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Donna Marbury/ MEDILL

Eli Lilly Co. reported 2012 third-quarter earnings that were up from the previous year, thanks to a onetime item.

Eli Lilly struggles in third quarter due to lack of new drugs

by Donna M. Marbury
Oct 24, 2012

Eli Lilly Co. reported third quarter earnings Wednesday that disappointed Wall Street and underscored the pharmaceutical maker’s ongoing struggle to develop new products.

The Indianapolis-based drug company’s net income climbed 7 percent to $1.33 billion, or $1.18 cents per diluted share, from the year-ago quarter’s $1.24 billion, or $1.11 per diluted share. The latest quarter was boosted by a $1.26 billion one-time payment from drug company Amylin. Excluding special items, the company had earnings were down 30 percent at of $888 million, or 79 cents per share.

Lilly’s revenue, pinched by a dropoff in sales of drugs that have lost patent protection, fell 11 percent to $5.44 billion from $6.15 billion in the same year period. The adjusted per-share results fell short of the 85 cents analysts surveyed by Bloomberg had predicted Eli Lilly would earn.

The profit shortfall didn’t go over well with investors: In New York Stock Exchange trading, Lilly shares dropped $1.41, or 2.7 percent, to close at $50.50.

“Pharmaceutical companies live by their drug pipelines and potentially die once the patent life on their drugs expires -- meaning Eli Lilly really needs to come up with a winner soon,” said Mel Daris of on the website

Eli Lilly has bled in the past few years due to its inability to get new drugs to market. Sales for the schizophrenia drug Zyprexa dropped 68 percent due to patent expiration, for example, and the company also disclosed Wednesday that it has halted trials for a new drug to treat schizophrenia. In addition, the company also recently stopped certain late-stage trials on Expedition, a drug aimed to treat Alzheimer’s disease.

Sales for Eli Lilly’s most popular drug, the depression treatment known as Cymbalta, increased 16 percent to $1.24 billion Eli Lilly’s patent on Cymbalta will expire at the end of 2013.

During a conference call Wednesday morning, analysts echoed concerns about the starting and stalling of new drug development. CEO Dr. John C. Lechleiter pointed to trials for Award, a once-weekly treatment for diabetes, which are producing satisfactory results. He says the company has 60 new drugs under clinical development.

The third quarter “was an eventful one for Lilly,” he said, “as we gained a better understanding of several potential new medicines in out clinical pipeline, while maintaining focus on delivering solid financial results, despite the loss of Zyprexa patent exclusivity.”

The company remains “firmly committed to our innovation-based strategy in order to meet the needs of the patients who rely on us for new medicines,” Lechleiter told the analysts.

In the first nine months, Eli Lilly had $2.84 billion in net income, or $2.92 per diluted share, down almost 7 percent from the year-ago quarter’s $3.49 billion or $3.13 per diluted share. The company reported $16.65 billion in year-to-date revenue, a 9 percent decrease from $18.24 billion in the previous year.