Lilly Reports Fourth-Quarter and Full-Year 2010 Results, Provides 2011 Financial Guidance
- Higher volume drove four percent revenue growth in Q4.
- Gross margin improvements in Q4 led to growth in operating income.
- Fourth quarter earnings per share grew to
$1.05 (reported), or$1.11 (non-GAAP). - Full-year 2010 revenue topped
$23 billion as eight human pharmaceutical medicines and the company's animal health business all exceed$1 billion in annual sales. - Full-year 2010 earnings per share grew to
$4.58 (reported), or$4.74 (non-GAAP). - 2011 earnings per share guidance range set at
$3.92 - $4.07 (reported), or$4.15 - $4.30 (non-GAAP).
$ in millions, except per share data | Fourth Quarter | % | Full Year | % | ||||
2010 | 2009 | Growth | 2010 | 2009 | Growth | |||
Total Revenue — Reported | $6,187.0 | $5,934.2 | 4% | $23,076.0 | $21,836.0 | 6% | ||
Net Income — Reported | 1,169.6 | 915.4 | 28% | 5,069.5 | 4,328.8 | 17% | ||
EPS — Reported | 1.05 | 0.83 | 27% | 4.58 | 3.94 | 16% | ||
Net Income — non-GAAP | 1,234.9 | 999.4 | 24% | 5,240.8 | 4,851.0 | 8% | ||
EPS — non-GAAP | 1.11 | 0.91 | 22% | 4.74 | 4.42 | 7% | ||
Financial results for 2010 and 2009 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.
"Lilly's fourth quarter results capped a year of solid financial performance in which we achieved volume-driven revenue growth along with good expense control. These results allowed us to deliver attractive earnings growth and a healthy dividend for our shareholders, while still investing in the research and development and business development activities that will enable us to bring the next generation of new medicines to patients," said John C. Lechleiter Ph.D., Lilly's chairman and chief executive officer. "As we begin 2011, we remain committed to our strategy of accelerating the flow of potential new medicines through our pipeline and are prepared to meet the challenges of patent expirations for several of our products."
Key Events Over the Last Three Months
- The company announced a global agreement with Boehringer Ingelheim to jointly develop and commercialize a portfolio of diabetes compounds currently in mid- and late-stage development. Included are Boehringer Ingelheim's two oral diabetes agents--linagliptin and BI 10773--as well as Lilly's two basal insulin analogues - LY2605541 and LY2963016 - along with an option to co-develop and co-commercialize Lilly's anti-TGF-beta monoclonal antibody.
- The company completed the acquisition of
Avid Radiopharmaceuticals, Inc. , a company developing novel molecular imaging compounds intended for the detection and monitoring of chronic human diseases. In addition, the U.S.FDA assigned priority review designation to the marketing application for Amyvid™ (florbetapir), Avid's lead program in development.The Peripheral and Central Nervous System Drugs Advisory Committee of the FDA held a meeting to discuss Amyvid's new drug application onJanuary 20, 2011 . The Committee decided that it could not recommend approval of Amyvid at this time based on the currently available data (13-3); but, voted unanimously (16-0) to recommend approval of Amyvid conditional on a reader training program that demonstrates reader accuracy and consistency through a re-read of previously acquired scans. The Committee supported that efficacy was established and there were no significant safety concerns raised. The U.S. Food and Drug Administration (FDA) Gastrointestinal Drugs Advisory Committee voted to recommend non-approval of liprotamase, a non-porcine pancreatic enzyme replacement therapy, currently underFDA review for the treatment of exocrine pancreatic insufficiency. During the meeting, the Committee had questions about the degree of efficacy of liprotamase and recommended that additional studies be conducted prior to considering approval of liprotamase for EPI. The company will continue to work with theFDA to address the questions raised in the meeting as the agency moves toward a final decision on the application.The U.S. District Court for the District ofDelaware ruled that judgment would be entered in the company's favor regarding its Alimta® patent litigation. Including the recently-obtained pediatric exclusivity, the patent provides protection for Alimta until January of 2017.The U.S. Court of Appeals for the Federal Circuit heard the company's appeal of a prior district court ruling invalidating the patent for Strattera®. The company is currently awaiting the appeals court's ruling.- The U.S.
