Lilly falls short of analyst forecasts with 2016 guidance on the 'weaker end'

After patent expirations for big sellers Cymbalta and Evista, Eli Lilly ($LLY) managed to top analyst expectations in the first three quarters last year. But for 2016, the company expects to come in below where Wall Street thought it would be.

On Tuesday, the Indianapolis drugmaker unveiled a revenue forecast of $20.2 billion to $20.7 billion for the year, missing analysts' $21.37 billion prediction. On the adjusted profits front, Lilly guided toward $3.45 to $3.55 per share--short of the Street's $3.66 consensus estimate.

That's not necessarily a reason to worry, though. "Similar to what happened a year ago in January, the guidance was on the weaker end both on revenues and EPS, but growth overall in 2016 should be robust versus peers," Bernstein analyst Tim Anderson wrote in a note to clients. Lilly "tends to guide conservatively," Evercore ISI Mark Schoenebaum agreed in a research note.

Holding Lilly back will be unfavorable foreign exchange rates, the company acknowledged. But if you exclude their effects from both 2015 and 2016, "you can see we expect to drive mid-teens performance growth in non-GAAP EPS," company CFO Derica Rice told investors on a Tuesday conference call. In constant currencies, Lilly expects established products Humalog, Trajenta, Cialis, Forteo, Strattera and Erbitux to all record revenue growth, with new products Cyramza, Trulicity, Jardiance, Portrazza and Basaglar expanding, too.

Eli Lilly CFO Derica Rice

Jardiance is already raring to go; new-to-brand share has recently risen from 15% to 25% on the back of favorable data from a cardiovascular outcomes study, Lilly's diabetes president, Enrique Conterno, told investors on the call. And Lilly's looking forward to a couple more "inflection points" in the short-term--one when that data makes its way onto the drug's label, and one when the American Diabetes Association and European Association for the Study of Diabetes issue new treatment guidelines based on the study results.

But Lilly may face a few other hurdles, too, execs said. Potentially taking a toll on the company's top line will be price cuts in Japan and possible competition to Alimta in Europe, where the company has had its ups and downs trying to defend its IP on the cancer drug. The new guidance includes the entrance of at least one generic competitor in various EU countries, execs said--including Germany, where Lilly lost a patent fight last March.

- read Lilly's release

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