Analysts demand news on next Lilly blockbuster

Back to TopCommentsE-mailPrintBookmark and Share

Eli Lilly and Co. spends a lot of time these days telling the rest of the story—how well it’s doing in areas not connected to highly lucrative drugs about to see their patents expire. But for the most part, investors and analysts just want to know when the next blockbuster will be coming.

That was certainly the case Monday morning, when analysts peppered Lilly’s R&D chief Jan Lundberg with questions about Lilly’s experimental Alzheimer’s medicine, solanezumab.

Lundberg fielded four questions about the drug during a one-hour conference call. At one point he chuckled and replied, “I appreciate your interest in solanezumab. It certainly could be a tremendous agent for patients with Alzheimer’s.”

Indeed, as no existing medicine does more than temporarily mask the symptoms of Alzheimer's, a drug that actually halts progression of the disease would be a monumental breakthrough. Some analysts have pegged the sales potential at $5 billion a year.

Only a drug of that magnitude could really offset the massive revenue Lilly will lose to patent expirations in the next three years. Three key drugs—Zyprexa, Cymbalta and Evista—will face competition from generic copies between now and 2014. Lilly will lose the lion’s share of those drugs' sales, which last year was a combined $9.5 billion.

In addition, Lilly lost patent protection late last year on its cancer drug Gemzar, which brought in another $1 billion a year.

Linda Bannister, a pharmaceutical analyst at Edward Jones in St. Louis, cited Lilly’s Alzheimer’s program and an experimental cholesterol drug, known as a CETP inhibitor, as its best shots at new blockbusters.

“Those are the things that really come to mind that could be game changers, if successful,” she said.

But both are high-risk ventures. Lilly was embarrassed late last summer when another experimental Alzheimer’s drug failed spectacularly in a late-stage clinical trial, actually worsening some patients’ condition. Lilly halted the trial of that medicine, semagacestat.

Lundberg said Monday that Lilly was seeing better safety results in its clinical trials of solanezumab.

“What I can say is that the safety profile so far in these trials looks better than for semagacestat, and there are actually less patients that have stopped the trials because of safety issues,” Lundberg said.

Lilly expects final data from its clinical trials to be available in mid-2012.

Even so, the company has no chance of bringing new drugs to market in time to substantially offset its looming revenue loss over the next few years.

“That’s clearly not going to be the case,” Bannister said, adding, “It’s going to be a little too late.”

Instead, Lilly is letting its profit drop—by as much as 12 percent this year. And many analysts don’t expect profits to grow anytime before 2015.

In the meantime, the company is trying to woo investors by talking about its rapid growth rates in Japan and China, as well as in its animal health business. Those three areas experienced first-quarter sale growth of 34 percent, 23 percent and 25 percent, respectively.

Those are impressive rates. But combined sales in those business areas were $3.4 billion last year—about one-seventh of Lilly’s overall revenue.

“Our clients are interested in the emerging markets story. We believe that could be an engine for growth,” Bannister said. “But that’s more of a long-term story. It’s really the near-term challenges that everyone is focused on.”


Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. With Pence running the ship good luck with a new government building on the site. He does everything on the cheap except unnecessary roads line a new beltway( like we need that). Things like state of the art office buildings and light rail will never be seen as an asset to these types. They don't get that these are the things that help a city prosper.

  2. Does the $100,000,000,000 include salaries for members of Congress?

  3. "But that doesn't change how the piece plays to most of the people who will see it." If it stands out so little during the day as you seem to suggest maybe most of the people who actually see it will be those present when it is dark enough to experience its full effects.

  4. That's the mentality of most retail marketers. In this case Leo was asked to build the brand. HHG then had a bad sales quarter and rather than stay the course, now want to go back to the schlock that Zimmerman provides (at a considerable cut in price.) And while HHG salesmen are, by far, the pushiest salesmen I have ever experienced, I believe they are NOT paid on commission. But that doesn't mean they aren't trained to be aggressive.

  5. The reason HHG's sales team hits you from the moment you walk through the door is the same reason car salesmen do the same thing: Commission. HHG's folks are paid by commission they and need to hit sales targets or get cut, while BB does not. The sales figures are aggressive, so turnover rate is high. Electronics are the largest commission earners along with non-needed warranties, service plans etc, known in the industry as 'cheese'. The wholesale base price is listed on the cryptic price tag in the string of numbers near the bar code. Know how to decipher it and you get things at cost, with little to no commission to the sales persons. Whether or not this is fair, is more of a moral question than a financial one.