Sure, Eli Lilly and Co. has a promising portfolio of new drugs and other potential blockbusters in the pipeline. But every time the Indianapolis drugmaker reports profits, Wall Street analysts spend much of their time slicing and dicing one number: Zyprexa sales.
Their greatest fear: The schizophrenia medication will stop pulling its weight before other drugs pick up the slack, sapping sales and profits and further depressing the company's already deflated stock.
Indeed, the stakes are huge. Zyprexa sales in 2004 accounted for nearly onethird of Lilly's $13.9 billion in sales. And analysts say the drug's share of profits is even larger.
During Lilly's third-quarter conference call Oct. 20, company officials said they had good news on the Zyprexa front.
In September, the company finalized a $690 million settlement to resolve thousands of Zyprexa product-liability claims, many of them alleging the medication gave patients diabetes or related health problems.
The same month, a study in the New England Journal of Medicine found that patients taking Zyprexa were hospitalized less for schizophrenia than patients taking other medications for the disease.
Both developments, Lilly officials said on the call, should help dissipate the uncertainty that has caused Zyprexa sales to stall, especially in the United States.
For the quarter, worldwide Zyprexa sales rose 1 percent, to $1.04 billion, while U.S. sales slid 10 percent, to $504 million. On the call, company officials stood by their projection that the drug's worldwide sales this year will be just shy of the $4.4 billion recorded last year, while suggesting better times lie ahead.
"We'd be delighted to be wrong about our  forecast for Zyprexa, but at this point I don't think these things turn on a dime," Lilly President John Lechleiter said on the call. "I don't think it is reasonable for us to expect that we are going to see, overnight, the impact of the settlement and the results of the ... [study]."
Not all analysts believe publication of the study will push sales higher. Another of its findings was that Zyprexa patients experienced more weight gain than patients taking competing drugs, which could fuel diabetes concerns and make doctors reluctant to write prescriptions.
Publication of the study "may hasten the decline of Zyprexa," Raymond James analyst Michael Krensavage said in a report. He noted that, in the third quarter, new U.S. retail and mail order prescriptions for the drug dropped to their lowest point in at least five years.
Lilly needs to get a sales boost from both the settlement and study in order "to stabilize a brand that appears to be in a free fall," Bear Stearns analyst John Boris said in a report.
"Our greatest concern is the competitive risk to global Zyprexa prescription trends, especially in the U.S., where several new entrants with more benign side [effects] ... are making meaningful inroads," Boris wrote. "It appears that this risk is spilling over into international markets," as the new drugs roll out globally.
Even so, many analysts don't think the bottom will fall out of Zyprexa sales anytime soon. Merrill Lynch, for instance, forecasts worldwide Zyprexa sales will top $4.3 billion a year through 2009.
But not all of Lilly's newer drugs are meeting expectations, narrowing the company's margin for error.
The latest disappointment is Strattera, a treatment for attention deficit/hyperactivity disorder. Its sales slumped after the company last year added a label warning about possible liver damage. It's expected to take another hit from a new label warning that a small number of children taking the drug experience suicidal thoughts.
In a new report, Merrill Lynch projects Strattera sales will reach only $518 million this year, down 22 percent from 2004. Sales likely will slip another 4 percent, to $498 million, in 2006, the report said.
Help from Lilly's research pipeline is on the way. One of the most promising drugs in development, analysts say, is Prasugrel, an anti-clotting drug for patients who have suffered heart attacks. Merrill Lynch projects it will reach market in 2008 and hit $1 billion in worldwide sales in 2009.
So Lilly investors may see a payoff down the road. But for now, all the uncertainty is propelling the stock south. Company shares last week were fetching about $50 apiece, down 11 percent for the year and 54 percent from their August 2000 high.