Eli Lilly and Co reported higher-than-expected quarterly earnings, helped by cost cuts and strong sales of Cymbalta, a depression treatment that will lose patent protection by year end, and the drugmaker raised its full-year profit forecast.
Lilly, whose shares rose more than 3 percent in premarket trading, said on Wednesday that it earned $1.21 billion, or $1.11 per share, in the second quarter. That compared with $924 million, or 83 cents per share, a year earlier.
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Excluding costs of closing a distribution center in Germany and other special items, Lilly earned $1.16 per share. Analysts on average had forecast $1.00, according to Thomson Reuters I/B/E/S.
Revenue rose 6 percent to $5.93 billion, topping Wall Street expectations of $5.82 billion.
Lilly forecast full-year earnings of $4.05 to $4.15 per share, excluding special items, up from its earlier outlook of $3.82 to $3.97.
"Earnings guidance was raised on (expected) lower expenses, not higher revenue," ISI Group analyst Mark Schoenebaum wrote in a research note. He said Lilly was trimming its expected spending in the second half of the year for research and for marketing and other expenses.
"Management appears to be showing prudent cost discipline in anticipation of the Cymbalta" patent expiration," Schoenebaum said. The company shaved 2 percent from its operating expenses in the second quarter.
The new 2013 forecast would represent growth of 19.5 percent to 22.5 percent from last year, when earnings sank on generic competition for another big product: Lilly's Zyprexa schizophrenia treatment.
Lilly's profit upturn will be short-lived, however. Investors expect earnings to take perhaps a 25 percent tumble in 2014, as generic versions of Cymbalta and osteoporosis drug Evista flood the market.
Global sales of Cymbalta, by far the company's biggest product, soared 22 percent in the second quarter to $1.5 billion. But sales of the drug are expected to plunge after it loses U.S. patent protection in December.
Sales of Evista, which goes generic in early 2014, rose 5 percent to $279 million. Sales of impotence treatment Cialis, which confronts generics a few years later, jumped 13 percent to $529 million.
With recent setbacks for Lilly's experimental treatments for Alzheimer's disease as well as the impending generic competition, investors remain cautious on the company. Its shares have risen 3.4 percent this year, lagging a 17 percent advance for the Arca Pharmaceutical Index of large U.S. and European drugmakers.
Even so, Lilly has expressed confidence that it would begin rebounding in 2015, after its painful three-year patent cliff, because of promising medicines in clinical trials. These include ramucirumab, for stomach and breast cancer, and treatments for diabetes.
Sales of Lilly's animal health products rose 6 percent to $544 million in the quarter.
Lilly shares were up 3.1 percent at $52.59 in trading before the market opened.
(Reporting by Ransdell Pierson; Editing by Lisa Von Ahn)