Eli Lilly issues profit warning

Eli Lilly, the leading US maker of diabetes products, forecast a drop in 2014 profit and reduced its sales outlook because of generic competition to the its Cymbalta antidepressant and Evista drug for osteoporosis.

Sales will be between $19.2 billion and $19.8 billion, while profit will be $2.77 to $2.85 a share, the company said in a statement today. Analysts predicted $19.6 billion and $2.78 a share, based on the average of 17 estimates compiled by Bloomberg.

Lilly said in October that meeting its projection of at least $20 billion in sales in 2014 would be difficult.

The company lost patent protection on Cymbalta, its best-selling drug, last month, leading to expectations that revenue will decline to its lowest level since 2007.

"We expect 2014 to be the most financially challenging year of Lilly's current period of patent expirations," chief financial officer Derica Rice said in the statement.

Atlantic Equities analyst Richard Purkiss said 2014 will be the "trough year" in Lilly's painful three-year patent cliff, which began in October 2011, when it lost patent protection for Zyprexa, then its biggest product. Despite lingering skepticism among many investors about Lilly's prospects, Purkiss said he expects company revenue to bounce back strongly in 2015, and for the company to have mid-teens percentage growth in earnings from 2014 to 2017.

The company plans to increase sales starting next year as it brings new products to market. Five Lilly drugs are being reviewed by regulators, and eight more are in the final of three stages of testing required before US approval, according to the company’s website.

Cymbalta generated $4.99 billion in 2012. Its 2014 sales are projected by analysts to fall to $1.43 billion.

Revenue from Evista is expected to drop to $498.6 million this year from an estimated $997.1 million in 2013, according to analysts.

The shares which rose just 3 per cent in 2013, sharply underperforming a 27 per cent jump in the ARCA Pharmaceutical Index of large drugmakers, slipped over 1 per cent yesterday (Tuesday) before rallying slightly. – Bloomberg / Reuters