FDA approved Cymbalta® for the management of chronic musculoskeletal pain. This has been established in studies in patients with chronic low back pain and chronic pain due to osteoarthritis. - The U.S.
FDA approved Axiron® for replacement therapy in men for certain conditions associated with a deficiency or absence of testosterone. The company, along with its partnerAcrux Ltd. , expects to launch Axiron in the U.S. by mid-2011. - The company's
Elanco Animal Health division launched two new companion animal products. Assurity™ is a topical flea treatment solely for cats, while Trifexis™ is a broad-spectrum canine parasiticide. - The company suspended all current studies evaluating tasisulam as a second-line treatment for those with unresectable or metastatic melanoma. Tasisulam, an investigational, small-molecule anti-cancer compound, continues to be studied in other types of cancers.
- The company notified its partner,
MacroGenics Inc. , of its decision to terminate the collaboration agreement for the development of teplizumab.
Fourth-Quarter Reported Results
In the fourth quarter of 2010, worldwide total revenue was
Gross margin increased 10 percent in the fourth quarter of 2010. Gross margin as a percent of total revenue was 80.1 percent, reflecting an increase of 4.2 percentage points compared with the fourth quarter of 2009. This increase was due to the impact of changes in foreign currencies compared to the U.S. dollar on international inventories sold, which slightly decreased cost of sales in the fourth quarter of 2010, but significantly increased cost of sales in the fourth quarter of 2009. To a lesser extent, the increase in gross margin as a percent of revenue was also due to lower manufacturing costs.
Marketing, selling and administrative expenses increased 2 percent to
In the fourth quarter of 2010, the company recognized a charge of
Operating income in the fourth quarter of 2010 increased 20 percent to
Other income (expense) improved
The effective tax rate was 17.0 percent in the fourth quarter of 2010, compared with an effective tax rate of 19.5 percent in the fourth quarter of 2009. The effective tax rate for the fourth quarter of 2010 reflects a full-year adjustment related to the extension of the R&D tax credit in the U.S. in late December.
Net income and earnings per share increased to
Fourth-Quarter non-GAAP Results
Operating income increased 15 percent to
For purposes of non-GAAP reporting, items totaling
Fourth Quarter | |||||
2010 | 2009 | % Growth | |||
Earnings per share (reported) | $1.05 | $0.83 | 27% | ||
In-process research and development charge | - | .05 | |||
Asset impairments and restructuring charges | .06 | .02 | |||
Earnings per share (non-GAAP) | $1.11 | $0.91 | 22% | ||
Full Year 2010 Reported Results
For the full-year 2010, worldwide total revenue increased 6 percent to
Gross margin as a percent of total revenue increased by 0.5 percentage points in 2010 to 81.1 percent. This increase was due to lower manufacturing costs and higher selling prices, partially offset by the negative effect of foreign exchange rates on international inventories sold.
