IBJNews

Lilly's insulin dip concerns analysts

Back to TopCommentsE-mailPrintBookmark and Share

Eli Lilly and Co. suffered a tough week on the stock market, in part because of a disturbing bit of news buried in its third-quarter earnings report: Lilly’s insulin sales are down.

The Indianapolis-based drugmaker is relying heavily on sustaining $3.5 billion in annual sales of its Humulin and Humalog insulins to carry it through its current string of patent expirations on other drugs—at least until it can launch new drugs to pick up the slack.

But in the third quarter, sales of Humalog fell 3 percent and sales of Humulin fell 5 percent, compared with the same quarter a year ago. Lilly officials said they lost share in the insulin market in the first half of the year, although the situation has stabilized now.

Still, those problems sparked a lot of questions from Wall Street analysts during a conference call Oct. 24. And Lilly’s share price slipped 3 percent from its close on Oct. 23 until the end of the week. The stock closed Friday at $50.26 per share.

“The Humalog and Humulin sales were light relative to our expectations,” noted Goldman Sachs analyst Jami Rubin during the conference call with Lilly executives. She added, “Insulin scripts have been strong. So what’s happening with the pricing environment?”

Both Humalog and Humulin suffered because they were removed from the formulary of a large third-party payer this year, Lilly reported. Also, the contract between Lilly and Wal-Mart to use Humulin for Wal-Mart’s ReliOn brand was terminated.

But in addition to those things, Lilly officials said, third-party payers are more aggressively threatening to remove or de-emphasize each drugmaker’s insulins from their formularies if the drugmakers don’t offer better prices.

“The negotiations that we basically have with some of the major payers are more difficult. And we have seen their leverage increase as they have the ability to be able to move share as they restrict access to products given the contracts that they're able to establish,” said Enrique Conterno, president of Lilly’s diabetes unit. “So, yes, there is some pressure.”

And in addition to that, doctors are prescribing insulin later to diabetics because they first try to control blood sugar with a relatively new class of oral medicines called DPP-4s, such as Januvia and Tradjenta, and through injectible medicines known as GLP-1s, such as Byetta, Bydureon and Victoza.

“To some extent, that is delaying the initiation on insulin and some of the earlier use of insulin,” Conterno said. “We believe that some of these impacts are more short term. I think we saw similar impacts when, for example, metformin was introduced in the U.S. many years ago. So my sense is that we will continue to see long-term insulin growth rates that are much more aligned with historical rates. But we are seeing some depressed rates now.”

Lilly’s overall results in the third-quarter were “ho-hum,” according to one analyst. The company lowered its full-year profit forecast by 4 cents per share.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
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
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. I am a Lyft driver who is a licensed CDL professional driver. ALL Lyft drivers take pride in providing quality service to the Indianapolis and surrounding areas, and we take the safety of our passengers and the public seriously.(passengers are required to put seat belts on when they get in our cars) We do go through background checks, driving records are checked as are the personal cars we drive, (these are OUR private cars we use) Unlike taxi cabs and their drivers Lyft (and yes Uber) provide passengers with a clean car inside and out, a friendly and courteous driver, and who is dressed appropriately and is groomed appropriately. I go so far as to offer mints, candy and/or small bottle of water to the my customers. It's a mutual respect between driver and passenger. With Best Regards

  2. to be the big fish in the little pond of IRL midwest racin' when yer up against Racin' Gardner

  3. In the first sentance "As a resident of one of these new Carmel Apartments the issue the local governments need to discuss are build quality & price." need a way to edit

  4. As a resident of one of these new Carmel Apartments the issue the local governments need to discuss is build quality & price. First none of these places is worth $1100 for a one bedroom. Downtown Carmel or Keystone at the Crossing in Indy. It doesn't matter. All require you to get in your car to get just about anywhere you need to go. I'm in one of the Carmel apartments now where after just 2.5 short years one of the kitchen cabinet doors is crooked and lawn and property maintenance seems to be lacking my old Indianapolis apartment which cost $300 less. This is one of the new star apartments. As they keep building throughout the area "deals" will start popping up creating shoppers. If your property is falling apart after year 3 what will it look like after year 5 or 10??? Why would one stay here if they could move to a new Broad Ripple in 2 to 3 years or another part of the Far Northside?? The complexes aren't going to let the "poor" move in without local permission so that's not that problem, but it the occupancy rate drops suddenly because the "Young" people moved back to Indy then look out.

  5. Why are you so concerned about Ace hardware? I don't understand why anyone goes there! Every time ive gone in the past, they don't have what I need and I end up going to the big box stores. I understand the service aspect and that they try to be helpful but if they are going to survive I think they might need to carry more specialty parts.

ADVERTISEMENT