Higher prices keep Lilly's quarter flat; Cymbalta DTC pull-back planned

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Eli Lilly wrapped the first quarter with flat results, and a lot of open threads. The company said Wednesday that sales for the three months were $5.6 billion, just as they were for the same period last year.

Lilly faces a slew of changes, including firing sales staff, bracing for Cymbalta's December patent loss, preparing for Evista's 2014 patent loss and recovering from Zyprexa's continued generics hit. Its key to maintaining footing: increasing prices. Among the quarter's leaders were several brands whose sales were buoyed by price hikes.

These included Cymbalta, with $1.3 billion in sales, a 19% increase compared to Q1 2012's $1.1 billion. Likewise, Cialis (up 11% to $515 million) and Humilin (up 1%, to $312 million) saw revenue gains due to higher prices. Meanwhile, price increases helped Effient hold onto sales of $116 million for the quarter, staying level with the same period the year before.

The company also threw more at R&D, increasing its investment to $1.3 billion, a 17% bump compared to the same period last year, while also slashing SG&A costs by 11%, to $1.7 billion for the quarter, compared to the same period last year.

Executives told analysts that recent sales-force layoffs and plans for measured increases in the diabetes sales presence were proportional with company need. “We believe we are right-sized” Dericka Rice, CFO and EVP of global services, told Gregg Gilbert of Bank of America. Rice noted that the company is correctly positioned for primary care but added it may “have to build a presence in some new therapeutic areas,” such as autoimmunity. Responding to another question about its marketing presence, Rice said “we believe, we have, again, the right sales-force footprint to accommodate the portfolio mix we have at the moment.”

Although Rice wouldn't give a timetable, he said the company was going to pull back on its Cymbalta marketing efforts, including its DTC outreach.

Future plans

Despite expectations that the firm will have at least $20 billion in revenues come December 31, 2013, the rest of the outlook was vague. The company said it could deliver up to five NME applications to the FDA this year and that it expects results for several Phase II and Phase III molecules to come in.


Executive Vice President, Science and Technology Jan Lundberg said Lilly's experimental Alzheimer's therapy solanezumab is up for another round of testing, this time among mild—as opposed to moderate—Alzheimer's patients, who showed cognitive benefits based on earlier research.

The company has held onto the low-expectations treatment candidate despite last summer's disappointing results, but the FDA is rethinking what constitutes efficacy, giving Lilly's candidate a possible opening. Lundberg said the company has been discussing solanezumab with regulators globally. The company will post clinical trial information “at some point prior to the first patient visit,” CEO John Lechleiter said.


Lilly, which has increased its investment in diabetes manufacturing twice within the last six months, said that it remains confident in the category, despite concerns about a suspected link between GLP-1s and pancreatitis and a categorical slowdown in DPP-4 prescriptions. The company said DPP-4 drug Tradjenta, which is duking it out with BMS/AstraZeneca's Onglyza, saw a slowdown in TRx but a 20% bump in new-to-brand. The company is also eyeing the glargine category and told analysts that it sees itself sharing 50% of the market with Sanofi if its new glargine product for type 1 and type 2 diabetes passes muster.

Key data sets

In addition to the above, the company told investors the year will include data roll-outs for dulaglutide for type 2 diabetes, for its experimental oncology drug ramucirumab for gastric cancer, and for enzastaurin for brain cancer.
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