Eli Lilly and Co. shares jumped 2.6 percent Wednesday morning after the drug maker reported better-than-expect results for the second quarter.
Strong sales and penny-pinching helped Lilly beat Wall Street’s expectations in the quarter, leading the company to raise its profit forecast for the year.
The Indianapolis-based drugmaker reported earnings of $1.2 billion in the three months ended June 30, an increase of 31 percent compared with same quarter last year. Earnings per share totaled $1.11, compared with 83 cents a year ago.
Excluding a restructuring charge of $63.5 million from the closing of a plant in Germany, Lilly would have earned $1.16 per share. On that basis, analysts were expecting earnings of $1 per share, according to a survey by Thomson Financial.
Because it outperformed those expectations, Lilly hiked up its profit expectations for the year by a range of 13 cent to 18 cents per share. The company now expects to earn between $4.28 and $4.38 for the year.
In the second quarter, Lilly was able to boost its sales 6 percent worldwide to $5.9 billion. Analysts were expecting revenue of $5.82 billion.
"Continued operating and financial discipline, along with a maturing pipeline of potential new medicines, gives me great confidence in the company's ability to meet the challenges we face from upcoming patent expirations and to resume growth after 2014,” Lilly CEO John Lechleiter said in a prepared statement.
Lechleiter took a leave of absence on May 13 to have surgery on a dilated aoarta. He returned on July 8.
“It looks like they were doing some pretty good work while I was gone,” Lechleiter said.
Lilly’s bestselling drug, the antidepressant Cymbalta, is set to lose its U.S. patent protection in December, after which its sales will switch to cheaper generics. Sales of Cymbalta grew 22 percent in the second quarter, to nearly $1.5 billion.
Lilly already lost patent protection on its former bestseller, the antipsychotic Zyprexa, in late 2011. And Lilly also will lose patent protection on Evista, an osteoporosis drug, next year. Lilly is hoping to win approval on new diabetes and cancer drugs to offset those coming hits to its sales.
The company has cut costs to help fund its drive for new drugs, and last week said it would freeze wages for most of its workers.
“Management appears to be showing prudent cost discipline in anticipation of the Cymbalta patent cliff,” Mark Schoenebaum, an analyst with International Strategy & Investment Group in New York said in a report. “Smart expense control should increase the street’s confidence that Lilly is serious about dramatically improving operating margins post-2014.”
Lilly expects a 20-percent reduction in revenue in 2014 because of the U.S. expiration of the Cymbalta and Evista patents, a company spokesman said July 17. Lilly had hoped to avoid more cost cuts in the medium term, Lechleiter said.
“We’re losing a lot of revenue when at the same time we’ve got to launch our phase III products,” he said.
“You don’t take these actions lightly. This is the second such announcement in three years,” Lechleiter said of the wage freeze.