Lilly scores series of small victories

November 17, 2010

Eli Lilly and Co. got a string a small victories this past week, as its executives kept up hope that its big pipeline will, one day, equal big sales.

The Indianapolis-based drugmaker finally won FDA approval for its antidepressant Cymbalta to treat chronic pain. Anything in health care with the word “chronic” in it means big dollars, as patients have to take their medicine consistently, not occasionally.

Although it’s not entirely clear how much in new sales the chronic-pain indication will add, some Wall Street analysts expect the approval to help boost revenue by another 30 percent over its remaining 2-1/2 years of patent protection. Cymbalta's annual sales already top $3 billion.

Lilly also fended off a patent challenge to its fastest-growing drug, the lung cancer medicine Alimta. A U.S. District Court judge in Delaware rejected Israel-based Teva Pharmaceuticals Inc.’s claim that Alimta’s patent is invalid. The drug is protected from generic competitors until 2016.

And Lilly is still trying to wring sales out of Effient, the blood thinner once thought to be Lilly’s sales savior, but now an afterthought in its quarterly earnings reports. Lilly unveiled data showing that significantly fewer heart patients who underwent bypass surgery died after taking Effient than patients who had taken Plavix, the leading blood thinner on the market.

Lilly is hoping that additional data about Effient will win over physicians to the drug. The market is huge, with Plavix pulling down $9 billion a year.

But Effient had sales of just $68 million through the first nine months of this year. And with generic versions of Plavix hitting the market in 2012, Lilly faces a huge headwind.

Jan Lundberg, president of Lilly's research labs, said many of the drug industry’s best-selling drugs started out with low expectations for sales success.

“We shouldn’t be too judgmental on the potential of products at the time of launch,” he said.

Lundberg also expressed confidence that, since Lilly has more drugs in its pipeline than ever before—including 28 in later Phase 2 and Phase 3 testing—it’s bound to deliver new products to market soon. He also touted better development techniques that should give Lilly's pipeline products higher-than-normal success rates.

Analysts, focusing more on Lilly’s many recent failures in clinical trials and only one new drug in 5-1/2 years, basically give the company’s pipeline very little credit. Many would like Lilly to make a sizable acquisition to offset the revenue that will disappear as four drugs lose patent protection between now and 2013, threatening to sap as much as half of Lilly’s revenue.

Moody’s Investors Service, citing pipeline and patent concerns, downgraded its ratings on Lilly’s debt last week, to A2 from A1.

“Recent pipeline disappointments and patent challenge setbacks compound Lilly's challenges related to upcoming patent expirations," stated Michael Levesque, Moody's pharmaceutical analyst.


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