Marketing, selling and administrative expenses increased 2 percent in 2010 compared with 2009, to
In 2010, the company recognized a charge of
In 2010, the company recognized charges of
Operating income in 2010 rose 17 percent to
Other income (expense) in 2010 was a net expense of
The effective tax rate was 22.3 percent for the full-year 2010. In 2009, the effective tax rate was 19.2 percent. The 2010 effective tax rate increased due to
For the full-year 2010, net income and earnings per share increased to
Full-Year 2010 non-GAAP Results
Operating income increased 6 percent to
For purposes of non-GAAP reporting, items totaling
Full-Year | |||||
2010 | 2009 | % Growth | |||
Earnings per share (reported) | $4.58 | $3.94 | 16% | ||
Charges related to Zyprexa litigation | - | .13 | |||
In-process research and development charge | .03 | .05 | |||
Asset impairment and restructuring charges | .13 | .29 | |||
Earnings per share (non-GAAP) | $4.74 | $4.42 | 7% | ||
Revenue Highlights | ||||||||||||
(Dollars in millions) | Fourth Quarter | % Change | Full-Year | % Change | ||||||||
2010 | 2009 | 2009 | 2010 | 2009 | 2009 | |||||||
Zyprexa | $1,335.8 | $1,366.5 | (2)% | $5,026.4 | $4,915.7 | 2% | ||||||
Cymbalta | 984.6 | 830.8 | 19% | 3,480.7 | 3,074.7 | 13% | ||||||
Alimta | 569.0 | 523.6 | 9% | 2,208.6 | 1,706.0 | 29% | ||||||
Humalog® | 549.1 | 530.8 | 3% | 2,054.2 | 1,959.0 | 5% | ||||||
Cialis® | 465.9 | 439.5 | 6% | 1,699.4 | 1,559.1 | 9% | ||||||
Gemzar® | 243.6 | 310.5 | (22)% | 1,149.4 | 1,363.2 | (16)% | ||||||
Humulin® | 287.9 | 273.0 | 5% | 1,088.9 | 1,022.0 | 7% | ||||||
Evista® | 266.5 | 262.7 | 1% | 1,024.4 | 1,030.4 | (1)% | ||||||
Forteo® | 226.3 | 212.8 | 6% | 830.1 | 816.7 | 2% | ||||||
Strattera | 155.4 | 162.2 | (4)% | 576.7 | 609.4 | (5)% | ||||||
Animal Health | 424.3 | 353.1 | 20% | 1,391.4 | 1,207.2 | 15% | ||||||
Total Revenue | $6,187.0 | $5,934.2 | 4% | $23,076.0 | $21,836.0 | 6% | ||||||
Zyprexa
In the fourth quarter of 2010, Zyprexa sales totaled
For the full year of 2010, worldwide Zyprexa sales increased 2 percent to
Cymbalta
For the fourth quarter of 2010, Cymbalta generated
For the full year of 2010, worldwide Cymbalta revenue increased 13 percent to
Alimta
For the fourth quarter of 2010, Alimta generated sales of
For the full year of 2010, worldwide Alimta sales increased 29 percent to
Humalog
For the fourth quarter of 2010, worldwide Humalog sales increased 3 percent, to
For the full year of 2010, worldwide Humalog sales increased 5 percent to
Cialis
Cialis sales for the fourth quarter of 2010 increased 6 percent to
For the full year of 2010, worldwide Cialis sales increased 9 percent to
Gemzar
Gemzar sales totaled
For the full year of 2010, worldwide Gemzar sales decreased 16 percent to
Humulin
Worldwide Humulin sales increased 5 percent in the fourth quarter of 2010, to
For the full year of 2010, worldwide Humulin sales increased 7 percent to
Evista
Evista sales were
For the full year of 2010, worldwide Evista sales decreased 1 percent to
Forteo
Fourth-quarter sales of Forteo were
For the full year of 2010, worldwide Forteo sales increased 2 percent to
Strattera
During the fourth quarter of 2010, Strattera generated
For the full year of 2010, worldwide Strattera sales decreased 5 percent to
Byetta®
Lilly recognizes in revenue its 50 percent share of Byetta's gross margin in the U.S., 100 percent of Byetta sales outside the U.S., and its sales of Byetta pen delivery devices to its partner,
Worldwide sales of Byetta were
For the full year of 2010, worldwide Byetta sales decreased 11 percent to
Erbitux®
Lilly recognizes net royalties received from its Erbitux collaboration partners and revenue from manufactured product sold to these partners. For the fourth quarter of 2010, Lilly recognized total revenue of
Effient™
Worldwide Effient sales were
For the full year of 2010, worldwide Effient sales were
Worldwide sales of animal health products in the fourth quarter of 2010 were
For the full year of 2010, worldwide animal health sales increased 15 percent to
2011 Financial Guidance
The company is providing financial guidance for 2011. The company expects full-year 2011 earnings per share to be in the range of
2011 Earnings Per Share Expectations:
2011 Expectations | 2010 Results | % Growth | ||||
Earnings per share (reported) | $3.92 to $4.07 | $4.58 | (11)% to (14)% | |||
In-process research and development charge | .23 | .03 | ||||
Asset impairments and restructuring charges | - | .13 | ||||
Earnings per share (non-GAAP) | $4.15 to $4.30 | $4.74 | (9)% to (12)% | |||
The company expects total revenue growth will be flat to slightly increasing. The company anticipates that the impact of U.S. health care reform will lower 2011 revenue by
The company anticipates that gross margin as a percent of revenue will decline approximately 2 percentage points.
