Lilly Shares Drop On Bad Zyprexa News

Shares in Eli Lilly have taken a tumble on the news that some patientshave not responded well to its antipsychotic drug Zyprexa (olanzapine), which was approved in October last year (Marketletter October 7, 1996) and was expected to overtake Johnson & Johnson's Risperdal (risperdone) as the top antipsychotic drug on the market.

The report, issued by Fahnestock drug analyst Louis Webb, quotes one doctor at New York's Bellevue Hospital as saying that about one third of his patients who switched to Zyprexa from Risperdal and other antipsychotics "experienced a return of psychotic symptoms." If the report holds up, it could mean lower revenue projections for the drug, and a 16%-20% effect on earnings per share if the drug's revenue falls short by $250 million, noted Mr Webb. Zyprexa saw sales of $87 million in its first three months on the market.

Lilly has denied the reports. Although it was expected that a small number of individuals would not do as well on a new drug, it is "extraordinarily unlikely" that the problem could affect as many as a third of patients, it says.