|Lilly CEO John Lechleiter|
Eli Lilly ($LLY) found itself standing at the bottom of a hole this year, beleaguered by slumping sales and patent losses for two of its bestselling drugs. Now, the company is continuing to dig itself deeper, reporting a 16% dip in revenue as newer drugs fail to make up for generic competition to antidepressant Cymbalta and osteoporosis drug Evista.
Lilly has said this year could be its worst yet, and so far, that prediction has been right on the mark. Thanks to new patent losses, third quarter net income dropped 58% to $501 million from $1.02 billion year over year, the company said Thursday. Beset by generics since December, Cymbalta sales charted a 73% decrease, to $368 million for the quarter. Evista sales also fell--by 65% to $89.5 million--after losing exclusivity in March.
Still, Lilly has a few products in its war chest that could lift it out of its sales funk. The company's fast-acting insulin, Humalog, netted $706.1 million in sales during the third quarter, a 15% jump from the previous year; in one savvy move, Lilly edged out competitors to win Humalog a spot on Express Scripts' exclusionary formulary for 2014.
The company's Elanco veterinary unit, on its way to a big expansion with the buyout of Novartis' animal health business, roped in promising numbers, posting $584.7 million in revenue--a 10% hop from 2013.
"While Lilly's third-quarter financial results continue to reflect the impact of recent patent expirations, our clinical pipeline is now producing strong momentum to drive future growth," CEO John Lechleiter said in a statement.
New therapies and regulatory blessings are exactly what Lilly needs to engineer a turnaround. The company won approval for three drugs during the third quarter and chalked up positive study results for other products under development. In August, Lilly scored FDA approval for Jardiance, a diabetes med the company markets with Boehringer Ingelheim. In September, Europe's Committee for Medicinal Products for Human Use put its stamp of approval on Cyramza, Lilly's new oncology drug, and Trulicity, its potential diabetes powerhouse that will compete head-to-head with Novo Nordisk's ($NVO) Victoza.
Meanwhile, Lilly drugs continue to suffer from earlier patent losses, including the blockbuster schizophrenia treatment Zyprexa. To cope with declining sales, the company cut 1,000 jobs last year and froze salaries for 2014. In July 2014, Lilly announced that it would cut 100 production jobs in its home city of Indianapolis, and move manufacturing of its antidepressant Prozac and blood thinner Effient to facilities in Spain and Puerto Rico.
- here's the earnings statement
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