Eli Lilly lifts annual earnings guidance as third-quarter sales, profit rise

Headline results for the third quarter:

Revenue

$5.5 billion (in line with forecasts)

+3%

Profit

$1.3 billion

+9%

Note: All changes are versus the prior-year period unless otherwise stated

What the company said:

CEO David Ricks noted that the "strong results" in the quarter were "due in large part to the growth of our newer medicines and our ability to effectively manage costs." The executive added that "revenue growth is being driven by volume, not price, as more and more patients are benefiting from our recently launched medicines."

Ricks indicated that the company's "sustained investments in oncology, diabetes, immunology, and neuroscience research continue to be productive, with several new medicines expected to be submitted [and launched]…over the next few years." The company also announced Wednesday that Enrique Conterno, president of Lilly Diabetes and Lilly USA, will retire at the end of the year, succeeded by Mike Mason, who currently serves as senior vice president of connected care and insulins.

Other results:

  • US revenue: $3.1 billion, flat versus the prior year, with 5% increased volume offset by lower realised prices due to  increased coverage gap funding requirements in Medicare Part D
  • Non-US revenue: $2.4 billion, up 8%, with increased volume of 12% driven by key growth products, including Trulicity, Olumiant, Jardiance, Taltz and Verzenio
  • Key growth products launched since 2014: $2.4 billion, contributing 12% of revenue growth and accounting for roughly 44% of total sales
    • Trulicity: $1 billion, up 24%, missing forecasts of $1.1 billion; US sales were up 17% at $755.5 million and rose 50% in other markets to $256 million
    • Taltz: $340 million, up 29%, but below expectations of $395.7 million; sales outside the US jumped 68% to $89.4 million following recent launches.
    • Basaglar: $263.2 million, up 31%, boosted by increased demand and higher realised prices
    • Jardiance: $240.7 million, up 44%, due to increased demand, volume
    • Cyramza: $240 million, up 21%, buoyed by increased demand, volume
    • Verzenio: $157.2 million, up 86%, mainly due to higher realised prices and increased demand in the US
    • Olumiant: $114.6 million, versus $55.6 million in the prior year; sales outside the US climbed 87% to $102.5 million, driven by increased demand.
    • Emgality: $47.7 million
  • Humalog: $648.9 million, down 2%, beating estimates of $645.3 million, with sales affected by decreased demand and lower realised prices in the US
  • Alimta: $508.2 million, down 2%, mainly due to lower realised prices
  • Forteo: $370.7 million, down 5%, as a result of decreased demand, with sales expected to fall further due to generic and biosimilar competition in major European markets, Japan and the US following loss of patent exclusivity in the third quarter
  • Humulin: $321.8 million, flat versus prior year
  • Cialis: $184.3 million, down 61%, with US sales falling 90% to $30.9 million as a result of generic competition

Looking ahead:        

Eli Lilly now expects earnings per share for 2019 of between $5.75 and $5.85, lifted from a prior prediction of $5.67 to $5.77. Analysts forecast earnings of $5.72 per share for full year. Meanwhile, annual sales are still forecast in the range of $22 billion to $22.5 billion.

Regarding future deals, Ricks suggested that Eli Lilly will target companies developing drugs to treat cancer. "Probably because of the number of opportunities, you will see us active in oncology - that's where a lot of early-stage biotech is," the executive commented.

What analysts said:

Citi analyst Andrew Baum suggested that the performance of Trulicity was likely a result of Eli Lilly trying to defend its market share against the upcoming launch of competing drug from Novo Nordisk. However, Conterno remarked "when it comes to Trulicity (insurance) coverage, we have unprecedented access. And we are projecting that into next year."

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