INDIANAPOLIS (AP) – Drugmaker Eli Lilly and Co. forecast a steeper-than-expected earnings drop this year due to the expiration of a patent protecting its top-selling antipsychotic drug Zyprexa from generic competition.
The Indianapolis company said it will earn between $3.10 and $3.20 per share in 2012 on revenue of $21.8 billion to $22.8 billion. Analysts expected Lilly’s 2012 earnings to drop, but the forecast falls well short of their predictions. Wall Street expected earnings of $3.60 per share on $22.79 billion in revenue, according to FactSet. The company’s 2012 prediction would mean a drop of between 26% and 28% from its forecast for earnings of $4.30 to $4.35 per share in 2011.
Lilly sees Zyprexa revenue plunging by over $3 billion. The drug rang up more than $5 billion in 2010 sales, the last full year before its U.S. patent expired. That happened in October, exposing Zyprexa to competition from cheaper generic versions of the drug.
Several big drugmakers are dealing with patent expirations on key products, but analysts say Lilly faces one of the biggest hits. In addition to Zyprexa, the company will lose protection for its second-best seller, the antidepressant Cymbalta, in 2013.
By 2014, the drugmaker will have lost U.S. patents protecting five drugs that generated 64 percent of Lilly’s U.S. product sales in 2010. That includes the diabetes treatment Humalog and the cancer drug Gemzar, which has seen sales plummet since it lost patent protection in November 2010.
Analysts expect the company’s earnings to drop through 2014 before rebounding, and some question how the company can replace that revenue and maintain its dividend at the current quarterly rate of 49 cents per share.
In October Fitch Ratings downgraded several Lilly debt ratings on concerns about the patent expirations.
Lilly officials have said they have no plans to reduce the dividend. The company has been preparing for the revenue losses for years and is trying to offset them with cost-cutting, its pipeline of drugs under development, its animal health business, sales in emerging markets like China, and with sales growth in Japan.
Lilly said Thursday it now has a dozen potential drugs in late-stage clinical testing, the last phase before a company seeks regulatory approval to sell a drug. That beats its goal of 10 by the end of the year.
Lilly expects to meet or beat its 2011 forecast for earnings of $4.30 to $4.35 per share. Analysts expect earnings of $4.34 per share. The company plans to report its fourth-quarter and full-year results on Jan. 31.
Date: January 5, 2012
Source: Associated Press