Lilly Reports Third-Quarter 2011 Results
- Third-quarter 2011 revenue grew 9 percent to
$6.148 billion due to increased demand for several key brands and favorable exchange rates. - Revenue for Cymbalta, Humalog, Forteo, Strattera, Cialis and Alimta all grew in double-digits, with strong growth also seen in animal health,
Japan andChina . - Q3 operating expense growth was driven primarily by marketing efforts to support new launches, investments in research and development, and exchange rates.
- Clinical pipeline now contains 66 potential new medicines, including 10 in Phase III.
- Company delivered third quarter earnings per share of
$1.11 (reported), or$1.13 (non-GAAP). - 2011 earnings per share guidance range revised to
$3.89 - $3.94 (reported), or$4.30 —$4.35 (non-GAAP).
$ in millions, except per share data | Third Quarter | % | |||
2011 | 2010 | Growth | |||
Total Revenue — Reported | 9% | ||||
Net Income — Reported | 1,236.3 | 1,302.9 | (5)% | ||
EPS — Reported | 1.11 | 1.18 | (6)% | ||
Net Income — non-GAAP | 1,253.8 | 1,341.4 | (7)% | ||
EPS — non-GAAP | 1.13 | 1.21 | (7)% | ||
Financial results for 2011 and 2010 are presented on both a reported and a non-GAAP basis. Reported results were prepared in accordance with generally accepted accounting principles (GAAP) and include all revenue and expenses recognized during the period. Non-GAAP results exclude the items described in the reconciliation tables. The non-GAAP results are presented in order to provide additional insights into the underlying trends in the company's business. The company's 2011 financial guidance is also being provided on both a reported and a non-GAAP basis.
"In the third quarter Lilly continued to drive revenue growth for many key brands, including Cymbalta, Humalog, Forteo and Strattera, with strong growth also seen in animal health,
Key Events Over the Last Three Months
The European Commission granted marketing authorization for Trajenta® for the treatment of adults with type 2 diabetes. The company and its partner Boehringer Ingelheim have recently begun launching Trajenta in theEuropean Union , beginning with theUnited Kingdom .
The U.S. Food and Drug Administration (FDA) approved Cialis® tablets for once daily use for the treatment of men who have both erectile dysfunction and the signs and symptoms of benign prostatic hyperplasia (ED+BPH). TheFDA also approved Cialis for once daily use for a separate indication for the treatment of the signs and symptoms of BPH.
- The European Medicines Agency's (EMA)
Committee for Medicinal Products for Human Use (CHMP) issued a positive opinion for the use of Alimta® as continuation maintenance therapy in patients with advanced nonsquamous non-small cell lung cancer (NSCLC).
The U.S. Court of Appeals for the Federal Circuit overturned a prior ruling by theU.S. District Court for the District ofNew Jersey and upheld the validity of the company's method-of-use patent on Strattera®. The method-of-use patent provides protection for Strattera through May of 2017.
- The company, along with its partners Amylin Pharmaceuticals, Inc. and
Alkermes, Inc. , submitted a reply to a complete response letter issued inOctober 2010 byFDA regarding Bydureon™, an investigational medication for type 2 diabetes. TheFDA has assigned a new Prescription Drug User Fee Act (PDUFA) action date ofJanuary 28, 2012 .
- The company submitted its reply to a complete response letter by
FDA regarding Amyvid™, a molecular Positron Emission Tomography (PET) imaging agent under investigation for the detection of beta-amyloid plaque in the brains of living patients.
- The America Invents Act was signed into law, aligning new U.S. patent laws more closely with those from other countries and improving the global competiveness of U.S. innovator companies such as Lilly. The law will provide new advantages for U.S. inventors by streamlining the application process and addressing the backlog of current applications. This new law, which transitions the U.S. from a "first-to-invent" to a "first-inventor-to-file" system, is the most significant overhaul of the U.S. patent system in 175 years.
