Ely Lilly Posts Profit Beat

Sales rise 6% from a year ago.
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Updated from 7:04 a.m. EST

Ely Lilly

(LLY) - Get Report

swung to a better-than-expected fourth-quarter profit as sales were boosted by a handful of newer drugs.

Lilly earned $700.6 million, or 64 cents a share, in the quarter, compared with a loss of $2.4 million, or nothing a share, a year ago. The year-ago quarter included a tax charge related to repatriated overseas earnings.

Excluding items, earnings rose 15% from a year ago to $871.6 million, or 80 cents a share, 2 cents better than estimates.

Sales rose 6% from a year ago to $3.88 billion. Analysts were expecting $3.90 billion. Lilly's stock was up 9 cents to $57.26 at midday.

Lilly said it expects to earn 73 cents to 75 cents a share in the first quarter, excluding one-time items. Analysts polled by Thomson First Call are forecasting 75 cents a share. For 2006, the company sees earnings of $3.10 to $3.20 a share, before items, while the consensus estimate is $3.13 a share.

Unlike many Big Pharma companies who experienced a difficult 2005 and face an uncertain or unpleasant 2006, Lilly is benefiting from the absence of generic competition to major products for the rest of the decade.

Lilly won a federal court case in April against three generic drug ompanies seeking to break the U.S. patent on Zyprexa, a schizophrenia reatment. The patent remains in force until 2011 for Lilly's biggest product.

Zyprexa's sales slipped in 2005, falling 5% to $4.2 billion, or 29% of corporate revenue. Zyprexa's sales continue to slump in the U.S. -- down 16% -- because of increased competition, but sales outside the U.S. rose 9%. Zyprexa is one of five Lilly drugs with more than $1 billion in sales.

The cancer treatment Gemzar posted a 10% gain last year to $1.3 billion. U.S. sales were flat, but international sales rose 13%. Sales of Humalog insulin rose 9% to $1.2 billion, and sales of Humulin insulin rose 1% to $1 billion. The osteoporosis drug Evista posted a 2% gain in worldwide sales to $1.04 billion.

Among big drugs not affected by generic competition, Strattera, for attention deficit hyperactivity disorder, produced the weakest results. Yearly sales fell 17% to $552 million. The company attributed the decline to reduced demand, as well as a restructuring of its arrangements with U.S. wholesalers during the first half of last year. In the last 13 months, Strattera's label has been strengthened to warn about potential liver damage and reports of suicidal thinking among children and adolescents.

This year, Lilly expects to submit to regulators applications for Arxxant, a treatment for eye damage caused by diabetes, for an expansion of Evista to reduce the risk of breast cancer in postmenopausal women and for an expansion of Cymbalta to treat generalized anxiety disorder.

In August 2004, the Food and Drug Administration approved Cymbalta for treating depression and the next month cleared the drug for treating nerve pain caused by diabetes. Cymbalta recorded sales of $679.7 million last year vs. $93.9 million in 2004. Analysts say it's a crucial element for Lilly's long-term growth.

Alimta, a lung cancer treatment approved in 2004, posted full-year sales of $463.2 million, compared with $142.6 million in 2004. Sales of Forteo for osteoporosis rose 62% to $389.3 million in 2005.