Eli Lilly's first-quarter revenue tops estimates as COVID-19 pandemic boosts sales by $250 million

Headline results for the first quarter:

Revenue

$5.9 billion (forecasts of $5.5 billion)

+15%

Profit

$1.5 billion

-66%

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

What the company said:

Chief financial officer Josh Smiley noted that Eli Lilly "exited 2019 with strong revenue growth and margin expansion, driven by the uptake of our newer medicines. That momentum continued in [the first quarter] and was augmented by higher patient and supply chain purchasing due to the COVID-19 pandemic." According to the company, key growth products launched since 2014 contributed 19 percentage points of revenue growth in the quarter, representing approximately 51% of total revenue.

Eli Lilly also said it generated $250 million in additional revenue due to "increased customer buying patterns and patient prescription trends" as a result of the coronavirus outbreak, with approximately $200 million in the US and around $50 million outside the country. The drugmaker indicated that the higher US revenue was mainly from its portfolio of diabetes medicines, with estimated increases of roughly $70 million to $80 million for insulin products, and about $30 million to $40 million for Trulicity. Meanwhile, US revenue for the psoriasis therapy Taltz was favourably impacted by approximately $20 million to $25 million.

Other results:

  • US revenue: $3.3 billion, up 15%
  • Non-US revenue: $2.5 billion, up 15%
  • Key growth products launched since 2014:
    • Trulicity: $1.2 billion, up 40%, with sales of the diabetes drug both inside and outside the US driven by higher volumes, partially offset by lower realised prices
    • Taltz: $443.5 million, up 76%, boosted in part by higher volumes and realised prices in the US
    • Basaglar: $303.7 million, up 21%, mainly driven by greater volumes, as sales outside the US were negatively impacted by foreign exchange rates
    • Jardiance: $267.5 million, up 31%, as increased volumes drove up sales by 15% in the US and by 57% outside the country
    • Cyramza: $239 million, up 21%, with higher volumes pushing up revenues both inside and outside the US
    • Verzenio: $188 million, up 72%, helped by higher volumes both in the US as well as outside the country
    • Olumiant: $139.7 million, up 70%, with increased volumes resulting in a 70% jump in quarterly sales outside the US
    • Emgality: $74 million, up from $14.2 million in the prior year
  • Humalog: $695.8 million, down 5%, with US sales declining 11% to $398.6 million, hit by lower realised prices as a result of changes in estimates for rebates and discounts
  • Alimta: $560.1 million, up 12%, with increased volumes and to a certain extent higher realised prices bolstering US revenues
  • Humulin: $315.7 million, up 6%
  • Forteo: $272.4 million, down 13%, with US sales hurt by lower realised prices primarily due to the unfavourable impact of higher contracted rates

Looking ahead:   

Eli Lilly still expects revenue this year of between $23.7 billion and $24.2 billion, while earnings per share are predicted to be in the range of $6.70 to $6.90, with the top of the forecast lifted from prior guidance of $6.80.

"Our revenue…outlook for 2020 is unchanged, but the economic and healthcare consequences of this pandemic are uncertain and could negatively affect our financial results later in 2020 and beyond, due to reduced non-COVID healthcare activities and global economic challenges," commented Smiley. Last month, the company delayed many of its clinical trials, citing strains the pandemic was placing on healthcare systems.

What analysts are saying:   

J.P. Morgan analyst Chris Schott remarked that "while we could see some negative impact to drug pricing from COVID-19, we see this as fairly manageable and far more muted than the impacts being experienced elsewhere in the broader economy."

However, Citi Equities analyst Andrew Baum suggested long-term unemployment rates in the US would likely reduce demand for drugs and even cut federal reimbursement for Eli Lilly's key medicines, pointing out that there are lower-cost options to Trulicity and Taltz.

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