Eli Lilly & Company (LLY) reported fourth-quarter 2014 adjusted earnings per share of 75 cents, a penny above the Zacks Consensus Estimate and the year-ago earnings.
Fourth-quarter revenues fell 12% to $5.121 billion, reflecting generic competition for Cymbalta and Evista in the U.S. as well as negative currency movement. However, revenues were slightly above the Zacks Consensus Estimate of $5.108 billion.
Reported earnings (including special items) declined 40% to 40 cents per share in the fourth quarter of 2014.
Eli Lilly’s full-year earnings declined 33% to $2.78 per share. Revenues fell 15% to $19.6 billion.
Generics & Currency Hit Revenues
Fourth-quarter revenues declined 9% due to lower volume and 4% due to currency fluctuation. This was partially offset by 1% due to higher prices. The lower volume was mainly due to the Dec 2013 genericization of Cymbalta in the U.S. and the Mar 2014 patent expiry of Evista in the U.S.
U.S. revenues declined 19% to $2.453 billion reflecting lower volume resulting from the loss of patent protection on Cymbalta and Evista as well as wholesaler buying patterns. Ex-U.S. revenues declined 3% to $2.669 billion mainly due to unfavorable currency movement.
During the fourth quarter, Zyprexa recorded a 27% decline in revenues, which came in at $253.1 million.
Cymbalta sales fell 58% to $367.3 million. U.S. sales plunged 89% to $62.8 million due to the loss of patent exclusivity in Dec 2013. Ex-U.S. sales remained flat at $304.5 million with higher volume being offset by unfavorable currency movement.
Evista sales fell 74% to $72.1 million. U.S. sales dropped 91% to $19.4 million, due to the loss of exclusivity in Mar 2014. Ex-U.S. sales declined 21% to $52.7 million due to lower prices and unfavorable currency movement.
Products which recorded growth in the fourth quarter included Effient (up 6% to $137.8 million), Humulin (up 7% to $395.6 million), Cialis (up 6% to $622.4 million) and Forteo (up 6% to $380.8 million).
Eli Lilly’s Animal Health segment contributed $633.3 million (up 9%) to revenues. Higher volume for food animal products led to the increase. The Lohmann acquisition also boosted sales. Sales in the U.S. grew 5% due to higher prices partially offset by lower volume for companion animal products due to competition and market dynamics.
Eli Lilly is looking to strengthen its Animal Health division and acquired Novartis’ (NVS) animal health business earlier this year.
Earnings Guidance Maintained
Eli Lilly maintained its 2015 earnings guidance of $3.10 – $3.20 per share. However, revenues are now expected in the range of $19.5 billion – $20.0 billion (previous guidance: $20.3 billion and $20.8 billion).
The Zacks Consensus Estimate for earnings and revenues is currently $3.12 per share and $20.4 billion, respectively.
The company now expects gross margin of about 78% (up from prior guidance of 76.5%).
Marketing, selling and administrative expenses are expected in the range of $6.3 billion – $6.6 billion (old guidance: $6.5 billion – $6.8 billion). Meanwhile, research and development expenses are expected to come in at $4.7 billion – $4.9 billion (old guidance: $4.8 billion – $5.0 billion).
Our Take
Although Eli Lilly’s fourth-quarter results were slighltly above expectations, the genericization of Cymbalta and Evista impacted revenues. Basically, 2014 has been an extremely challenging year for Eli Lilly with both products seeing a sharp decline in sales.
However, some of the company’s key products and the animal health business should help partially offset the impact of genericization. The company also has some new products in its portfolio which should start contributing to revenues.
Eli Lilly is also working on controlling costs and is slated to return to growth from 2015.
Eli Lilly is a Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the health care sector include AbbVie (ABBV) and Celgene Corp. (CELG). While Celgene is a Zacks Rank #1 (Strong Buy) stock, AbbVie carries a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment