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Patent expirations up pressure on Lilly

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Eli Lilly and Co. lost patent protection on its $5-billion-a-year best-seller Zyprexa in October, plunging the company into the long-awaited zone of uncertainty that it calls “Years YZ.”

But instead of pursuing a merger, CEO John Lechleiter kept the Indianapolis-based drugmaker’s chips bet entirely on the ability of its research and development teams to launch new drugs to offset the massive revenue losses the company is now suffering.

Starting with cancer drug Gemzar in late 2010, Lilly began to lose patent protection on a string of five blockbuster drugs, ending with Cymbalta in 2013, which have accounted for nearly half of Lilly’s annual revenue. Zyprexa, an antipsychotic, was the biggest.

Lilly’s top brass no longer makes an effort to suggest that the next three years won’t be ugly for Lilly’s balance sheet: Revenue and profits will almost certainly decline. The company’s stock price, already stagnant for three years, likely will remain so.

Instead, executives now take the Paul Harvey approach, constantly telling the rest of the story. They point to how sales of Lilly’s products in animal health, emerging markets and Japan are growing rapidly, which will offset some of the losses from its blockbuster drugs.

Some, but by no means all. To help patch up the rest of the revenue hole, Lilly has been slashing staff: 5,500 workers worldwide and nearly 2,000 in Indianapolis.

After 2014, Lilly officials promise, its pipeline will have produced new medicines that will put the company back on a path to growth.

It had certainly better, because if Lilly hasn’t generated anything new by 2016 and 2017—when it will lose patent protection on its newer star drugs—Alimta, Strattera and Cialis—the company will be in serious trouble.

Lechleiter constantly touts the historic number of molecules Lilly is testing in humans. (Currently 66.) But Lilly’s pipeline production has been disappointing since at least the 2005 launch of the diabetes injection Byetta.

Lilly did launch in Europe this year the potential blockbuster Byrdueon—a sister drug to Byetta—with California-based partner Amylin Pharmaceuticals Inc. But after a legal dispute between the companies, Lilly sold the rights to Bydureon back to Amylin for current and future payments up to $1.5 billion.•

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  1. A Tilted Kilt at a water park themed hotel? Who planned that one? I guess the Dad's need something to do while the kids are on the water slides.

  2. Don't come down on the fair for offering drinks. This is a craft and certainly one that belongs in agriculture due to ingredients. And for those worrying about how much you can drink. I'm sure it's more to do with liability than anything else. They don't want people suing for being over served. If you want a buzz, do a little pre-drinking before you go.

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  4. I feel the conditions of the alcohol sales are a bit heavy handed, but you need to realize this is the first year in quite some time that beer & wine will be sold at the fair. They're starting off slowly to get a gauge on how it will perform this year - I would assume if everything goes fine that they relax some of the limits in the next year or couple of years. That said, I think requiring the consumption of alcohol to only occur in the beer tent is a bit much. That is going to be an awkward situation for those with minors - "Honey, I'm getting a beer... Ok, sure go ahead... Alright see you in just a min- half an hour."

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