Eli Lilly & Company
) reported first quarter 2013 adjusted earnings per share of
$1.14, well above the Zacks Consensus Estimate of $1.05 and 24%
above the year-ago earnings of 92 cents. The year-over-year
growth was attributable to the strong performance of several key
products and regions that were partially offset by the
genericization of Zyprexa, a weaker Japanese yen and a slowdown
in some parts of the animal health business. Earnings also
benefited from a lower tax rate.
First quarter revenues remained flat at $5.60 billion.
However, revenues were slightly below the Zacks Consensus
Estimate of $5.67 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 first quarter of
Reported earnings (including special items) increased 56% to
$1.42 per share in the first quarter of 2013.
First quarter revenues remained flat with a 4% price increase
being offset by lower volume (3%) and unfavorable currency
fluctuation (1%). The lower volume was mainly due to the loss of
exclusivity for Zyprexa, which is facing competition from several
US revenues grew 2% to $3.1 billion mainly due to price
increases that were partially offset by the loss of market
exclusivity of Zyprexa. Ex-US revenues declined 2% to $2.5
billion, mainly due to the loss of exclusivity for Zyprexa,
unfavorable currency fluctuation and lower prices.
During the first quarter, Zyprexa recorded a 49% decline in
revenues, which came in at $284.8 million. US revenues plummeted
84% due to lower prices. International revenues decreased 30%,
mainly due to the loss of market exclusivity in major markets
apart from Japan. Zyprexa sales in Japan were affected by the
Products which performed well in the first quarter included
Cymbalta (19% growth to $1.3 billion), Cialis (up 11% to $515
million), and Humalog (7% growth to $632.7 million).
Eli Lilly's Animal Health segment contributed $499.1 million
(up 2%) to revenues. Sales declined on a sequential basis. Eli
Lilly reported lower demand for food animal products.
Effient revenues remained flat at $115.9 million. While US
revenues declined 7% to $83.7 million, due to lower prices and
unfavorable wholesaler buying pattern, ex-US revenues increased
24% to $32.2 million driven by higher demand.
Eli Lilly's adjusted operating expenses remained flat at $3
billion. Research and development (R&D) expenses increased
17% to $1.3 billion due to higher late-stage trial costs.
Marketing, selling and administrative expenses declined 11% to
$1.7 billion reflecting the company's cost control efforts.
Eli Lilly continues to expect earnings of $3.82 - $3.97 per
share on total revenues of $22.6 billion - $23.4 billion in 2013.
The Zacks Consensus Estimate for earnings and revenues currently
stands at $3.90 per share and $23 billion, respectively.
While Eli Lilly expects marketing, selling and administrative
expenses of $7.1 - $7.4 billion, R&D expenses are now
expected in the range of $5.3 - $5.6 billion (old guidance: $5.2
- $5.5 billion).
Eli Lilly's first quarter results were better than expected
with products like Cymbalta, Cialis and Humalog managing to
offset a part of the negative impact of the genericization of
Zyprexa and the weakness in the animal health segment.
Eli Lilly 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 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 US), 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 currently carries a Zacks Rank #3 (Hold). Companies
that currently look attractive include
Catalyst Pharmaceuticals Partners Inc.
Onyx Pharmaceuticals, Inc.
). All three are Zacks Rank #1 (Strong Buy) stocks.
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