Marketing, selling and administrative expenses are projected to grow in the low- to mid-single digits and include an estimated
Other income is expected to be a net expense of between
Earnings per share are expected to decline and be in the range of
Cash flows are expected to be sufficient to fund capital expenditures of between
Webcast of Conference Call
As previously announced, investors and the general public can access a live webcast of the fourth-quarter and full-year 2010 financial results conference call through a link on Lilly's website at www.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. The company's results may also be affected by such factors as competitive developments affecting current products; rate of sales growth of recently launched products; the timing of anticipated regulatory approvals and launches of new products; regulatory actions regarding currently marketed products; other regulatory developments and government investigations; patent disputes and other litigation involving current and
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 filed
Alimta® (pemetrexed, Lilly) | |
AmyvidTM (florbetapir, Lilly), | |
Assurity™ (spinetoram, Lilly) | |
Axiron® (testosterone, Acrux Corp.) | |
Byetta® (exenatide injection, Amylin Pharmaceuticals) | |
Cialis® (tadalafil, Lilly) | |
Cymbalta® (duloxetine hydrochloride, Lilly) | |
EffientTM (prasugrel, Lilly) | |
Erbitux® (cetuximab, ImClone Systems, Lilly) | |
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) | |
Trifexis™ (spinosad + milbemycin oxime, Lilly) | |
Zyprexa® (olanzapine, Lilly) | |
Eli Lilly and Company Employment Information | |||
December 31, 2010 | December 31, 2009 | ||
Worldwide Employees | 38,350 | 40,360 | |
Eli Lilly and Company | ||||||||||||||
Operating Results (Unaudited) — REPORTED | ||||||||||||||
(Dollars in millions, except per share data) | ||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||
December 31 | December 31 | |||||||||||||
2010 | 2009 | % Chg. | 2010 | 2009 % Chg. | ||||||||||
Total Revenue | $ | 6,187.0 | $ | 5,934.2 | 4% | $ | 23,076.0 | $ | 21,836.0 | 6% | ||||
Cost of sales | 1,232.2 | 1,431.3 | -14% | 4,366.2 | 4,247.0 | 3% | ||||||||
Research and development | 1,438.1 | 1,216.7 | 18% | 4,884.2 | 4,326.5 | 13% | ||||||||
Marketing, selling and administrative | 1,988.7 | 1,953.3 | 2% | 7,053.4 | 6,892.5 | 2% | ||||||||
Acquired in-process research and | 0 | 90.0 | -100% | 50.0 | 90.0 | -44% | ||||||||
Asset impairments, restructuring | 79.0 | 37.9 | NM | 192.0 | 692.7 | -72% | ||||||||
Operating income | 1,449.0 | 1,205.0 | 20% | 6,530.2 | 5,587.3 | 17% | ||||||||
Net interest income (expense) | (29.2) | (36.4) | (133.6) | (186.1) | ||||||||||
Net other income (expense) | (10.2) | (31.4) | 128.6 | (43.4) | ||||||||||
Other income (expense) | (39.4) | (67.8) | -42% | (5.0) | (229.5) | -98% | ||||||||
Income before income taxes | 1,409.6 | 1,137.2 | 24% | 6,525.2 | 5,357.8 | 22% | ||||||||
Income taxes | 240.0 | 221.8 | 8% | 1,455.7 | 1,029.0 | 41% | ||||||||
Net income | $ | 1,169.6 | $ | 915.4 | 28% | $ | 5,069.5 | $ | 4,328.8 | 17% | ||||
Earnings per share — Basic and diluted | $ | 1.05 | $ | .83 | 27% | $ | 4.58 | $ | 3.94 | 16% | ||||
Dividends paid per share | $ | .49 | $ | .49 | NM | $ | 1.96 | $ | 1.96 | NM | ||||
Weighted-average shares | ||||||||||||||
Weighted-average shares | 1,109,336 | 1,101,420 | 1,105,788 | 1,098,338 | ||||||||||
1,109,361 | 1,101,447 | 1,105,813 | 1,098,367 | |||||||||||
