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Lilly's Q1 profit falls by $200m

Eli Lilly has announced a net income loss of 15 per cent for the first quarter of 2011, due in part to severance costs and expenses related to a deal with Boehringer Ingelheim to develop diabetes products

Eli Lilly & Company has announced a net income loss of 15 per cent for the first quarter of 2011 due, in part to severance costs; ongoing healthcare reforms in the US; and expenses related to a deal with Boehringer Ingelheim to develop diabetes products.

Company profit for Q1 fell to $1.06bn, compared to $1.25bn for 2010.

According to Lilly, the company's performance was negatively impacted by operating expenses, which increased by 10 per cent from 2010.

This included a $338m development charge associated with the Boehringer collaboration and $76.3m to cover restructuring related to severance costs.

There was also an additional $45m in administrative costs related to the mandatory pharmaceutical manufacturers' fee associated with US healthcare reform, as well as higher litigation expenses.

The decline was in contrast to company revenue for the quarter, with sales increasing by 6 per cent to $5.84bn.

This was partly driven by the continued success of antipsychotic drug, Zyprexa (olanzapine), which made $1.28bn worldwide for the period – an increase of 6 per cent.

Zyprexa is due to go off patent in October 2011, however, with the company expecting 'rapid and severe erosion of global Zyprexa sales' due to generic competition.

Despite the drop in profits, and pending patent expiry, Dr John C Lechleiter, chairman, president and CEO of Lilly was positive about the results.

He commented: "Lilly started the year by delivering solid financial results as we continue to advance the next wave of potential new medicines in our pipeline.

"We are on track to deliver on our 2011 headcount and expense reduction targets, as well as our goal of having at least ten potential new medicines in phase III clinical development by the end of this year."

18th April 2011

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