Eli Lilly & Company has suffered setback during the second quarter ended June 2012 on account of Zyprexa patent expirations. Its net earnings declined by 23 per cent to $924 million from $1,197 million in the corresponding period of last year and operating income declined by 24 per cent to $1,202 million from $1,589 million. Its total revenues also declined by 10 per cent to $5,601 million from $6,253 million. China and Japan delivered pharma revenue growth of 28 per cent and 15 per cent, respectively, providing counter-cyclical growth.
Its sales of Zyprexa declined by 73 per cent to $379.5 million from $1,408.3 million in the similar period of last year. However, the sales of Cymbalta moved by 22 per cent to $1,223 million from $1,003 million. Alimta and Humalog registered growth of 8 per cent and 4 per cent respectively. Total revenue in the US decreased by 10 percent to $3,012 million due to the loss of patent exclusivity for Zyprexa, offset by increased prices and, to a lesser extent, increased volume in other products. Total revenue outside the US decreased by 11 percent to $2,588 million, driven by the loss of patent exclusivity for Zyprexa in markets outside of Japan, partially offset by increased volume in other products.
Lilly's R&D expenditure increased by 5 per cent to $1,321 million from $1,261 million in the similar period of last year.
Worldwide sales of animal health products in the second quarter of 2012 were $512.2 million, an increase of 32 per cent compared with the second quarter of 2011. US sales grew 40 per cent, to $304.6 million, due primarily to increased demand for companion animal products and, to a lesser extent, higher prices. Sales outside the US increased 21 per cent, to $207.6 million, driven primarily by the impact of the acquisition of certain Janssen animal health assets in Europe, as well as growth in other products.
John C. Lechleiter, Ph.D., chairman, president and chief executive officer, said, "Lilly's second-quarter financial results reflect the company's strategy of focusing on the areas of our business with the greatest growth potential. Despite the continued decline in Zyprexa sales following patent expiration late last year in most major markets outside Japan, we achieved strong growth for other products such as Cymbalta, Alimta, Forteo, Effient and our animal health portfolio. In addition, outside the US, we drove solid growth in both China and Japan."
Lechleiter continued, "Our strong underlying sales performance, combined with the favorable impact from a stronger dollar on our cost of goods sold, supports our decision to raise our 2012 EPS guidance. Even as we focus on growth opportunities, we also remain committed to reducing our expense base through productivity gains and cost cutting initiatives, and to advancing our pipeline of potential new medicines in development."
Derica Rice, executive vice president, global services and chief financial officer, commented on the company's longer-term financial performance expectations. "We remain on track to meet or exceed our mid-term financial minimum performance goals of at least $20 billion of revenue, $3 billion of net income and $4 billion of operating cash flow annually through 2014. After 2014, we anticipate a return to revenue and income growth, fueled in large part by our pipeline. This growth, combined with our continued focus on expense management, should lead to expanding margins. After 2014, we will look to return our research and development expense as a percent of revenue to levels more consistent with our historical averages, in the 18 per cent to 20 per cent range. For SG&A, it's reasonable to expect that within a few years post-2014, we will move more in line with industry averages in the range of 28 per cent to 30 per cent of revenue."
For the first six months ended June 2012, Eli Lilly's total revenue declined by 7 per cent to $11,203 million from $12,092 million in the corresponding half of last year. Its net profit also declined 14 per cent to $1,935 million from $2,253 million.
The company still anticipates 2012 revenue of between $21.8 and $22.8 billion. This includes an expected decline of over $3 billion in Zyprexa sales due to patent expirations in most markets outside of Japan. The reduction in revenue due to Zyprexa patent expirations is expected to be partially offset by growth in key franchises including Cymbalta, Cialis, Alimta.