Lilly profit slumps, hurt by Zyprexa charge
Last Updated: 2007-01-31 14:00:07 -0400 (Reuters Health)
By Ransdell Pierson
NEW YORK (Reuters) - Eli Lilly and Co. said on Wednesday fourth-quarter earnings fell, hurt by a charge for a settlement with users of its Zyprexa schizophrenia drug, and the company forecast 2007 earnings at the low end of Wall Street estimates.
But shares of Lilly, whose profit beat forecasts on lower taxes and price hikes for its medicines that drove revenue growth, were up 1.5 percent in morning trading.
The Indianapolis-based drugmaker said it earned $132 million, or 12 cents per share, compared with $701 million, or 64 cents per share, in the year-earlier period.
Excluding special items, Lilly earned 85 cents per share. Analysts, on average, expected 82 cents per share, according to Reuters Estimates.
Revenue rose 9 percent to $4.25 billion in the quarter, topping the Reuters Estimates forecast of $4.06 billion, fueled by higher sales of its Cymbalta depression treatment and higher Zyprexa sales.
"Relatively exceptional pricing gains contributed 6 percent of the overall 9 percent (revenue) growth, and we would be cautious on the sustainability of such trends," JP Morgan analyst Chris Shibutani said in a research note.
The company projected 2007 earnings, excluding special items, of $3.25 to $3.35 per share, reflecting growth of 2.2 percent to 5.3 percent. The Reuters Estimates forecast is $3.34 per share.
Lilly said its forecast would have been about 10 cents per share -- or 3 percentage points -- higher if not for the dilutive impact of its recent purchase of biotechnology company Icos Corp.
Profit growth will also be crimped by heavy spending on research, including late-stage trials of an experimental blood clot drug called prasugrel that Lilly deems potentially superior to Bristol-Myers Squibb Co.'s blockbuster Plavix.
Sales should grow this year in the high single or low double-digit percentage range, Lilly said.
Global Zyprexa revenue rose 12 percent to $1.16 billion, largely due to price increases. The company said U.S. demand for the pill remained flat. The drug's use has been crimped by concerns over weight gains that can increase risk of diabetes.
Lilly this month agreed to the $495 million Zyprexa settlement, covering more than 18,000 patient claims. An earlier $700 million Zyprexa settlement dispensed with about 8,000 claims. About 1,200 claims are not included in the settlements and will go to trial.
The New York Times in December said Lilly told its sales representatives to play down data showing 30 percent of patients taking Zyprexa gained 22 pounds or more after a year on the drug, with some reporting gaining 100 pounds or more.
Lilly denied Zyprexa is more likely to cause diabetes than rival drugs and said the Times had improperly obtained its internal documents and taken them out of context.
Cymbalta sales leaped 85 percent to $424 million, amid soaring demand in the United States and introductions of the drug in more overseas markets.
But Strattera, for attention deficit hyperactivity disorder, fell 7 percent to $156 million, as concerns about safety of the class of medicines continues to hurt U.S. sales.
Diabetes drug Actos had sales of $90 million, a 42 percent decline, due to Lilly' loss in September of U.S. marketing rights to the drug. Combined sales growth of company diabetes products rose 4 percent to $782 million.
Sales of Cialis, an impotence treatment that had been sold in partnership with Icos, jumped 28 percent to $269 million.
Lilly on Monday completed its $2.3 billion acquisition of Icos, gaining full control of Cialis, whose far longer-acting formulation has allowed it to wrest market share from Pfizer Inc.'s Viagra.
Lilly was up 77 cents to $53.50 on the New York Stock Exchange.
