Eli Lilly raises forecast for 2012 as earnings beat estimates

Eli Lilly & chief executive John Lechleiter said rising sales of the antidepressant Cymbalta and animal drugs stemmed losses from generic competition, helping the company’s earnings beat estimates.

Net income declined 4% to $1.01bn (€770m), or 91 cents a share, in the first quarter, the Indianapolis-based company said. Profit excluding one-time items beat by 13 cents the average estimate of 18 analysts surveyed by Bloomberg.

The company has raised its 2012 earnings forecast.

Eli Lilly’s main Irish unit is based in Kinsale, Co Cork, and the company employs close to 600 people in Ireland.

Revenue dropped 4% to $5.6bn, hurt by declining sales for the anti-psychotic Zyprexa after copies of the drug were allowed on the market in the fourth quarter.

Lilly has slashed more than $1bn in costs and fired 5,500 employees in anticipation of the drop in revenue. The company does not plan to initiate new cost cuts, and investors should be prepared for several years of declining sales, Lechleiter said.

“This is a company that is facing a period of several years where we will suffer the loss of several patents,” Lechleiter said in a telephone interview.

“Buying Lilly today means you’re investing in our pipeline, and that is going to be the means that we emerge and resume growth.”

Lilly has 12 drugs in late-stage testing, including an experimental treatment for Alzheimer’s, which Lilly will report results on in the second half of the year, Lechleiter said.

Sales of Cymbalta increased 23% to $1.1bn. Lilly also reported revenue growth of 41% in China, its fastest-growing market. Zyprexa sales fell 56% to $563m. Revenue also benefited from a 33% gain in sales from its Elanco Animal Health unit.

Lechleiter said he has no plans to sell the company’s animal business. Pfizer is considering a sale or spin-off of its animal unit. Lechleiter declined to comment on whether Lilly would be interested in buying Pfizer’s division.

Lilly raised its 2012 adjusted earnings forecast to $3.15 to $3.30 a share from $3.10 and 3.20 a share. Sales are set to drop as much as 10% to $21.8bn to $22.8bn, the company said.

— Bloomberg