Lilly's quarterly profit tumbles, but tops Wall Street estimates

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Profit fell at Eli Lilly and Co. in the fourth quarter but not as much as Wall Street analysts were expecting.

The Indianapolis-based drugmaker announced Tuesday morning that it earned $858.2 million, or 77 cents per share, in the three months ended Dec. 31, a 27-percent plunge from the profit it earned in the same quarter a year ago. That’s because Lilly had a full quarter of generic competition for its cancer drug Gemzar, which saw its patent expire in November 2010, and also lost its U.S. and European patents for its bestseller Zyprexa in October 2011.

Lilly also withdrew its severe sepsis drug Xigris from the market late last year, after a new clinical trial showed that it delivered no benefit to patients. The withdrawal shaved 5 cents per share off Lilly’s profit.

Excluding that charge, as well as charges for layoffs Lilly engineered to reduce its costs, the company would have earned 87 cents per share in the fourth quarter, down from $1.11 per share in the same quarter last year. On that basis, analysts were expecting Lilly to earn 81 cents per share, according to a survey by Thomson Reuters.

Lilly CEO John Lechleiter said the company saw better-than-expected sales growth for key drugs—the antidepressant Cymbalta, the insulins Humulin and Humalog, the anti-iimpotence pill Cialis and the lung cancer drug Alimta. Lilly also posted strong growth in Japan, emerging markets and its animal health business.

“Lilly’s fourth quarter results not only reflect the impact of recent patent expirations, but also highlight the growth opportunities that will enable us to remain a strong and successful company in the years ahead,” Lechleiter said in a prepared statement. “Although we anticipated the sales erosion in the fourth quarter resulting from the loss of U.S. patent exclusivity for Zyprexa in late October, I am encouraged by the strong performance of many other areas of our business.”

Revenue for the quarter fell 2 percent to $6.05 billion. Analysts were expecting $5.90 billion.

For all of 2011, Lilly’s revenue rose 5 percent to $24.3 billion, compared with the previous year, but its full-year profit fell 14 percent to $4.3 billion, or $3.90 per share.

Excluding special charges, Lilly would have earned $4.41 per share in 2011, which exceeded its previous profit forecasts of $4.30 to $4.35 per share.

Lilly’s stock price peaked right after the first of the year but has fallen 6 percent since Lilly announced that its 2012 would fall more than analysts expected, to just $3.10 to $3.20 per share. Lilly reaffirmed that profit forecast in its announcement Tuesday.

Lilly’s shares rose 51 cents Tuesday morning, or 1.3 percent, to $39.76 each.


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