NM — not meaningful | ||||||||||||||
Eli Lilly and Company | ||||||||||||||
Operating Results (Unaudited) — Non-GAAP | ||||||||||||||
(Dollars in millions, except per share data) | ||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||
December 31 | December 31 | |||||||||||||
2010(a) | 2009(b) | % Chg. | 2010(a) | 2009(b) | % Chg | |||||||||
Total Revenue | $ | 6,187.0 | $ | 5,934.2 | 4% | $ | 23,076.0 | $ | 21,836.0 | 6% | ||||
Cost of sales | 1,232.2 | 1,431.3 | -14% | 4,366.2 | 4,247.0 | 3% | ||||||||
Research and development | 1,438.1 | 1,216.7 | 18% | 4,884.2 | 4,326.5 | 13% | ||||||||
Marketing, selling and | 1,988.7 | 1,953.3 | 2% | 7,053.4 | 6,892.5 | 2% | ||||||||
Operating income | 1,528.0 | 1,332.9 | 15% | 6,772.2 | 6,370.0 | 6% | ||||||||
Net interest income (expense) | (29.2) | (36.4) | (133.6) | (186.1) | ||||||||||
Net other income (expense) | (10.2) | (31.4) | 128.6 | (43.4) | ||||||||||
Other income (expense) | (39.4) | (67.8) | -42% | (5.0) | (229.5) | -98% | ||||||||
Income before income taxes | 1,488.6 | 1,265.1 | 18% | 6,767.2 | 6,140.5 | 10% | ||||||||
Income taxes | 253.7 | 265.7 | -5% | 1,526.4 | 1,289.5 | 18% | ||||||||
Net income | $ | 1,234.9 | $ | 999.4 | 24% | $ | 5,240.8 | $ | 4,851.0 | 8% | ||||
Earnings per share — basic and diluted | $ | 1.11 | $ | .91 | 22% | $ | 4.74 | $ | 4.42 | 7% | ||||
Dividends paid per share | $ | .49 | $ | .49 | NM | $ | 1.96 | $ | 1.96 | NM | ||||
Weighted-average shares | 1,109,336 | 1,101,420 | 1,105,788 | 1,098,338 | ||||||||||
Weighted-average shares | 1,109,361 | 1,101,447 | 1,105,813 | 1,098,367 | ||||||||||
NM — not meaningful | ||||||||||||||
- The fourth-quarter and full-year 2010 financial statements have been adjusted to eliminate restructuring charges of
$79.0 million (pretax), or$0.06 (after-tax). The year-to-date 2010 financial statements have also been adjusted to eliminate restructuring charges of$113.0 million (pretax), or$0.07 (after-tax). These charges are primarily related to severance costs from previously announced strategic actions that the company is taking to reduce its cost structure and global workforce. In addition, the year-to-date 2010 financial statements have been adjusted to eliminate a charge of$50.0 million (pretax), or$0.03 per share (after-tax), for acquired in-process research and development associated with the in-licensing agreement withAcrux Ltd. - The fourth- quarter and full-year 2009 financial statements have been adjusted to eliminate an asset impairment and restructuring charge of
$37.9 million (pretax), or$0.02 (after-tax). This charge is primarily related to severance costs from previously announced strategic actions. In addition, the fourth quarter and full-year 2009 financial statements have been adjusted to eliminate a charge of$90.0 million (pretax), of$0.05 per share (after-tax) for acquired in-process research and development associated with the licensing agreement withIncyte . The year-to-date 2009 financial statements have been adjusted to eliminate an additional special pretax charge of$230.0 million , or$0.13 per share (after-tax), related with several states' litigation claims involving Zyprexa. In addition , the full-year 2009 financial statements have also been adjusted to eliminate an asset impairment and restructuring charge of$424.8 million (pretax), or$0.26 (after-tax) primarily related to severance costs from previously announced strategic actions.
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