TIDMLEL
Date: April 25, 2012
For Release: Immediately
Refer to: (317) 276-5795 - Mark E. Taylor (Media)
(317) 655-6874 - Philip Johnson (Investors)
Lilly Reports Solid Start to the Year With First-Quarter 2012
Results, Raises EPS Guidance
- Worldwide revenue declined 4 percent in the first quarter of 2012, driven by
Zyprexa patent expirations, partially offset by significant growth in other
products and key regions.
- Cymbalta revenue increased 23 percent due to strong growth in both the U.S.
and international markets, while Effient revenue more than doubled.
- Elanco Animal Health revenue grew 33 percent, driven by gains in both the
food animal and companion animal portfolios.
- China remained Lilly's fastest-growing market, with revenue growth of 41
percent.
- Continued investment in research and development supported robust Phase III
pipeline of 12 potential new medicines.
- First quarter earnings per share were $.91 (reported), or $.92 (non-GAAP).
- 2012 earnings per share guidance range raised to $3.14 - $3.29 (reported),
or $3.15 - $3.30 (non-GAAP)
Eli Lilly and Company (NYSE: LLY) today announced financial results for the
first quarter of 2012.
$ in millions, except per First Quarter %
share data
2012 2011 Change
Total Revenue - Reported $5,602.0 $5,839.2 (4)%
Net Income - Reported 1,011.1 1,055.9 (4)%
EPS - Reported 0.91 0.95 (4)%
Net Income - non-GAAP 1,026.9 1,374.9 (25)%
EPS - non-GAAP 0.92 1.24 (26)%
Financial results for 2012 and 2011 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 2012 financial guidance is also being provided on both
a reported and a non-GAAP basis.
"Lilly's financial results in the first quarter represent a solid start to the
year and support our decision to increase our 2012 EPS guidance.
Notwithstanding the negative effect of the expiration of the Zyprexa patent in
the U.S. and many international markets, Lilly demonstrated strong underlying
growth in other products and key regions; specifically, Cymbalta, Forteo,
Effient, diabetes care and our animal health portfolio, as well as our
fast-growing affiliate in China," said John C. Lechleiter, Ph.D., Lilly's
chairman, president and chief executive officer. "We continue to invest
appropriately in our pipeline, with 12 potential new medicines now in Phase
III clinical trials. We strongly believe that our innovation-based strategy
will enable Lilly to return to steady growth following a period of multiple
patent expirations."
Key Events Over the Last Three Months
- The U.S. Food and Drug Administration (FDA) approved Amyvid?, a
radioactive diagnostic agent indicated for brain imaging of beta-amyloid
plaques in patients with cognitive impairment who are being evaluated for
Alzheimer's Disease and other causes of cognitive decline.
- Japan's Ministry of Health, Labor and Welfare approved Zyprexa?
for treatment of depression in bipolar disorder and Cymbalta? for
treatment of diabetic peripheral neuropathic pain.
- The FDA issued a Complete Response Letter for the Erbitux? filing
in first-line non-small cell lung cancer, which was based on the pivotal
FLEX study. Lilly and its partner, Bristol-Myers Squibb, do not plan to
resubmit the FLEX filing, but will continue to market Erbitux in the U.S.
for certain types of head and neck cancer and colorectal cancer.
- The European Commission granted marketing authorization to Byetta?
(exenatide twice-daily) as an adjunctive therapy to basal insulin, with or
without metformin and/or Actos? (pioglitazone), for the treatment of type
2 diabetes in adults who have not achieved adequate glycemic control with
these agents.
