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Eli Lilly's shares slip after it forecasts mixed profits in coming years

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Investors dumped stock in Eli Lilly and Co. this morning after the company issued a long-term forecast that suggested its profit could tumble after patents expire on several of its bestselling drugs.

Lilly shares fell as much as 4.9 percent, to $34.76 each,  before recovering partially in late-morning trading.

The Indianapolis-based drugmaker expects to post profit of more than $3 billion each year from 2012 to 2014, according to Chief Financial Officer Derica Rice. Those are the years in which Lilly’s blockbusters Zyprexa, Cymbalta, Gemzar, Humalog and Evista could face competition from cheaper generic drugs.

But profit this year is on pace to exceed $4.5 billion and could approach $5 billion.

Lilly spokesman Phil Johnson emphasized that the $3 billion figure is a “minimum threshold.”

Lilly said it expects its earnings per share to grow in the double-digit range through 2011. The drugmaker expects to earn $4.65 to $4.85 per share in 2010, excluding the impact of health care reform and other items. On average, analysts expect income of $4.74 per share, according to a survey by Thomson Reuters.

Lilly said it would launch two new drugs each year beginning in 2013. The company has more than 60 molecules in clinical development, including 25 in mid- and late-stage development.

But since the blockbusters that will lose patent protection make up more than half of Lilly’s current revenue, investors and analysts do not think Lilly’s pipeline can make up the losses.

“Although Lilly has a growing mid-stage pipeline, these assets remain several years away from the market, leaving the company in the difficult position of needing to heavily invest in its next wave of product opportunities at a time of significant erosion,” Chris Schott, a JPMorgan Securities analyst, wrote to clients today, according to Bloomberg News.

In August, Lilly debuted blood thinner Effient in the United States, the company's first new product launch since 2005.

Lilly's fastest-growing product is Alimta, which saw its sales climb 47 percent in the third quarter. Lilly said Thursday it plans to pursue additional indications for the cancer drug, either as monotherapy, or in combination with other oncolytics.

Earlier this year, the Indianapolis company said it would cut annual costs by $1 billion by 2011 by trimming 5,500 workers (13.5 percent of its work force) and producing new drugs faster. Today, Lilly said its U.S. sales force would be 25 percent smaller in 2010 than it was at the beginning of 2009.

Lilly CEO John Lechleiter opened the investor meeting with a presentation meant to convince investors that Lilly’s high-risk strategy is the right one to take.

“We want you to leave this meeting sharing our confidence in our future prospect,” he said.

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  • Zyprexa litigation

    Eli Lilly sells a drug (Zyprexa) that can cause diabetes and then turn a profit on the drugs that treat the condition that they may have caused in the first place!

    Eli Lilly has made $38 billion on Zyprexa and it was way oversold and caused diabetes and in some cases sudden death.
    Eli Lilly has received a huge criminal fine over their Zyprexa cash cow,add it all up comes to $4.6 billion, in Zyprexa settlements,fines,litigation.

    Did you know that Lilly made $ billions last year on diabetic meds, Actos,Humulin and Byetta?

    They sell a drug that can cause diabetes and then turn a profit on the drugs that treat the condition that they may have caused in the first place!

    ----
    Daniel Haszard Zyprexa whistle-blower

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  1. In reality, Lilly is maintaining profit by cutting costs such as Indiana/US citizen IT workers by a significant amount with their Tata Indian consulting connection, increasing Indian H1B's at Lillys Indiana locations significantly and offshoring to India high paying Indiana jobs to cut costs and increase profit at the expense of U.S. workers.

  2. I think perhaps there is legal precedence here in that the laws were intended for family farms, not pig processing plants on a huge scale. There has to be a way to squash this judges judgment and overrule her dumb judgement. Perhaps she should be required to live in one of those neighbors houses for a month next to the farm to see how she likes it. She is there to protect the people, not the corporations.

  3. http://www.omafra.gov.on.ca/english/engineer/facts/03-111.htm Corporate farms are not farms, they are indeed factories on a huge scale. The amount of waste and unhealthy smells are environmentally unsafe. If they want to do this, they should be forced to buy a boundary around their farm at a premium price to the homeowners and landowners that have to eat, sleep, and live in a cesspool of pig smells. Imagine living in a house that smells like a restroom all the time. Does the state really believe they should take the side of these corporate farms and not protect Indiana citizens. Perhaps justifiable they should force all the management of the farms to live on the farm itself and not live probably far away from there. Would be interesting to investigate the housing locations of those working at and managing the corporate farms.

  4. downtown in the same area as O'malia's. 350 E New York. Not sure that another one could survive. I agree a Target is needed d'town. Downtown Philly even had a 3 story Kmart for its downtown residents.

  5. Indy-area residents... most of you have no idea how AMAZING Aurelio's is. South of Chicago was a cool pizza place... but it pales in comparison to the heavenly thin crust Aurelio's pizza. Their deep dish is pretty good too. My waistline is expanding just thinking about this!

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