Eli Lilly ($LLY) said 2014 would be an extraordinarily challenging year, and judging from its second-quarter earnings, that prediction wasn't wrong. Lilly's revenue dropped 17% to $4.9 billion in the second quarter, largely because the company lost its patent protection on two of its biggest blockbusters: the anti-depressant Cymbalta, which once brought in nearly $5 billion in sales annually, and osteoporosis drug Evista, previously a $1-billion-a-year hit.
Lilly's profits fell, too--by 39% to $734 million--but its per-share earnings of 68 cents actually beat analysts' estimates by 3 cents, according to Bloomberg. That small silver lining came from sales of the company's fast-acting insulin product Humalog, which jumped 11% to $700.1 million, beating analyst estimates of $682.7 million. Lilly's lung cancer drug Alimta also performed well, growing 6% to $711.6 million in sales, compared to the $706.5 million analysts were expecting, the news service said.
The patent losses have not been easy on Lilly. Even before Cymbalta and Evista went generic, the company suffered greatly from the patent loss on Zyprexa, its blockbuster schizophrenia treatment. Last year, Lilly announced 1,000 layoffs and a salary freeze for 2014. Then it cut cash bonuses. And CEO John C. Lechleiter's compensation for 2013 plummeted 23% to $11.2 million.
Apparently that wasn't enough to stop the bleeding, though. On Monday, Lilly said it would cut about 100 production jobs in its home city of Indianapolis, moving manufacturing of its antidepressant Prozac and blood thinner Effient to facilities in Puerto Rico and Spain.
|Lilly CEO John Lechleiter|
Lilly focused today's announcement on recent achievements in its pipeline, which had been widely criticized for years for being unproductive. During the quarter, the company launched Cyramza to treat gastric cancer and announced positive Phase III results for a new insulin product to treat diabetes. "We have stayed the course with our innovation-based strategy, replenishing and advancing our pipeline," Lechleiter said in the earnings release.
Towards that end, Lilly formed an oncology research deal with Immunocore last week to co-develop therapies that harness the body's immune-boosting T cells. But the innovations won't come quickly enough to boost short-term results: Lilly maintained its 2014 earnings guidance of $2.72 to $2.80 per share on expected revenues between $19.4 billion and $20.0 billion.
Special Report: The top 10 largest pharma layoffs in 2013 – Eli Lilly