Lilly's sales and earnings continue their free-fall but CEO Lechleiter sees good things coming

Eli Lilly CEO John Lechleiter promised today that the company's finances will improve over the next decade. It would be hard for them to get much worse. Sales and earnings continued their free-fall for the year, bashed by patent expirations on antidepressant Cymbalta and osteoporosis drug Evista. Lilly's ($LLY) fourth-quarter net income was down 41%. Its revenue was down 12%. Its earnings were down 40% to $0.40 a share.

Eli Lilly CEO John Lechleiter

"While Lilly's fourth-quarter 2014 results continue to reflect the impact of patent expirations, we are moving to a period of growth led by diabetes, oncology and animal health. … Throughout the balance of this decade, we aim to drive revenue growth and expand margins as we offer new medicines to the people who need them," Lechleiter said in a statement issued before the markets opened.

On the positive side, Lechleiter pointed to a long list of promising developments like the $5.4 billion acquisition of Novartis' ($NVS) Animal Health business and the approvals of cancer drug Cyramza and Type 2 diabetes fighter Trulicity as reasons to hope for better results he promised would materialize. He also pointed to the licensing from Adocia of the "ultrarapid insulin" BioChaperone Lispro for treating both Type 1 and Type 2 diabetes and clinical trials of its cancer fighter Alimta in combination with Merck's ($MRK) anti-PD-1 therapy Keytruda in that promising area of cancer treatments. For the here and now, the company reminded investors it was paying a $0.50 dividend and had repurchased $300 million in shares in the quarter.

A couple of weeks ago, Lilly provided guidance for this year, disappointing some on the street with projections of a revenue range of $20.3 billion to $20.8 billion--just 2% higher than 2014--and an earnings forecast of $2.40 to $2.50 per share, or $3.10 to $3.20 non-GAAP. Analysts were looking for $3.25.

Lilly's 12% decline in revenue in Q4 to $5.121 billion was due in part to the patent loss of Cymbalta in the U.S., but also from foreign exchange issues brought on by a strong dollar which shaved about 4% off the numbers. Total revenue in the U.S. was down 19% to $2.453 billion as sales of Cymbalta and Evista collapsed. Cymbalta's fourth-quarter sales were $367.3 million, off 58% and Evista sales were $72.1 million, down 74%.

But other products didn't see a lot of growth to offset those falls. Sales of lung cancer drug Alimta were flat at $725 million, and sales of its Humalog insulin were down 1% to $729.1 million. Sales of its human insulin product Humulin were up 7% to $395.6 million and revenues in its animal health division were up 9% to $633.3 million.

The company didn't list sales of its new versatile cancer drug Cyramza, which was approved last April and on which it is pinning a lot of its growth expectations. In December the drug picked up a third indication when the FDA green-lighted it in combination with chemo drug docetaxel as a treatment for non-small cell lung cancer. It is already approved for advanced stomach cancer and advanced gastric cancer.

- here's the earnings release

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