Lilly surprises on revenue even as Cymbalta sinks

Lilly CEO John Lechleiter

Eli Lilly's ($LLY) patent cliff has struck again, but some analysts found things weren't as bad as they expected when they surveyed the damage Thursday morning. Higher sales of other drugs offset much of the generic competition to newly off-patent Cymbalta, helping the pharma giant beat Wall Street's revenue forecasts by a long shot.

Fourth-quarter earnings excluding one-time items for the Indianapolis-based drugmaker tallied 74 cents per share, which fell in line with analyst projections. Factored in were sales that fell 2% to $5.81 billion, surpassing analysts' estimates of $5.46 billion. But don't expect any more revenue surprises in the coming year, CEO John Lechleiter cautioned.

"Lilly's fourth-quarter 2013 results reflect the initial impact from the U.S. patent expiration for Cymbalta," he said in a statement. "The loss of the Cymbalta patent, along with the expiration of the U.S. patent for Evista in March of this year, will result in a substantial decline in revenue and earnings in 2014."

That initial impact came out to 38% of the antidepressant's sales, dragging its haul down to $883 million for the quarter. It was a bit of déjà vu for the drugmaker, which saw sales of its top dog Zyprexa mauled by generic competition when it lost patent protection in 2011. But this time, thanks to price hikes, layoffs and contributions from other meds, the company is better prepared to shoulder the blow; diabetes therapy Humalog put up gains of 19% for the quarter, and ADHD treatment Strattera posted a 23% jump in sales.

"Instead of having to play defense and manage through this difficult patent cliff, the company will be able to use additional cash flow to invest in its pipeline, to partner with others or make bolt-on acquisitions," Atlantic Equities analyst Richard Purkiss told Reuters. "The outlook is much brighter, and they'll try to get that message across in coming months."

The company is also hoping it can launch some new meds this year to bolster growth, and Lechleiter told Reuters he also has a mind to boost sales of animal-health products and ramp up sales in China and Japan.

"We're on the cusp of launching products in cancer and diabetes, two therapeutic areas where we're well established and where we have built out the infrastructure we need," Lechleiter told Reuters in a recent interview. "And we believe that's going to be the beginning of our return to growth."

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Special Reports: The top 10 largest pharma layoffs in 2013 - Eli Lilly | Top 15 drug patent losses for 2013 - Cymbalta | Top 10 Drug Patent Losses of 2014 - Evista