First-Quarter Reported Results
In the first quarter of 2012, worldwide total revenue was $5.602 billion, a
decrease of 4 percent compared with the first quarter of 2011. This 4 percent
revenue decline was comprised of a decrease of 7 percent due to lower volume,
partially offset by an increase of 4 percent in prices. Foreign exchange rates
had a negligible impact. (Numbers do not add due to rounding). The decrease in
volume was driven by the loss of patent exclusivity for Zyprexa in most major
markets, partially offset by volume gains for other products. Total revenue in
the U.S. remained relatively flat at $3.085 billion due to the loss of patent
exclusivity for Zyprexa, offset by increased prices and, to a lesser extent,
increased volume in other products. Total revenue outside the U.S. decreased
by 9 percent to $2.517 billion, driven by the loss of patent exclusivity for
Zyprexa, partially offset by increased volume in other products including
Cymbalta, Forteo?, Humalog?, Efient? and the animal health portfolio, as well
as a 41 percent revenue increase in China.
Gross margin decreased 5.5 percent to $4.404 billion in the first quarter of
2012. Gross margin as a percent of total revenue was 78.6 percent, reflecting
a decrease of 1.2 percentage points compared with the first quarter of 2011.
The decrease in gross margin percent was primarily due to lower sales of
Zyprexa following its patent expiration in most major markets, partially
offset by the impact of foreign exchange rates on international inventories
sold.
Total operating expense, defined as the sum of research and development,
marketing, selling and administrative expenses, increased 3 percent compared
with the first quarter of 2011. Marketing, selling and administrative expenses
increased 3 percent to $1.848 billion, driven by the diabetes collaboration
with Boehringer Ingelheim and increased expense for newer pharmaceutical and
animal health products, partially offset by lower administrative expenses.
Research and development expenses increased 2 percent to $1.151 billion, or
20.6 percent of total revenue, driven by expenses related to the diabetes
collaboration with Boehringer Ingelheim and other late-stage clinical trial
costs.
In the first quarter of 2012, the company recognized an asset impairment,
restructuring and other special charge of $23.8 million primarily related to
the withdrawal of Xigris?. In the first quarter of 2011, the company
recognized a charge of $76.3 million for restructuring related to severance
costs from previously announced strategic actions that the company is taking
to reduce its cost structure, as well as a $388.0 million in-process research
and development (IPR&D) charge associated with the diabetes collaboration with
Boehringer Ingelheim.
Operating income in the first quarter of 2012 was $1.381 billion, an increase
of 7 percent compared to the first quarter of 2011, due primarily to the prior
year IPR&D charge mentioned previously, partially offset by decreased revenue
as a result of the loss of Zyprexa patent exclusivity.
Other income (expense) was a net expense of $46.0 million, compared with net
expense of $11.2 million in the first quarter of 2011. The increase in other
expense was driven by the recognition in the first quarter of 2011 of a gain
on an equity investment and an insurance recovery, partially offset by
increased interest income in the first quarter of 2012.
The effective tax rate was 24.3 percent in the first quarter of 2012, compared
with an effective tax rate of 17.1 percent in the first quarter of 2011. The
increase in the effective tax rate was driven primarily by the tax benefit in
2011 of the IPR&D charge described above, as well as the expiration of the R&D
tax credit in the U.S. at the end of 2011.
Net income and earnings per share decreased to $1.011 billion and $0.91,
respectively, compared with first-quarter 2011 net income of $1.056 billion
and earnings per share of $0.95. The decreases in net income and earnings per
share were primarily due to lower gross margin and the increase in the
effective tax rate, partially offset by the IPR&D charge in the first quarter
of 2011.
First-Quarter 2012 non-GAAP Results
On a non-GAAP basis, first quarter 2012 operating income decreased 20 percent
to $1.405 billion, due to lower gross margin resulting from the loss of patent
exclusivity for Zyprexa in most major markets and, to a lesser extent,
increased operating expenses. The effective tax rate was 24.4 percent,
compared with 20.9 percent in the first quarter of 2011, primarily due to the
expiration of the R&D tax credit at the end of 2011, as well as the inclusion
of a discrete item in the first quarter of 2012 due to changes in estimates
concerning certain prior-year tax items. Net income and earnings per share
decreased 25 and 26 percent, to $1.027 billion and $0.92, respectively. These
decreases were driven primarily by lower operating income.
