Eli Lilly & Company
) reported fourth quarter 2012 adjusted earnings per share of 85
cents, well above the Zacks Consensus Estimate of 78 cents but
2.0% below the year-ago earnings of 87 cents. The year-over-year
decline was attributable to lower revenues in the fourth quarter
Fourth quarter revenues declined 1% to $5.96 billion. However,
revenues were above the Zacks Consensus Estimate of $5.88
billion. The Zyprexa patent expiry continued to impact revenues.
Sales of Zyprexa, which went off patent in the EU and the US in
late 2011, plummeted 49% in the fourth quarter of 2012. Currency
fluctuation impacted revenues negatively by 1%.
Reported earnings (including special items) declined 4% to 74
cents per share in the fourth quarter of 2012.
Meanwhile, Eli Lilly reported 2012 earnings of $3.39 per
share, down 23%, and within the guidance range of $3.30 - $3.40
per share. Revenues declined 7% to $22.6 billion. Both earnings
and revenues exceeded the Zacks Consensus Estimate of $3.33 per
share and $22.5 billion, respectively.
Fourth quarter revenues declined mainly due to a 3% decrease
in volume. A 2% price increase partially mitigated the effect of
lower volume and unfavorable currency fluctuation. The lower
volume was mainly due to the loss of exclusivity for Zyprexa,
which is facing competition from generic players like
US revenues declined 2% to $3.23 billion mainly due to the
loss of market exclusivity of Zyprexa. Ex-US revenues declined 1%
to $2.73 billion, mainly due to the loss of exclusivity for
Zyprexa, unfavorable currency fluctuation and lower prices.
During the fourth quarter, Zyprexa recorded a 49% decline in
revenues, which came in at $384.8 million. US revenues plummeted
80% due to lower prices. International revenues decreased 29%,
mainly due to the loss of market exclusivity in major markets
apart from Japan.
Products which performed well in the fourth quarter included
Cymbalta (20% growth to $1.4 billion), Alimta (7% growth to
$684.3 million), and Forteo (20% growth to $314.6 million).
Both Humulin and Humalog sales in the US continued to be
affected by their removal from a large formulary in 2012.
Eli Lilly's Animal Health segment contributed $554.1 million
(up 18%) to revenues. Higher demand for companion animal products
drove sales in the US.
Effient posted revenues of $120.6 million, up 33%. While US
revenues increased 31% to $87.8 million, driven by higher demand
and higher prices, ex-US revenues increased 37% to $32.8 million
driven by higher demand.
Eli Lilly's adjusted operating expenses decreased 1% during
the quarter. Research and development (R&D) expenses
increased 8% to $1.46 billion due to higher late-stage trial
costs. Marketing, selling and administrative expenses declined 7%
to $1.98 billion mainly due to lower marketing costs.
Guidance Adjusted to Reflect Tax Benefit
Eli Lilly, which had provided its 2013 guidance earlier this
year, raised its earnings outlook by 7 cents to reflect the
expected benefit from the delayed enactment of the American
Taxpayer Relief Act of 2012. As a result, Eli Lilly now expects
2013 earnings of $3.82 - $3.97 per share (old guidance: $3.75 -
$3.90 per share). The company will recognize the tax benefit in
the first quarter. Eli Lilly expects total revenues of $22.6
billion - $23.4 billion in 2013. The Zacks Consensus Estimate for
earnings and revenues currently stands at $3.84 per share and
$23.0 billion, respectively.
Eli Lilly will continue working on containing costs. While the
company expects marketing, selling and administrative expenses of
$7.1 - $7.4 billion, R&D expenses are expected in the range
of $5.2 - $5.5 billion. Eli Lilly has about 13 candidates in
Eli Lilly's fourth quarter results were better than expected
with products like Cymbalta, Forteo, Alimta, Effient and the
animal health portfolio managing to offset a part of the negative
impact of the genericization of Zyprexa.
The company expects revenues to remain flat or increase by
about 3.5% in 2013 despite the expected loss of US exclusivity
for Cymbalta later this year. Eli Lilly, which is currently going
through a patent cliff with the loss of exclusivity on Zyprexa,
will be losing US exclusivity on Cymbalta in Dec. While revenues
will be impacted by the loss of Cymbalta exclusivity and the loss
of the 15% royalty on exenatide sales, products like Humalog,
Humulin, Cialis, Strattera, Forteo, Alimta, Cymbalta (outside the
US), Effient, Tradjenta and Axiron, and the animal health segment
should contribute to sales. Japan and emerging markets,
especially China, should also drive sales.
Meanwhile, share buybacks and cost control should help Eli
Lilly achieve its 2013 guidance despite the presence of generic
competition for key products.
Eli Lilly currently carries a Zacks Rank #2 (Buy). Other
large-cap pharma stocks like
) also carry a Zacks Rank #2.
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