Third-Quarter Reported Results
In the third quarter of 2011, worldwide total revenue was
Gross margin increased 3.1 percent to
Total operating expense, defined as the sum of research and development, marketing, selling and administrative expenses, increased 10 percent compared with the third quarter of 2010. Marketing, selling and administrative expenses increased 13 percent to
In the third quarter of 2011, the company recognized a charge of
Operating income in the third quarter of 2011 was
Other income (expense) was a net expense of
The effective tax rate was 17.7 percent in the third quarter of 2011, compared with an effective tax rate of 22.0 percent in the third quarter of 2010. The largest driver of the decrease in the effective tax rate was the recognition of a
Net income and earnings per share decreased to
Third-Quarter 2011 non-GAAP Results
Operating income decreased 8 percent to
For purposes of non-GAAP reporting, items totaling
Third Quarter | |||||
2011 | 2010 | % Growth | |||
Earnings per share (reported) | (6)% | ||||
Restructuring charges | .02 | .03 | |||
Earnings per share (non-GAAP) | (7)% | ||||
Year-to-Date Results
For the first nine months of 2011, worldwide total revenue was
For purposes of non-GAAP reporting, items totaling
Year-to-date | % Growth | ||||
2011 | 2010 | ||||
Earnings per share (reported) | (11)% | ||||
In-process research and development charges | .23 | .03 | |||
Restructuring charges | .18 | .07 | |||
Earnings per share (non-GAAP) | (2)% | ||||
U.S. Health Care Reform Impact
U.S. health care reform reduced earnings per share in the third quarters of 2011 and 2010 by approximately
Revenue Highlights — Reported | ||||||||||||
(Dollars in millions) | Third Quarter | % Change | Year-to-Date | % Change | ||||||||
2011 | 2010 | 2010 | 2011 | 2010 | 2010 | |||||||
Zyprexa® | (3)% | 5% | ||||||||||
Cymbalta® | 1,068.6 | 825.3 | 29% | 2,980.8 | 2,496.2 | 19% | ||||||
Alimta | 629.7 | 560.3 | 12% | 1,823.0 | 1,639.5 | 11% | ||||||
Humalog® | 593.2 | 494.0 | 20% | 1,705.5 | 1,505.1 | 13% | ||||||
Cialis | 469.8 | 406.5 | 16% | 1,381.4 | 1,233.5 | 12% | ||||||
Humulin® | 301.5 | 278.0 | 8% | 903.2 | 801.0 | 13% | ||||||
Evista® | 270.1 | 256.8 | 5% | 799.7 | 757.9 | 6% | ||||||
Forteo® | 240.3 | 199.7 | 20% | 687.3 | 603.8 | 14% | ||||||
Strattera | 153.2 | 127.9 | 20% | 449.5 | 421.3 | 7% | ||||||
Gemzar | 91.0 | 324.6 | (72)% | 359.5 | 905.8 | (60)% | ||||||
451.0 | 353.2 | 28% | 1,210.4 | 967.0 | 25% | |||||||
Total Revenue | 9% | 8% | ||||||||||
Zyprexa
In the third quarter of 2011, Zyprexa sales totaled
Cymbalta
For the third quarter of 2011, Cymbalta generated
Alimta
For the third quarter of 2011, Alimta generated sales of
Humalog
For the third quarter of 2011, worldwide Humalog sales increased 20 percent, to
Cialis
Cialis sales for the third quarter of 2011 increased 16 percent to
Humulin
Worldwide Humulin sales increased 8 percent in the third quarter of 2011, to
Evista
Evista sales were
Forteo
Third-quarter sales of Forteo were
Strattera
During the third quarter of 2011, Strattera generated
Gemzar
Gemzar sales totaled
Erbitux®
Lilly recognizes net royalties received from its Erbitux collaboration partners and revenue from manufactured product sold to these partners. For the third quarter of 2011, Lilly recognized total revenue of
Exenatide (Byetta® and Bydureon)
Lilly recognizes in revenue its 50 percent share of Byetta's gross margin in the U.S., 100 percent of Byetta and Bydureon sales outside the U.S., and its sales of Byetta pen delivery devices to its partner, Amylin Pharmaceuticals. For the third quarter of 2011, Lilly recognized total exenatide revenue of
Worldwide exenatide sales were
Effient®
Effient sales were
Worldwide sales of animal health products in the third quarter of 2011 were
2011 Financial Guidance
The company has updated certain elements of its 2011 financial guidance. The company has narrowed its full-year 2011 non-GAAP earnings per share guidance to a range of
2011 Earnings Per Share Expectations:
2011 | 2010 | % Growth | ||||
Earnings per share (reported) | (14)% to (15)% | |||||
In-process research and development charges | .23 | .03 | ||||
Asset impairments and restructuring charges | .18 | .13 | ||||
Earnings per share (non-GAAP) | (8)% to (9)% | |||||
The company still expects total revenue to grow in the mid-single digits. The company still anticipates that the impact of U.S. health care reform will lower 2011 revenue by
The company still anticipates that gross margin as a percent of revenue will decline between 2 and 3 percentage points.