For purposes of non-GAAP reporting, items totaling $.01 and $.29 per share in
the first quarters of 2012 and 2011, respectively, have been excluded. For
further detail, see the reconciliation below as well as the footnotes to the
non-GAAP income statement later in this press release.
First Quarter
2012 2011 % Change
Earnings per share (reported) $.91 $.95 (4)%
In-process research and development
charge associated with Boehringer
Ingelheim collaboration - .23
Asset impairment, restructuring, other
special charges .01 .06
Earnings per share (non-GAAP) $.92 $1.24 (26)%
Revenue Highlights
(Dollars in First Quarter % Change Over/(Under)
millions) 2012 2011 2011
Cymbalta $1,114.9 $908.8 23%
Alimta? 606.8 579.9 5%
Humalog 590.3 525.4 12%
Zyprexa 562.7 1,281.9 (56)%
Cialis? 461.8 434.4 6%
Humulin? 307.7 289.8 6%
Forteo 271.3 216.1 26%
Evista? 256.2 266.1 (4)%
Strattera? 158.9 138.7 15%
Effient 115.8 56.3 NM
Animal Health 490.7 369.8 33%
Total Revenue $5,602.0 $5,839.2 (4)%
Cymbalta
For the first quarter of 2012, Cymbalta generated $1.115 billion in revenue,
an increase of 23 percent compared with the first quarter of 2011. U.S. sales
of Cymbalta increased 24 percent, to $857.6 million, driven by increased
prices and higher demand. Revenue outside the U.S. was $257.3 million, an
increase of 18 percent, driven by higher demand.
Alimta
For the first quarter of 2012, Alimta generated sales of $606.8 million, an
increase of 5 percent compared with the first quarter of 2011. U.S. sales of
Alimta increased 10 percent, to $256.6 million, driven by increased demand
and, to a lesser extent, higher prices. Sales outside the U.S. increased 1
percent, to $350.2 million, due to increased demand, partially offset by lower
prices in Japan.
Humalog
For the first quarter of 2012, worldwide Humalog sales increased 12 percent,
to $590.3 million. Sales in the U.S. increased 15 percent to $348.4 million,
driven by higher prices. Sales outside the U.S. increased 9 percent to $241.9
million, due to increased demand.
Zyprexa
In the first quarter of 2012, Zyprexa sales totaled $562.7 million, a decrease
of 56 percent compared with the first quarter of 2011 due to the loss of
patent exclusivity in the U.S. and most major international markets outside of
Japan. The company expects further erosion of Zyprexa sales throughout 2012.
U.S. sales of Zyprexa decreased 66 percent to $202.8 million. Zyprexa sales in
international markets decreased 47 percent, to $359.9 million.
Cialis
Cialis sales for the first quarter of 2012 increased 6 percent to $461.8
million. U.S. sales of Cialis were $178.8 million in the first quarter, a 13
percent increase compared with the first quarter of 2011, driven by higher
demand. Sales of Cialis outside the U.S. increased 2 percent, to $283.0
million, driven by increased demand and higher prices, partially offset by the
unfavorable impact of foreign exchange rates.
Humulin
Worldwide Humulin sales increased 6 percent in the first quarter of 2012, to
$307.7 million. U.S. sales increased 20 percent to $155.1 million, driven
primarily by higher prices. Sales outside the U.S. decreased 5 percent, to
$152.6 million, driven by the unfavorable impact of foreign exchange rates,
lower prices, and decreased volume.
Forteo
First-quarter sales of Forteo were $271.3 million, a 26 percent increase
compared with the first quarter of 2011. U.S. sales of Forteo increased 9
percent to $121.9 million due to higher prices, largely offset by decreased
demand. Sales outside the U.S. increased 43 percent, to $149.4 million, due
primarily to increased demand in Japan.
