The Wall Street Journal-20080130-Eli Lilly Sales Exceed Forecast

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Eli Lilly Sales Exceed Forecast

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Dodging industry pressures, Eli Lilly & Co. reported that fourth- quarter profit soared, as increased sales of drugs for mental illness and cancer helped boost revenue above expectations.

For now, Lilly seems to be free of some of the problems that are plaguing other pharmaceutical companies, such as generic competition for top drugs and major setbacks in developing new drugs. The company's problems will heat up in 2011, when its bestselling antipsychotic Zyprexa loses patent protection.

Lilly Chief Operating Officer John Lechleiter told analysts on a conference call that "2007 was one of the strongest years we have had in some time, and we intend to carry this positive momentum into 2008." Mr. Lechleiter has been designated to replace Sidney Taurel as chief executive in April.

But 2008 could prove to be a pivotal year for Lilly. It expects Food and Drug Administration action this year on its proposed anticlotting drug prasugrel, a potential blockbuster. Lilly is counting on prasugrel's success to help offset revenue it expects to lose when Zyprexa and other key drugs lose patent protection in quick succession.

Lilly "lacks significant exposure to generic competition before 2011 but is largely exposed beyond then," Deutsche Bank analyst Barbara Ryan wrote in a research note.

Shares of the Indianapolis drug maker gained 91 cents, or 1.8%, to $52.31, yesterday in New York Stock Exchange composite trading after its earnings report was released.

Lilly posted net income of $854.4 million, or 78 cents a share, up from $132.3 million, or 12 cents a share, a year earlier. The latest quarter included 12 cents a share in charges for restructuring and license deals, while the year-earlier period was weighed down by charges totaling 73 cents a share.

Excluding the charges and other items, earnings would have been 90 cents a share, up from 82 cents a share a year earlier. Adjusted earnings were near the high end of Lilly's previous forecast, and exceeded the mean forecast by analysts surveyed by Thomson Financial by a penny.

A 22% rise in revenue to $5.19 billion was fueled partly by the January 2007 acquisition of Icos, which gave Lilly full control over the erectile-dysfunction drug Cialis. If Icos had been part of Lilly for the entire fourth quarter of 2007, sales growth would have been 16%.

Zyprexa sales rose 10% to $1.27 billion. Demand for the drug was essentially flat in the U.S., but sales rose 11% domestically because of higher prices. Sales of the antidepressent Cymbalta jumped 48%. Sales of Byetta, a diabetes drug Lilly co-promotes with Amylin Pharmaceuticals Inc., rose 34%, though Mr. Lechleiter said a consumer- advertising campaign for Byetta "did not fully meet our expectations."

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Avery Johnson contributed to this article.