A downbeat 2015 in emerging markets for Eli Lilly ($LLY) is set to continue into the coming year and beyond, executives said, though some brands remain strong and will take up most of the company's efforts in those regions, particularly in China.
Overall in emerging markets, Eli Lilly saw a 12% drop in revenues in 2015, John Lechleiter, chairman and CEO, said on the Jan. 28 earnings call.
He said that most of the drop was driven by foreign exchange headwinds and that in constant currencies emerging markets revenue increased 1%, with the caveat that excluding a major tender won in Brazil for Humulin in 2014, adjusted revenues gained 4% when compared with 2015.
"Also this quarter, our pharma revenue in China increased 2%, with a volume increase of 5%, partially offset by FX (foreign exchange)," Lechleiter said.
However, the company did benefit as well on the lower cost of goods in some cases, but operating expenses grew a bit faster than revenue on a performance basis in the fourth quarter, Lechleiter said.Eli Lilly's Chito Zulueta
Chito Zulueta, president of emerging markets, responded to a question on the outlook for these regions and bright spots remain few with global economic growth weak, though China continued to grow and some key products performed exceptionally well.
"And as the economies go, so does the healthcare sector in many of the markets," Zulueta said. "So we've had a very tough year, even on a constant exchange rate, for many of our markets. And I think we see that for the next 18 months. Clearly the one that has had a significant decline over the previous years has been China. The prognosis is, we will continue to see about a 4% to 5% market growth in China, which is what we had in 2015. And that will continue perhaps in 2016."
But Zulueta said in China and other emerging markets, products like Forteo (teriparatide) can show rapid gains and spark a sales push, even as nonbranded products get hit by a government move to curb drug costs.
"We're very bullish about Forteo in emerging markets. We grew mid-teens in 2015. We expect to accelerate that growth further. China grew 60% on Forteo. So we're very bullish, and I think there's tremendous growth in Forteo for our business. So we continue to invest heavily in that brand."
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