10-KPeriod: FY2012

ELI LILLY & Co Annual Report, Year Ended Dec 31, 2012

Filed February 21, 2013For Securities:LLY

Summary

Eli Lilly and Company's 2012 10-K filing reveals a challenging year marked by a 7% decrease in worldwide revenue to $22.6 billion, primarily driven by the significant sales decline of Zyprexa following patent expirations in major markets. Net income and earnings per share also saw a decrease. Despite the revenue headwinds, the company highlighted growth in key products like Cymbalta, Forteo, Effient, and Alimta, alongside a strong performance in its animal health division (Elanco). Lilly's extensive research and development pipeline remains a significant focus, with numerous compounds in various stages of clinical trials, including promising candidates for diabetes, cancer, and Alzheimer's disease. The company also announced significant progress on dulaglutide and empagliflozin for diabetes treatment. Looking ahead, Lilly faces continued pressure from patent expiries, particularly for Cymbalta in late 2013, which is expected to materially impact future results. The company is strategically focusing on its patent-protected products, emerging markets, and animal health business to offset these challenges. Additionally, the filing details ongoing litigation, regulatory scrutiny, and the impact of healthcare reforms, all of which present ongoing risks and require careful management.

Financial Highlights

53 data points
Beta

Revenue

$22.60B

78.8% Gross Margin

Net Income

$4.09B

18.1% Net Margin

EPS (Diluted)

$3.66

Total Assets

$34.40B

Cash & Equivalents

$4.02B

Free Cash Flow

$5.30B

Financial Statements
Beta
Revenue$22.60B
Cost of Revenue$4.80B
Gross Profit$17.81B
R&D Expenses$5.28B
SG&A Expenses$7.51B
Interest Expense$177.80M
Net Income$4.09B
EPS (Basic)$3.67
EPS (Diluted)$3.66
Shares Outstanding (Basic)1.11B
Shares Outstanding (Diluted)1.12B

Key Highlights

  • 1Worldwide revenue declined 7% to $22.6 billion in 2012, largely due to Zyprexa's patent expiration.
  • 2Net income decreased by 6% to $4.09 billion, with EPS falling to $3.66.
  • 3Cymbalta, Forteo, Effient, and Alimta showed revenue growth, partially offsetting declines in other products.
  • 4Elanco Animal Health division demonstrated strong growth, with sales up 21% in the U.S. and 12% internationally.
  • 5The company highlighted its robust late-stage pipeline, including positive developments for diabetes treatments dulaglutide and empagliflozin.
  • 6Lilly anticipates significant revenue decline for Cymbalta following its U.S. patent expiration in December 2013.
  • 7The company continues to invest heavily in R&D, with $5.28 billion spent in 2012, focusing on key therapeutic areas including diabetes, oncology, and neuroscience.

Frequently Asked Questions

The primary driver of the 7% decrease in worldwide revenue to $22.6 billion was the loss of patent exclusivity for Zyprexa in most major markets, leading to a significant sales decline for that product. This was partially offset by growth in other key products such as Cymbalta, Forteo, Effient, and Alimta, as well as strong performance from the Elanco animal health division.

Eli Lilly is facing significant upcoming patent expirations, most notably for Cymbalta in the U.S. in December 2013 and for Evista in March 2014. The company anticipates a 'rapid and severe decline' in sales for Cymbalta following generic competition. Lilly's strategy to mitigate these impacts includes focusing on the growth of its patent-protected products, expanding in emerging markets and Japan, and leveraging its animal health business.

Lilly continues to invest heavily in R&D, with a strong focus on its pipeline. Key developments highlighted include positive Phase III trial results for dulaglutide and empagliflozin, both treatments for type 2 diabetes, with anticipated regulatory filings in 2013. The company also received FDA approval for Amyvid (florbetapir) for Alzheimer's disease imaging and is advancing other candidates for various indications including cancer, lupus, and psoriasis.

Yes, Eli Lilly is involved in several legal proceedings, including patent litigation concerning Alimta and product liability lawsuits related to products like Byetta and Zyprexa. The company also reached a settlement with the SEC regarding FCPA investigations for certain subsidiary activities. Additionally, the filing mentions ongoing marketing practices investigations and the impact of U.S. healthcare reform, including mandatory fees and increased rebates, which affect revenue and expenses.