INDIANAPOLIS – Drugmaker Eli Lilly and Co.’s net income tumbled 27 per cent in the last quarter of 2011 as the loss of a key patent protecting its top-seller Zyprexa hurt revenue, but the performance still topped Wall Street expectations.
Lilly lost U.S. patent protection in October for Zyprexa, an antipsychotic that generated 19 per cent of its third-quarter revenue. Revenue from the drug fell 44 per cent to $749.6 million in the fourth quarter.
The Indianapolis company said Tuesday it earned $858.2 million, or 77 cents per share, in the three months that ended Dec. 31. That’s down from the $1.17 billion, or $1.05 per share, Lilly earned in the final quarter of 2010.
Revenue fell 2 per cent to $6.05 billion.
Adjusted earnings, which exclude some one-time charges, were 87 cents per share.
Analyst surveyed by FacSet expected, on average, adjusted earnings of 81 cents per share on $5.89 billion in revenue.
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Zyprexa is Lilly’s all-time bestseller, and it topped $5 billion in worldwide revenue last year. The company still has patent protection for Zyprexa in Japan, but it expects revenue from the drug to plunge by more than $3 billion this year.
Lilly also was hurt in the quarter by a 62 per cent drop in sales for the cancer treatment Gemzar, which lost its patent protection in 2010.
Revenue from Lilly’s second-bestseller, the antidepressant Cymbalta, climbed 20 per cent to $1.18 billion in the quarter. Revenue from its top-selling insulin, Humalog, rose 21 per cent to $662 million. The patents for both those products expire next year.
Lilly has spent years preparing for the patent losses. The company said it has cut more than $1 billion in costs since 2009 and trimmed more than 5,500 positions from its workforce.
It plans to depend on its pipeline of drugs under development, its animal health business, and sales in Japan and emerging markets like China to get through the expected revenue slump caused by the patent expirations.
The drugmaker said earlier this month it now has a dozen potential drugs in late-stage clinical testing, the last phase before a company seeks regulatory approval. The company expects annual earnings of at least $3 billion on revenue of at least $20 billion through 2014.
Some analysts doubt Lilly’s ability to recover from the patent expirations without the aid of a major acquisition, and they wonder about the future of Lilly’s dividend, which currently stands at a quarterly rate of 49 cents per share. Company officials have said repeatedly they expect to at least maintain their dividend and they plan no major deals.
Lilly said earlier this month it expects to earn between $3.10 and $3.20 in 2012. Analysts expect earnings of $3.21 per share.
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