Eli Lilly and Co's quarterly revenue plunged due to generic competition for its Cymbalta depression drug and its Evista osteoporosis treatment, but cost controls helped earnings beat forecasts.
Lilly on Thursday said it had earned 68 cents per share in the second quarter, above analysts' average forecast of 65 cents, according to Thomson Reuters I/B/E/S.
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Sales of Cymbalta, which lost U.S. patent protection in December, tumbled 73 percent to $401 million. Evista, which began facing cheaper generics in March, had a sales drop of 61 percent to $108 million.
The Indianapolis drugmaker's sales and earnings have been badly hurt since late 2011, when its top-selling Zyprexa schizophrenia drug lost U.S. patent protection and faced competition from cheaper generics.
The expiration of patents and resulting decline in revenue have been a problem for most U.S. drugmakers and are among the reasons for a surge in mergers and acquisitions in the sector.
But rather than attempt to merge with another big drugmaker, Lilly has vowed to remain independent and rely on its own product lineup to get back on track.
Lilly on Thursday said it plans to stick with that strategy and selectively make small or mid-size acquisitions.
By contrast, Pfizer Inc, which faces looming patent expirations on big drugs, earlier this year tried but failed to buy British rival AstraZeneca Plc in a deal valued at $118 billion.
Pfizer hoped to slash its tax rate by buying AstraZeneca and domiciling the combined company in Britain, a maneuver known as a tax inversion. Other healthcare companies are pursuing similar deals.
Pfizer, with three mega-mergers since 2000, has focused on U.S. rivals, largely for huge cost cuts that boosted earnings.
Lilly Chief Executive John Lechleiter, appearing on CNBC on Thursday, said Lilly had not been approached by Pfizer and did not "intend to be anyone's target."
Later, in a conference call with investors, Lechleiter said tax reform is needed in the United States to create a lower corporate tax rate, so U.S. companies can better compete with overseas rivals.
"It's time for Congress to step up to the plate to get this thing done," he said during the call.
Company Chief Financial Officer Derica Rice said Lilly would never pursue tax inversions as a "primary driver" of deals, although they could be a secondary benefit.
Lilly earned $734 million, or 68 cents per share, in the second quarter. That compared with $1.21 billion, or $1.11 per share, a year earlier, when the company took charges for closing a distribution center and other costs.
Although revenue fell 17 percent to $4.94 billion, it topped Wall Street expectations of $4.90 billion.
Lilly said it still expects earnings this year of $2.72 to $2.80 per share, excluding special items.
Shares of Lilly edged 0.6 percent higher to $64.62 in midday trading. (Reporting by Ransdell Pierson, Editing by Andrea Ricci)