Marketing, selling and administrative expenses are still projected to grow in the high-single digits and still include an estimated
Other income is now expected to be a net expense of between
The tax rate is now expected to be approximately 20 percent on a non-GAAP basis and approximately 19.5 percent on a reported basis.
Cash flows are still expected to be sufficient to fund capital expenditures that are now expected to be approximately
Webcast of Conference Call
As previously announced, investors and the general public can access a live webcast of the third-quarter 2011 financial results conference call through a link on Lilly's website at www.investor.lilly.com. The conference call will be held today from
Lilly, a leading innovation-driven corporation, is developing a growing portfolio of pharmaceutical products by applying the latest research from its own worldwide laboratories and from collaborations with eminent scientific organizations. Headquartered in
F-LLY
This press release contains forward-looking statements that are based on management's current expectations, but actual results may differ materially due to various factors. There are significant risks and uncertainties in pharmaceutical research and development. There can be no guarantees with respect to pipeline products that the products will receive the necessary clinical and manufacturing regulatory approvals or that they will prove to be commercially successful. Pharmaceutical products can develop unexpected safety or efficacy concerns. The company's results may also be affected by such factors as competitive developments affecting current products; market uptake of recently-launched products; the timing of anticipated regulatory approvals and launches of new products; regulatory actions regarding currently marketed products; issues with product supply; regulatory changes or
other developments; regulatory compliance problems or government investigations; patent disputes; changes in patent law or regulations related to data-package exclusivity; other litigation involving current or future products; the impact of governmental actions regarding pricing, importation, and reimbursement for pharmaceuticals, including U.S. health care reform; changes in tax law; asset impairments and restructuring charges; acquisitions and business development transactions; and the impact of exchange rates and global macroeconomic conditions. For additional information about the factors that affect the company's business, please see the company's latest Form 10-Q and Form 10-K filed with the
Alimta® (pemetrexed, Lilly) | |
Amyvid™ (florbetapir, Lilly) | |
Byetta® (exenatide injection, Amylin Pharmaceuticals) | |
Bydureon™ (exenatide for extended-release injectable suspension, Amylin Pharmaceuticals) | |
Cialis® (tadalafil, Lilly) | |
Cymbalta® (duloxetine hydrochloride, Lilly) | |
Effient® (prasugrel, Lilly) | |
Erbitux® (cetuximab, | |
Evista® (raloxifene hydrochloride, Lilly) | |
Forteo® (teriparatide of recombinant DNA origin injection, Lilly) | |
Gemzar® (gemcitabine hydrochloride, Lilly) | |
Humalog® (insulin lispro injection of recombinant DNA origin, Lilly) | |
Humulin® (human insulin of recombinant DNA origin, Lilly) | |
Strattera® (atomoxetine hydrochloride, Lilly) | |
Trajenta® (linagliptin, Boehringer Ingelheim) | |
Trifexis™ (spinosad + milbemycin oxime, Lilly) | |
Zyprexa® (olanzapine, Lilly) | |
