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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. to mention the rest of Molly's experience- she served as Communications Director for the Indianapolis Department of Public Works and also did communications for the state. She's incredibly qualified for this role and has a real love for Indianapolis and Indiana. Best of luck to her!

  2. Shall we not demand the same scrutiny for law schools, med schools, heaven forbid, business schools, etc.? How many law school grads are servers? How many business start ups fail and how many business grads get low paying jobs because there are so few high paying positions available? Why does our legislature continue to demean public schools and give taxpayer dollars to charters and private schools, ($171 million last year), rather than investing in our community schools? We are on a course of disaster regarding our public school attitudes unless we change our thinking in a short time.

  3. I agree with the other reader's comment about the chunky tomato soup. I found myself wanting a breadstick to dip into it. It tasted more like a marinara sauce; I couldn't eat it as a soup. In general, I liked the place... but doubt that I'll frequent it once the novelty wears off.

  4. The Indiana toll road used to have some of the cleanest bathrooms you could find on the road. After the lease they went downhill quickly. While not the grossest you'll see, they hover a bit below average. Am not sure if this is indicative of the entire deal or merely a portion of it. But the goals of anyone taking over the lease will always be at odds. The fewer repairs they make, the more money they earn since they have a virtual monopoly on travel from Cleveland to Chicago. So they only comply to satisfy the rules. It's hard to hand public works over to private enterprise. The incentives are misaligned. In true competition, you'd have multiple roads, each build by different companies motivated to make theirs more attractive. Working to attract customers is very different than working to maximize profit on people who have no choice but to choose your road. Of course, we all know two roads would be even more ridiculous.

  5. The State is in a perfect position. The consortium overpaid for leasing the toll road. Good for the State. The money they paid is being used across the State to upgrade roads and bridges and employ people at at time most of the country is scrambling to fund basic repairs. Good for the State. Indiana taxpayers are no longer subsidizing the toll roads to the tune of millions a year as we had for the last 20 years because the legislature did not have the guts to raise tolls. Good for the State. If the consortium fails, they either find another operator, acceptable to the State, to buy them out or the road gets turned back over to the State and we keep the Billions. Good for the State. Pat Bauer is no longer the Majority or Minority Leader of the House. Good for the State. Anyway you look at this, the State received billions of dollars for an assett the taxpayers were subsidizing, the State does not have to pay to maintain the road for 70 years. I am having trouble seeing the downside.

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