Lilly CEO Lechleiter predicts big things after its 'most financially challenging year'

If it's worth saying once, then it probably bears saying again: "This will be Eli Lilly's most financially challenging year." That is the message that Eli Lilly ($LLY) CEO John Lechleiter started off his presentation with Tuesday to a room full of apt listeners at the J.P. Morgan Healthcare Conference before segueing into how the company's pipeline will move it past troubled times.

Lilly CEO John Lechleiter

"We call this our YZ years, but we think it represents a new beginning," Lechleiter told the group.

The phrase for Lilly represents the years of 2011 through 2014, when patent losses and revenue shortfalls have, and will, wreak havoc on revenues. In fact, Lilly last week fessed up that instead of the $20 billion minimum revenue that Lechleiter had said investors could expect in 2014, the number will come in somewhere between $19.2 billion and $19.8 billion. And that is down from about $24 billion in 2011. That new number came a few weeks after the FDA approved more than a half-dozen generic versions of Cymbalta, the antidepressant that's now Lilly's top-selling drug at about $5 billion a year.  

But Tuesday, he also repeated his projection that new product launches will carry the day, moving the company back to growth in 2015. Investors, he said, could expect "multiple products" each year for the next few years. That is even though it is preparing big cuts to its R&D budget.

Diabetes care and oncology are the main areas of focus, "and we are acquiring a treatment for migraine," Lechleiter said. The company announced that deal Monday, saying it would buy back from Arteaus Therapeutics a migraine therapy it previously licensed to the Cambridge, MA-based biotech for development in a clinical proof-of-concept study. The CEO also said he believed there was not another company as well-positioned in diabetes care as Lilly. He pointed out the oral Type 2 diabetes med Tradjenta (linagliptin) that it shares with Boehringer Ingelheim and a number of products under development that should pan out for future growth.

Challenging that future growth may be Lilly's decision to pare back its R&D budget. With the revenue shortfall acknowledgement, the company said it expects to cut down R&D spending this year to between $4.4 billion and $4.7 billion--which is up to $1 billion less that the estimated $5.4 billion it spent in 2013. That is how the Lilly CEO is launching the company's new beginning.

- here's the migraine press release