Worldwide Employees | 38,380 | 38,350 | |
Operating Results (Unaudited) — REPORTED | ||||||||||||
(Dollars in millions, except per share data) | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
2011 | 2010 | % Chg. | 2011 | 2010 | % Chg. | |||||||
Total Revenue | $ | 6,147.9 | $ | 5,654.8 | 9% | $ | 18,239.9 | $ | 16,889.0 | 8% | ||
Cost of sales | 1,338.1 | 987.6 | 35% | 3,746.2 | 3,134.0 | 20% | ||||||
Research and development | 1,280.9 | 1,219.8 | 5% | 3,665.5 | 3,446.1 | 6% | ||||||
Marketing, selling and administrative | 1,917.8 | 1,694.9 | 13% | 5,746.5 | 5,064.7 | 13% | ||||||
Acquired in-process research and development | - | - | NM | 388.0 | 50.0 | NM | ||||||
Asset impairments, restructuring and other special charges | 25.2 | 59.5 | (58)% | 233.8 | 113.0 | NM | ||||||
Operating income | 1,585.9 | 1,693.0 | (6)% | 4,459.9 | 5,081.2 | (12)% | ||||||
Net interest income (expense) | (22.9) | (30.9) | (80.5) | (104.4) | ||||||||
Net other income (expense) | (60.5) | 9.2 | (71.7) | 138.8 | ||||||||
Other income (expense) | (83.4) | (21.7) | NM | (152.2) | 34.4 | NM | ||||||
Income before income taxes | 1,502.5 | 1,671.3 | (10)% | 4,307.7 | 5,115.6 | (16)% | ||||||
Income taxes | 266.2 | 368.4 | (28)% | 818.2 | 1,215.7 | (33)% | ||||||
Net income | $ | 1,236.3 | $ | 1,302.9 | (5)% | $ | 3,489.5 | $ | 3,899.9 | (11)% | ||
Earnings per share — basic and diluted | $ | 1.11 | $ | 1.18 | (6)% | $ | 3.13 | $ | 3.53 | (11)% | ||
Dividends paid per share | $ | .49 | $ | .49 | 0% | $ | 1.47 | $ | 1.47 | 0% | ||
Weighted-average shares | 1,113,820 | 1,105,173 | 1,113,324 | 1,104,265 | ||||||||
Weighted-average shares | 1,113,841 | 1,105,198 | 1,113,347 | 1,104,290 | ||||||||
Operating Results (Unaudited) — Non-GAAP | ||||||||||||
(Dollars in millions, except per share data) | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
2011(a) | 2010(b) | % Chg. | 2011(a) | 2010(b) | % Chg. | |||||||
Total Revenue | $ | 6,147.9 | $ | 5,654.8 | 9% | $ | 18,239.9 | $ | 16,889.0 | 8% | ||
Cost of sales | 1,338.1 | 987.6 | 35% | 3,746.2 | 3,134.0 | 20% | ||||||
Research and development | 1,280.9 | 1,219.8 | 5% | 3,665.5 | 3,446.1 | 6% | ||||||
Marketing, selling and administrative | 1,917.8 | 1,694.9 | 13% | 5,746.5 | 5,064.7 | 13% | ||||||
Operating income | 1,611.1 | 1,752.5 | (8)% | 5,081.7 | 5,244.2 | (3)% | ||||||
Net interest income (expense) | (22.9) | (30.9) | (80.5) | (104.4) | ||||||||
Net other income (expense) | (60.5) | 9.2 | (71.7) | 138.8 | ||||||||
Other income (expense) | (83.4) | (21.7) | NM | (152.2) | 34.4 | NM | ||||||
Income before income taxes | 1,527.7 | 1,730.8 | (12)% | 4,929.5 | 5,278.6 | (7)% | ||||||
Income taxes | 273.9 | 389.4 | (30)% | 984.9 | 1,272.7 | (23)% | ||||||
Net income | $ | 1,253.8 | $ | 1,341.4 | (7)% | $ | 3,944.6 | $ | 4,005.9 | (2)% | ||
Earnings per share — basic and diluted | $ | 1.13 | $ | 1.21 | (7)% | $ | 3.54 | $ | 3.63 | (2)% | ||
Dividends paid per share | $ | .49 | $ | .49 | 0% | $ | 1.47 | $ | 1.47 | 0% | ||
Weighted-average shares | 1,113,820 | 1,105,173 | 1,113,324 | 1,104,265 | ||||||||
Weighted-average shares | 1,113,841 | 1,105,198 | 1,113,347 | 1,104,290 | ||||||||
(a.) The third quarter 2011 has been adjusted to eliminate a restructuring charge of | |
(b.) The third quarter 2010 has been adjusted to eliminate a restructuring charge of | |
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