First-quarter profit fell at Eli Lilly and Co. as the company recorded restructuring charges due to its downsizing and higher research costs as it tries to develop new drugs to help it shrug off its looming patent expirations.
Excluding those charges, however, the Indianapolis-based drugmaker appeared to beat the expectations of Wall Street analysts.
Lilly earned $1.1 billion, or 95 cents per share, during the three months ended March 31. Those results were at least 15 percent lower than during the same quarter a year ago.
Lilly spent $76.3 million on severance as it continues its efforts to trim 5,500 workers by year’s end. It also spent another $26 million on its restructuring efforts. And two research partnerships—with Germany-based Boehringer Ingelheim and with Australia-based Acrux Ltd.—cost the company $438 million in the quarter.
Without those charges, Lilly would have earned $1.24 per share. Analysts surveyed by Thomson Reuters, who typically exclude special charges from their forecasts, were expecting $1.16 per share.
Sales at Lilly rose 6 percent to $5.84 billion, mainly on the strength of international sales. Analysts were expecting revenue of $5.7 billion.
“This revenue growth allowed us to make necessary investments in research and development to address the challenges of upcoming patent expirations," Lilly CEO John Lechleiter said in a statement. "We are on track to deliver on our 2011 headcount and expense reduction targets, as well as our goal of having at least 10 potential new medicines in Phase 3 clinical development by the end of this year.”
At the end of October, Lilly will lose U.S. and European patent protection on its bestseller, the antipsychotic Zyprexa, which had $5 billion in sales last year. Then in 2013, Lilly will lose U.S. and European patent protection on its No. 2 drug, Cymbalta.
In both cases, cheap generic copies will quickly sap most of those drugs’ sales.
Lilly lowered its full-year profit forecast by about 6 cents per share—to reflect its restructuring charges. It now expects to earn $3.86 to $4.01 per share.