Eli Lilly's first-quarter 2010 profits fall 5%, due to impact of US health reform

Although still beating consensus forecasts, US drug major Eli Lilly posted a decline in first-quarter 2010 profits, blaming the impact of US health care reform on the downturn, taking an $85 million hit on the imposition of tax on the prescription drug subsidy of the company's retiree health plan, and a weaker dollar for decreased gross margins.

As a result, the company said, 2010 earnings are now expected to be in the range of $4.40 to $4.55 per share (non-GAAP), or $4.35 to $4.50 (reported), including an approximate $.35 per share anticipated reduction due to the impact of US health care reform, as well as expectations of stronger underlying business performance

First quarter worldwide total revenue was $5.49 billion, an increase of 9% compared with the first quarter of 2009. This growth was comprised of an increase of 4% due to higher volume, 3% because of the impact of foreign exchange rates, and 1% from higher prices (numbers do not add due to rounding). Total revenue in the USA increased 6% to $3.03 billion due to higher prices (offset in part by approximately $60 million in higher rebates resulting from US health care reform) and, to a lesser extent, increased demand. Total revenue outside the USA rose 13% to $2.45 billion due to greater demand and the positive impact of foreign exchange rates, partially offset by lower prices.