker of treatments for kidney disease, cancer and other disorders, said Thursday its third-quarter profit dropped 58 percent because of tax charges.
Among publicly traded drug companies, "by and large, it really feels like the best that most can achieve today is to hit their targets and not screw up," wrote Stephen D. Simpson, a contributor to the Motley Fool financial Web site.
Lilly Chief Executive Sidney Taurel credited Lilly's growth in large part to eight products Lilly has put on the market since 2001. The newcomers contributed 18 percent, or $652 million, of Lilly's sales last quarter, compared with 12 percent a year ago.
"These achievements reinforce the continued strength of our product portfolio and position us well to continue to lead the industry in innovative new treatments," Taurel said in a statement.
Drugs that did well in the quarter included the fast-acting insulin Humalog, with sales up 16 percent, and the cancer compound Gemzar, up 7 percent.
Zyprexa posted just over $1 billion in sales, with a 10 percent decline in the United States and a 14 percent gain in international markets. The drug got a boost from a federally funded study that came out last month and showed schizophrenia patients on Zyprexa were hospitalized less and tended to stay on the medicine longer than patients using rival medications.
The study "has been a huge shot in the arm for us," Lilly President John C. Lechleiter told stock analysts and others in a teleconference.
Laggards in the quarter were the attention deficit drug Strattera, with sales down 14 percent, and the antidepressant Prozac, down 20 percent.
Strattera, which came on the market two years ago, was hurt by the addition of a black-box warning to its label that notes the drug can cause suicidal thoughts among some children.  Prozac, which lost its U.S. patent in 2001 and since has faced cheaper-priced generic competition that captured most of its sales, made up only about 3 percent of Lilly's total sales of $3.6 billion in the quarter.
The male impotence drug Cialis, marketed under a joint venture with Icos Corp., had sales of $195 million, a 27 percent increase from a year ago.  For the first nine months this year, Lilly's sales are 5 percent higher than a year ago, to $10.76 billion, while earnings are up 29 percent, to $1.28 billion.  Lilly's stock price fell 35 cents Thursday to close at $51.25.
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