Eli Lilly & Company
) reported second quarter 2013 adjusted earnings per share of
$1.16, well above the Zacks Consensus Estimate of $1.02 and 40%
above the year-ago earnings of 83 cents. The year-over-year
growth was attributable to the strong performance of several key
products, cost control and a lower tax rate.
Second quarter revenues increased 6% to $5.93 billion, beating
the Zacks Consensus Estimate of $5.84 billion. Revenues increased
despite the impact of the Zyprexa patent expiry due to the strong
performance of key products. Sales of Zyprexa, which went off
patent in the EU and the U.S. in late 2011, fell 25% in the
second quarter of 2013.
Reported earnings (including special items) increased 34% to
$1.11 per share in the second quarter of 2013.
Second quarter revenues increased 6% reflecting price
increases (6%) and higher volume (2%) that were partially offset
by unfavorable currency fluctuation (2%). The higher volume was
mainly due to the strong performance of several products that was
partially offset by the loss of exclusivity for Zyprexa, which is
facing competition from several generic players as well as the
transfer of exenatide commercial rights outside the U.S. to
U.S. revenues grew 13% to $3.4 billion mainly due to price
increases. Ex- U.S. revenues declined 2% to $2.5 billion, mainly
due to the loss of exclusivity for Zyprexa, unfavorable currency
fluctuation and lower prices.
During the second quarter, Zyprexa recorded a 25% decline in
revenues, which came in at $283.2 million. U.S. revenues fell 35%
due to lower prices. International revenues decreased 25%, mainly
due to the loss of market exclusivity in major markets apart from
Japan. Zyprexa sales in Japan were affected by the weakening
Products which performed well in the second quarter included
Cymbalta (22% growth to $1.5 billion), Cialis (up 13% to $529.4
million), Forteo (up 7% to $296.9 million) and Humulin (8% growth
to $327.5 million) among others.
Eli Lilly's Animal Health segment contributed $543.5 million
(up 6%) to revenues. Sales improved on a sequential basis. Eli
Lilly reported higher demand for Trifexis and companion animal
Effient revenues increased 24% to $137.4 million. While U.S.
revenues grew 28% to $103.8 million, due to higher prices, ex-
U.S. revenues increased 12% to $33.6 million driven by higher
Eli Lilly's adjusted operating expenses declined 1.7% to $3.2
billion. Research and development (R&D) expenses increased 1%
to $1.3 billion. Marketing, selling and administrative expenses
declined 3% to $1.9 billion reflecting the company's cost control
EPS Guidance Up
Eli Lilly raised its earnings guidance to $4.05 - $4.15 per
share on total revenues of $22.6 billion - $23.4 billion in 2013.
The company was earlier expecting earnings of $3.82 - $3.97 per
share on total revenues of $22.6 billion - $23.4 billion. The
Zacks Consensus Estimate for earnings and revenues is currently
$3.92 per share and $22.8 billion, respectively.
Eli Lilly now expects marketing, selling and administrative
expenses of $7.0 - $7.2 billion (old guidance: 7.1 - $7.4
billion). R&D expenses are now expected in the range of $5.3
- $5.5 billion (old guidance: $5.3 - $5.6 billion).
Eli Lilly's second quarter results were better than expected
with products like Cymbalta, Cialis and Humulin and the animal
health segment managing to offset the negative impact of the
genericization of Zyprexa.
Eli Lilly expects revenues to remain flat or increase by about
3.5% in 2013 despite the expected loss of U.S. 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 U.S. exclusivity on Cymbalta in December.
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 U.S.), Effient, Tradjenta and
Axiron, and the animal health segment should contribute to sales.
Emerging markets, especially China, should also drive sales.
However, revenue growth in Japan could be adversely affected by
the weak yen.
Eli Lilly is also working on controlling costs. Last quarter,
Eli Lilly had announced a restructuring initiative to help lessen
the impact of the upcoming loss of patent exclusivity for
Cymbalta and Evista, the changing consumer needs and the change
in the U.S. healthcare environment. The company is cutting down
its U.S. Bio-Medicines sales force with the main focus being on
the primary care sales force. The restructuring also reflects the
termination of the company's U.S. promotion agreement with Kowa
Pharmaceuticals for Livalo and a minor expansion in its diabetes
sales force. The company said that it will close its packaging
and distribution site in Giessen, Germany during 2014.
Eli Lilly currently carries a Zacks Rank #3 (Hold). At
present, companies like
Johnson & Johnson
) look more attractive. While Jazz is a Zacks Rank #1 (Strong
Buy) stock, Johnson & Johnson is a Zacks Rank #2 (Buy)
BRISTOL-MYERS (BMY): Free Stock Analysis
JAZZ PHARMACEUT (JAZZ): Free Stock Analysis
JOHNSON & JOHNS (JNJ): Free Stock Analysis
LILLY ELI & CO (LLY): Free Stock Analysis
To read this article on Zacks.com click here.