Eli Lilly 3rd quarter 2009 beats forecasts, raises guidance

US drug major Eli Lilly swung to a third-quarter 2009 profit after solid sales in the reporting period, as well as year-earlier litigation charges related to its schizophrenia drug Zyprexa (olanzapine). The firm posted net income of $941.8 million, or 86 cents a share, compared to a loss of $465.6 million, or 43 cents a share, in the like, year-earlier quarter, beating consensus forecasts. Group revenues advanced 7% to $5.62billion.

'Lilly continues to deliver very solid financial results," commentd John Lechleiter, Lilly's chairman and chief executive. "Our performance in the third quarter once again was driven by volume-based sales growth, improving gross margins and tight control of operating expenses, allowing us to deliver very attractive earnings growth. These results are evidence of the strength of our current operations as we implement our new operating model, streamline our organization and take measures to accelerate the flow of new medicines through our pipeline," he added.

Total product sales were $5.4 billion, up 6%, while collaboration and other revenues accounted for the remaining $176.5 million, an increase of 51%, primarily due to the inclusion of cancer drug Erbitux (cetuximab) revenue as a result of the Lilly's acquisition of ImClone.

Product performance

Other Lilly products recorded robust growth during the quarter compared to the year-ago period, with Zyprexa sales rising 3% to $1.2 billion, Cymbalta (duloxetine), for major depressive disorder, generalized anxiety disorder, saw 10% growth to $790.2 million, Humalog (insulin lispro) advanced 16% to $500.2 million, and lung cancer drug Alimta (pemetrexed) increased 47% to $461.9 million.

US sales accounted for 58% of Lilly's total revenues during the third quarter, increasing 14% to $3.1 billion due to higher volume, higher prices, and the inclusion of Erbitux revenue. However, international revenues declined 1% to $2.4 billion due to the negative impact of foreign exchange rates and lower prices partially offset by increased demand.

Lilly took charges totaling $549.8 million in the reporting period, including asset impairment and restructuring charges for the sale of a manufacturing plant and a charge related to a legal settlement. In addition to posting a strong performance, the company raised its earnings guidance for full-year 2009, and now expects earnings in the range of $4.30-$4.40 up from the previous guidance of $4.20-$4.30, and low- to mid-single digit total revenue growth on a pro-forma basis and mid-single digit revenue growth on a reported basis.