Two wins to bring Lilly modest sales

Back to TopCommentsE-mailPrintBookmark and Share

Finally, some new revenue. Eli Lilly and Co. will enjoy modest new sales later this year after U.S. regulators approved a new diabetes drug developed by a partner company, and another firm nears approval on a drug that will produce royalties for the Indianapolis-based drugmaker.

The Type 2 diabetes drug, Tradjenta, approved May 2 by the Food and Drug Administration, is expected to ramp up to worldwide sales of $600 million by 2015, according to an estimate by Citi analyst John Boris.

The approval marks the fourth new drug approval won by Lilly in the past two years, following a nearly five-year dry spell. The other new drugs—which include the blood-thinner Effient, the statin Livalo and the testosterone booster Axiron—all have paltry sales so far.

Lilly would pocket only about $247 million of Tradjenta's annual sales, according to Boris, with the rest going to Germany-based Boehringer Ingelheim GmbH, which developed the drug. Tradjenta sales will be dampened by two similar drugs already on the market, Merck & Co. Inc.’s Januvia and Onglyza, made by Bristol-Myers Squibb Co. and AstraZeneca plc.

Lilly and Boehringer signed a co-development deal in January involving four diabetes drugs, with an option for a fifth. Tradjenta, chemically known as linagliptin, will be the first of those to hit the market.

"Our alliance with Boehringer Ingelheim represents one of the most robust diabetes pipelines in the pharmaceutical industry," said Enrique Conterno, president of Lilly Diabetes. "Tradjenta is the first regulatory approval of what we hope will be many new treatment options this alliance brings to the millions of Americans living with type 2 diabetes."

Lilly could see roughly the same amount of revenue by 2015 in royalties from telaprevir, a hepatitis C drug that appears primed for FDA approval on May 23, according to Wall Street analysts. The drug, developed by Massachusetts-based Vertex Pharmaceuticals Inc., won a unanimous recommendation from an FDA advisory panel on April 29.

Lilly helped identify and develop telaprevir in a collaboration with Vertex that began in 1997. But in December 2002, Lilly sold back most of its rights to the drug after reprioritizing its research portfolio.

Analysts estimate Lilly still has a claim to royalties on the drug’s sales, somewhere in the range of 3 percent to 9 percent. Neither Lilly nor Vertex has disclosed the exact terms.

But with analysts expecting telaprevir to be a blockbuster, Lilly (which must be kicking itself for letting the drug go) could still pocket some meaningful change. Bert Hazlett expects sales of $2.5 billion a year, meaning Lilly could pull in as much as $225 million per year.

Boris, the Citi analyst, thinks telaprevir could produce sales in 2015 of $4.8 billion. He expects Lilly to get no more than 5 percent in royalties, but that would still be nearly $240 million per year. And those royalties would be pure profit for Lilly.

The influx of dollars from Tradjenta and telaprevir, while less than $500 million combined, would still help Lilly offset the massive loss of revenue it faces from drugs whose patents are expiring, allowing patients to switch to cheaper generic copies.

In November, Lilly started facing generic competition for its $1 billion-a-year cancer drug Gemzar. Six months from now, its bestseller Zyprexa, a $5 billion-a-year antipsychotic, will face generics in the United States and Europe.

The patent on Cymbalta, a $3.5 billion-a-year antidepressant, expires in mid-2013. And the billion-dollar-drug Evista loses patent protection in 2014.


  • Not yet a revival of Lilly research
    Tradjenta is a success that is worth celebrating, but it is really Boehringer-Ingelheim's success, not Lilly's. The drug is a product of B-I's research, and B-I is the only company mentioned in the FDA's approval letter. Lilly deserves praise for its alliance with B-I, but we will have to wait a little longer for signs that Lilly research can deliver on its own.

Post a comment to this story

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

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. Kent's done a good job of putting together some good guests, intelligence and irreverence without the inane chatter of the other two shows. JMV is unlistenable, mostly because he doesn't do his homework and depends on non-sports stuff to keep HIM interested. Query and Shultz is a bit better, but lack of prep in their show certainly is evident. Sterling obviously workes harder than the other shows. We shall see if there is any way for a third signal with very little successful recent history to make it. I always say you have to give a show two years to grow into what it will become...

  2. Lafayette Square, Washington Square should be turned into office parks with office buildings, conversion, no access to the public at all. They should not be shopping malls and should be under tight security and used for professional offices instead of havens for crime. Their only useage is to do this or tear them down and replace them with high rise office parks with secured parking lots so that the crime in the areas is not allowed in. These are prime properties, but must be reused for other uses, professional office conversions with no loitering and no shopping makes sense, otherwise they have become hangouts long ago for gangs, groups of people who have no intent of spending money, and are only there for trouble and possibly crime, shoplifting, etc. I worked summers at SuperX Drugs in Lafayette Square in the 1970s and even then the shrinkage from shoplifting was 10-15 percent. No sense having shopping malls in these areas, they earn no revenue, attract crime, and are a blight on the city. All malls that are not of use should be repurposed or torn down by the city, condemned. One possibility would be to repourpose them as inside college campuses or as community centers, but then again, if the community is high crime, why bother.

  3. Straight No Chaser

  4. Seems the biggest use of TIF is for pet projects that improve Quality Of Life, allegedly, but they ignore other QOL issues that are of a more important and urgent nature. Keep it transparent and try not to get in ready, fire, Aim! mode. You do realize that business the Mayor said might be interested is probably going to want TIF too?

  5. Gary, I'm in complete agreement. The private entity should be required to pay IPL, and, if City parking meters are involved, the parking meter company. I was just pointing out how the poorly-structured parking meter deal affected the car share deal.