Eli Lilly and Company, Japan, has suffered minor setback during the first quarter ended March 2010 on account of weaker dollar and impact of US health care reform. The company's revenues improved by 9 per cent to US$ 5,486 million from US$ 5,047 million in the corresponding period of last year. However, its net income declined by 5 per cent to US$ 1,248 million from US$ 1,313 million. The earning per share worked out to US$ 1.13 as against US$ 1.20 in the last period.
John C Lechleiter, chairman and CEO, said, “Lilly delivered strong operational performance in the first quarter, even as we experienced continued weakness in the US dollar versus prior periods and began to account for the impact from recently-enacted US health care reform. Our volume-driven revenue growth remains solid and we are making the investments necessary to accelerate the flow of potential new medicines through our pipeline.”
Lechleiter added, “We expect that the new US health care reform legislation,while not perfect, will help seniors in the Medicare system better afford their prescriptions and will provide greater access to our medicines for millions of Americans who are currently uninsured. However, as a result of the new legislation, Lilly will incur substantial costs to our business. The initial financial impact is captured in our first quarter results, while the fully-year impact is reflected in our revised 2010 financial guidance.”
The company's US revenue increased by 6 per cent to US$ 3,034 million due to higher prices and, to lesser extent, increased demand. Total revenue outside the US increased by 13 per cent to US$ 2,452 million due to the positive impact of foreign exchange rates. Its R&D expenditure worked out to 19 per cent of total revenue at US$ 1,039 million.
The company has revised the range of its full-year 2010 financial guidance to reflect the expected negative impact of US health care reform, partially offset by expectations of stronger underlying business performance. Based on current expectations, the company estimates that US health care reform will lower earnings by approximately US$ 0.35 per share in 2010 and revenues by US$ 350 million to US$ 400 million.