Lilly strong now, but future uncertain

Earlier this week, Bernstein Research analyst Dr. Tim Anderson said in a letter [1] that Eli Lilly was among three Big Pharma companies facing the biggest patent losses over the next few years. Between 2011 and 2014, drugs like Zyprexa, Cymbalta, Gemzar and Evista will all go off-patent. When Lilly released its annual report this morning, the company projected 2010 earnings per share of $4.65 to $4.85 (excluding the potential impact of health care reform in the U.S.)--a projected growth of 5.2 percent to 9.7 percent over 2009 forecasts. But it didn't lay out specific guidance regarding the post-patent cliff era, leading analysts to speculate that there will be a sharp sales decline. "Lilly's 2010 and longer-term guidance points to a company with continued strong near-term results but a significantly less certain long term profile," JP Morgan analyst Chris Schott says in a research note, as quoted by Reuters.

Once again [2], Lilly CEO John Lechleiter (photo [3]) said the company would not look for a mega-merger to fill the holes left by expired patents. "We see a divergence of strategies among our peers to deal with these challenges, including the wave of consolidation this year. Many companies are seeking to lower risk by reducing their focus on innovative medicines. This is not our path," he states in the release. The company is instead looking to is pipeline for salvation. Lilly says it will introduce two new medicines a year starting in 2013; 10 of its 60 experimental therapies should be in late-stage trials in 2011. However, that pipeline of drugs may not arrive in time to absorb the sales lost from patent expirations.

In addition to its pipeline, Lilly is expanding its presence in China, calling the country its "top emerging market priority." Its animal health business unit Elanco is also a priority.

- check out Lilly's release [4]
- see the Reuters report [5]
- here's more [6] on Lilly

Related Articles:
AZ, Lilly, BMS face steepest patent cliff [1]
Eli Lilly - Top 10 Layoffs of 2009 [7]
Lilly hungry enough for less-mega deals [8]
Lilly chief: Megamergers 'driven by weakness' [2]