Evista
Evista sales for the first quarter of 2012 decreased 4 percent to $256.2
million. U.S. sales of Evista decreased 1 percent to $171.7 million, driven by
decreased demand, largely offset by higher prices. Sales outside the U.S.
decreased 8 percent to $84.5 million, driven by lower volume in Japan.
Strattera
During the first quarter of 2012, Strattera generated $158.9 million of sales,
an increase of 15 percent compared with the first quarter of 2011. U.S. sales
increased 21 percent to $104.8 million, due to higher prices. Sales outside
the U.S. increased 4 percent, to $54.1 million, driven primarily by higher
demand, partially offset by lower prices.
Effient
Effient sales were $115.8 million in the first quarter of 2012, an increase of
106 percent compared with the first quarter of 2011. U.S. Effient sales
increased 114 percent to $89.8 million, driven by increased demand and higher
prices. Sales outside the U.S. increased 82 percent to $26.0 million due to
higher demand.
Erbitux
Lilly recognizes net royalties received from its Erbitux collaboration
partners and revenue from manufactured product sold to these partners. For the
first quarter of 2012, Lilly recognized total revenue of $113.3 million for
Erbitux, an increase of 9 percent from the first quarter of 2011.
Animal Health
Worldwide sales of animal health products in the first quarter of 2012 were
$490.7 million, an increase of 33 percent compared with the first quarter of
2011. U.S. sales grew 33 percent, to $269.6 million, due primarily to
increased demand and the favorable impact from customer buying patterns. Sales
outside the U.S. increased 32 percent, to $221.1 million, driven primarily by
the impact of the acquisition of certain Janssen animal health assets in
Europe.
2012 Financial Guidance
The company has raised its 2012 earnings per share guidance and now expects
full-year 2012 earnings per share to be in the range of $3.14 to $3.29 on a
reported basis and $3.15 to $3.30 on a non-GAAP basis. All other elements of
the company's 2012 financial guidance remain unchanged.
2012 2011
Expectations Results % Change
Earnings per share (reported) $3.14 to $3.90 (19)% to (16)%
$3.29
In-process research and development
charge associated with Boehringer
Ingelheim collaboration - .23
Asset impairment, restructuring, other
special charges .01 .29
Earnings per share (non-GAAP) $3.15 to $4.41 (29)% to (25)%
$3.30
Numbers in the 2011 full-year column do not add due to rounding.
The company anticipates 2012 revenue of between $21.8 and $22.8 billion. This
includes an expected decline of over $3 billion in Zyprexa sales due to patent
expirations in most markets outside of Japan. The reduction in revenue due to
Zyprexa patent expirations is expected to be partially offset by growth in key
franchises including Cymbalta, Cialis, Humalog, Humulin and Forteo, as well as
continued growth of newer products such as Effient, Axiron? and Tradjenta?.
The company also anticipates continued strong, double-digit revenue growth
from its Elanco Animal Health business. Both Japan and Emerging Markets are
expected to post continued strong underlying volume growth; however, overall
revenue growth in these markets in 2012 will be adversely affected by pricing
actions in Japan and by the expected impact of patent expirations, including
Zyprexa, in some emerging market countries.
The company anticipates that gross margin as a percent of revenue will be
approximately 77 percent in 2012.
As a result of ongoing productivity efforts, the company expects to keep 2012
operating expenses essentially flat compared to 2011. Marketing, selling and
administrative expenses are expected to decline and be in the range of $7.4
billion to $7.8 billion. Research and development expense is expected to be
flat to increasing and in the range of $5.0 billion to $5.3 billion.
Other income and deductions is expected to be in a range between net expense
of $50 million and net income of $100 million in 2012.
The 2012 tax rate is expected to be approximately 21 percent, and assumes the
extension of the R&D tax credit for the full year 2012.
Operating cash flows in 2012 are expected to be more than sufficient to fund
capital expenditures of approximately $800 million, as well as anticipated
business development activity and the company's current dividend.
