Eli Lilly Forecasts Profit, Revenue Drop in 2014
INDIANAPOLIS (AP) — Eli Lilly and Co. expects a sharp drop in both earnings and revenue in the new year, as the drug developer deals with the loss of patents protecting two more key drugs from cheaper generic competition.
The Indianapolis company forecast on Tuesday earnings of between $2.77 and $2.85 per share in 2014, a decrease of more than 30 percent from the range of $4.10 to $4.15 per share that it expects to report for 2013.
The company also expects revenue ranging from $19.2 billion to $19.8 billion in the new year, compared to its forecast of $22.6 billion to $23.4 billion for 2013. Lilly will announce its 2013 results on Jan. 30.
The drugmaker known for its portfolio of cancer and diabetes treatments has long warned of an impending dip in performance due to patent expirations. Its 2014 forecast generated little surprise on Wall Street. Analysts expect, on average, 2014 earnings of $2.78 per share on $19.56 billion in revenue, according to FactSet.
Lilly shares rose 10 cents to $51.63 in morning trading Tuesday.
The company also is known for its quarterly dividend of 49 cents per share. It said Tuesday that it expects to maintain that payout at least at its current level.
Lilly had said it expected to produce at least $20 billion in annual revenue through 2014, despite the patent expirations. But Tuesday's forecast didn't surprise investors because Lilly said in October that foreign exchange rates and slower growth in some markets would make that goal challenging.
The company recently lost U.S. patent protection for its top seller, the antidepressant Cymbalta. It also will lose protection for the osteoporosis treatment Evista in March. Those drugs generated about 29 percent of Lilly's worldwide sales of $17.3 billion through the first nine months of last year.
Lilly expects the patent losses to lead to a big drop in U.S. sales for both products. The drugmaker has already weathered some big hits from generic competition, including the 2011 loss of patent protection for the anti-psychotic Zyprexa, its all-time best-selling drug. But Lilly said in a Tuesday morning statement it expects 2014 to be the most financially challenging year of its patent expiration period.
The company expects revenue growth from products like the insulin Humalog and the erectile dysfunction drug Cialis to partially counter the patent hits. It also said operating expenses will drop substantially in 2014, and it has 13 potential new treatments that have either been submitted to regulators for approval or are in advanced clinical testing.
Bernstein analyst Dr. Tim Anderson said in a research note that the drugmaker should be able to return to healthy growth after 2014.