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Moody's considers cutting Lilly debt rating

July 11, 2007
As early as next year, Moody's Investors Service could lower its debt rating on Eli Lilly and Co. because of the looming patent expiration of Lilly's top-selling drug, Zyprexa.

In a quarterly snapshot of the drug industry, Moody's said it will take a hard look at any pharmaceutical company with a blockbuster drug set to expire in 2010 through 2012, according to a Reuters report. Indianapolis-based Lilly and Bristol-Myers Squibb Co., headquartered in New York, are particularly vulnerable, Moody's said.

"Lilly is among the most exposed to blockbuster patent expirations in the 2010 to 2012 period," Moody's analysts wrote. "Negative pressure on Lilly's rating or its outlook could increase as we near the inclusion of Zyprexa into our three-year forward view of patent exposures."

Zyprexa's patent is set to expire in 2011. The widely used antipsychotic therapy accounted for almost 28 percent of Lilly's overall sales last year.

Right now, Lilly has a "stable" Moody's rating outlook, meaning the rating service sees no immediate change to its current credit rating.

Bristol is at risk because its blockbuster blood-thinning drug Plavix will lose patent protection in 2011. Also, New York-based Pfizer Inc. faces the loss of patent protection on Lipitor, the nation's top-selling drug, in 2011.

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