Updated from 1:38 p.m. EDT

Eli Lilly

(LLY) - Get Report

, the pharmaceutical company that makes antidepressant drug Prozac, exceeded Wall Street's earnings expectations by 2 cents on the strength of strong sales of osteoporosis drug Evista, antischizophrenia drug Zyprexa and its line of diabetes drugs.

Shares of the Indianapolis-based company rose 1 15/16, or 2.8%, to 69 3/8 in Monday afternoon trading. (Eli Lilly finished Monday up 2 9/16, or 3.8%, at 70.)

For the first quarter ended March 31, net income rose to $692.3 million, or 63 cents a diluted share, from $588.8 million, or 53 cents a share a year earlier. Those numbers exceeded the 61-cent consensus estimate of analysts polled by

First Call/Thomson Financial

.

Revenue rose to $2.54 billion from $2.25 billion a year ago. First-quarter 2000 sales results are adjusted for the fourth-quarter 1999 impact of Year 2000 buying, when consumers stocked up on drugs in anticipation of possible calamities that might make it difficult to purchase necessary medication. An estimated $91 million of sales that normally would have been realized during the first quarter of 2000 were realized during the fourth quarter of 1999.

Leonard Yaffe, an analyst at

Banc of America Securities

, expects that four drugs -- Gemzar, Actos, Zyprexa and Evista -- "incrementally will provide $800 million to $900 million in revenues this year. They will drive growth for the next two years." He rates Lilly a strong buy and his firm has done no underwriting for the company.

Sales of Evista were up 84%, to $100.5 million from $54.6 million; antischizophrenia drug Zyprexa increased 14%, to $458.1 million from $401.2 million and lung and pancreatic cancer treatment Gemzar jumped 19%, to $136 million from $114.4 million. Meanwhile, diabetes care products -- including Actos -- rose 53%, to $392 million from $256.6 million.

Actos has benefited from

Warner-Lambert's

(WLA)

voluntary withdrawal of Rezulin, announced on March 21. Rezulin had a 4% market share. As a result, from March 3 to April 7, Actos' share of new prescriptions nearly doubled, from 4.4% to 8.7%, while its share of total prescriptions rose from 3% to 5%.

Sales of antidepressant Prozac, Lilly's growth engine product of the 1990s, increased only 1%, to $596.2 million from $589.9 million. Prozac's U.S. market share in 1999 fell 4% to 26%, due to increased competition from

Pfizer's

(PFE) - Get Report

Zoloft, which is now No. 1 in new prescriptions. Warner-Lambert and Forest Pharmaceuticals also co-market Celexa, which has grabbed 11% of the market. "Most of the market share erosion should be behind us," Yaffe said.

Outside the U.S., the drug went off patent in the U.K., which accounted for a significant percentage of its international sales. As a result, international sales decreased 27% in the first quarter.

Eli Lilly also reported a net pretax gain of $213.4 million for the company's sale in December of its stake in

Kinetra

, a provide of e-commerce services to physicians, to

Healtheon/WebMD

(HLTH)

.

Results in 1999 include a $174.3 million gain from the sale of discontinued operations and a $61.4 million charge for impairment of certain manufacturing assets, as well as a $150 million charge for funding of the

Eli Lilly & Co. Foundation.