Webcast of Conference Call
As previously announced, investors and the general public can access a live
webcast of the first-quarter 2012 financial results conference call through a
link on Lilly's website at www.lilly.com. The conference call will be held
today from 9:00 a.m. to 10:00 a.m. Eastern Daylight Time (EDT) and will be
available for replay via the website.
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 Indianapolis, Ind., Lilly provides answers -
through medicines and information - for some of the world's most urgent
medical needs. Additional information about Lilly is available at
www.lilly.com.
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 U.S. Securities and Exchange Commission. The company undertakes
no duty to update forward-looking statements.
# # #
Actos? (pioglitazone, Takeda Pharmaceuticals)
Alimta? (pemetrexed, Lilly)
AmyvidTM (florbetapir, Lilly)
Axiron? (testosterone, Acrux Corp.)
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, 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)
Trajenta? (linagliptin, Boehringer Ingelheim)
Xigris? (drotrecogin alfa (activated), Lilly)
Zyprexa? (olanzapine, Lilly)
Eli Lilly and Company Employment Information
March 31, 2012 December 31, 2011
Worldwide Employees 38,270 38,080
Eli Lilly and Company
Operating Results (Unaudited) - REPORTED
(Dollars in millions, except per share data)
Three Months Ended
March 31
2012 2011 % Chg.
Total Revenue $ 5,602.0 $ 5,839.2 (4)%
Cost of sales 1,197.9 1,180.1 2%
Research and development 1,151.5 1,124.0 2%
Marketing, selling and administrative 1,847.5 1,785.7 3%
Acquired in-process research and development - 388.0 NM
Asset impairments, restructuring and other 23.8 76.3 (69)%
special charges
Operating income 1,381.3 1,285.1 7%
Net interest income (expense) (19.2) (30.3)
Net other income (expense) (26.8) 19.1
Other income (expense) (46.0) (11.2) NM
Income before income taxes 1,335.3 1,273.9 5%
Income taxes 324.2 218.0 49%
Net income $ 1,011.1 $ 1,055.9 (4)%
Earnings per share - basic and diluted $ 0.91 $ 0.95 (4)%
Dividends paid per share $ 0.49 $ 0.49 NM
Weighted-average shares outstanding 1,116,962 1,112,003
(thousands) - basic
Weighted-average shares outstanding 1,116,983 1,112,026
(thousands) - diluted
NM - not meaningful
Eli Lilly and Company
Operating Results (Unaudited) - Non-GAAP
(Dollars in millions, except per share data)
Three Months Ended
March 31
2012(a) 2011(b) % Chg.
Total Revenue $ 5,602.0 $ 5,839.2 (4)%
Cost of sales 1,197.9 1,180.1 2%
Research and development 1,151.5 1,124.0 2%
Marketing, selling and 1,847.5 1,785.7 3%
administrative
Operating income 1,405.1 1,749.4 (20)%
Net interest income (19.2) (30.3)
(expense)
Net other income (expense) (26.8) 19.1
Other income (expense) (46.0) (11.2) NM
Income before income taxes 1,359.1 1,738.2 (22)%
Income taxes 332.2 363.3 (9)%
Net income $ 1,026.9 $ 1,374.9 (25)%
Earnings per share - basic $ 0.92 $ 1.24 (26)%
and diluted
Dividends paid per share $ 0.49 $ 0.49 NM
Weighted-average shares
outstanding (thousands) -
basic 1,116,962 1,112,003
Weighted-average shares
outstanding (thousands) -
diluted 1,116,983 1,112,026
(a) The first quarter 2012 has been adjusted to eliminate a charge of $23.8
(pretax), or $0.01 per share (after-tax) primarily related to the withdrawal
of Xigris.
(b) The first quarter 2011 has been adjusted to eliminate a restructuring
charge of $76.3 million (pretax), or $0.06 (after-tax). This charge is 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 first quarter 2011 financial statements have been adjusted to
eliminate a charge of $388.0 million (pretax), or $0.23 per share (after-tax),
for acquired in-process research and development associated with the
collaboration with Boehringer Ingelheim.
END
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