D-Day for Eli Lilly: Generic foes arrive for $5B antidepressant Cymbalta

Cymbalta is going down. The question for Eli Lilly is how fast and how far.

Last evening, the FDA approved more than a half-dozen generic versions of Cymbalta, the antidepressant that's now Lilly's ($LLY) top-selling drug. A $5 billion-a-year powerhouse, Cymbalta has stepped up over the past couple of years to help Lilly weather the loss of patent protection on its atypical antipsychotic drug Zyprexa.

Painful as Zyprexa's patent loss was, the sales decline happened in phases, with one generic rival for the first 6 months after zero hour. Then, after Dr. Reddy's Laboratories' 180-day exclusivity expired, the real competition began, driving prices down and Lilly's sales into the ditch.

Not so for Cymbalta. The 6 generics makers--Teva Pharmaceutical Industries ($TEVA), plus India's Lupin, Sun Pharma, Torrent Pharmaceuticals, Aurobindo Pharma and Dr. Reddy's--have already begun rolling out their versions. Price competition will hit immediately, and branded Cymbalta is likely to see most of its sales evaporate quickly.

Lilly knows all this, and it has been preparing for a major hit to 2014 sales. The drugmaker started laying off Cymbalta's sales force and restructuring other marketing groups earlier this year, with more than 1,500 reps transferred or laid off. In July, Lilly announced a salary freeze to help it cope. In October, the company admitted that meeting its $20 billion revenue goal for next year would be tough--and promised further cost cuts to keep profits and margins at acceptable levels.

Meanwhile, the company is struggling to push its in-development drugs to market--and even if they win FDA approval, those products may not deliver as much as Lilly once hoped. One of them, ramucirumab, failed a breast cancer trial in late September, so it's down to a possible indication in gastric cancer.

A diabetes hopeful, empagliflozin, has stronger data, but it would be the third entrant in the SGLT-2 inhibitor market, after Johnson & Johnson's ($JNJ) Invokana (canagliflozin) and AstraZeneca ($AZN) and Bristol-Myers Squibb's ($BMY) Forxiga (dapagliflozin). Plus, the entire class is under scrutiny for safety concerns; the FDA required J&J to perform 5 postmarketing safety trials.

Long term, Lilly is betting that diabetes treatments--empagliflozin included--will buoy its results. It's sinking $1 billion into insulin production around the world to feed anticipated demand. Already, its Humalog and Humulin sales helped make third-quarter revenues a pleasant surprise. If the three diabetes meds it's hoping to get to market next year actually make it there, that could put Lilly on the right track. Of course, many drugmakers are making similar bets on diabetes, so the company will be scrapping for share.

- see the FDA release

Special Reports: Top 15 Drug Patent Losses for 2013 - Cymbalta | Biopharma's Top R&D Spenders of 2012 - Eli Lilly