10-KPeriod: FY2013

ELI LILLY & Co Annual Report, Year Ended Dec 31, 2013

Filed February 19, 2014For Securities:LLY

Summary

Eli Lilly and Company's 2013 10-K filing reveals a company navigating patent expirations while investing heavily in research and development for future growth. The company reported a 2% increase in worldwide revenue to $23.11 billion, driven by strong performance in key products like Cialis, Humalog, and Trajenta, alongside its animal health division. Net income saw a significant 15% increase to $4.68 billion, largely due to improved gross margins and lower operating expenses, further boosted by a lower effective tax rate and share repurchases. However, the report also highlights significant challenges. Cymbalta lost U.S. patent exclusivity in December 2013, leading to immediate generic competition and expected rapid revenue declines. Evista is also set to face similar pressures with patent expiration in March 2014. The company is actively managing these patent cliffs through robust R&D pipelines, with several promising candidates in late-stage development across therapeutic areas like diabetes, oncology, and neuroscience. Despite these challenges, Lilly's financial health appears solid, supported by strong cash flow and a commitment to returning value to shareholders through dividends and share repurchases.

Financial Highlights

53 data points
Beta

Revenue

$23.11B

78.8% Gross Margin

Net Income

$4.68B

20.3% Net Margin

EPS (Diluted)

$4.32

Total Assets

$35.25B

Cash & Equivalents

$3.83B

Free Cash Flow

$5.74B

Financial Statements
Beta
Revenue$23.11B
Cost of Revenue$4.91B
Gross Profit$18.20B
R&D Expenses$5.53B
SG&A Expenses$7.13B
Interest Expense$160.10M
Net Income$4.68B
EPS (Basic)$4.33
EPS (Diluted)$4.32
Shares Outstanding (Basic)1.08B
Shares Outstanding (Diluted)1.08B

Key Highlights

  • 1Worldwide revenue grew 2% to $23.11 billion in 2013, with net income up 15% to $4.68 billion.
  • 2Key product growth drivers included Cialis, Humalog, Trajenta, Alimta, and Forteo, along with the Elanco animal health division.
  • 3Significant revenue erosion is expected for Cymbalta and Evista due to recent and upcoming patent expirations.
  • 4Research and development expenses increased 5% to $5.53 billion, reflecting continued investment in new drug development.
  • 5The company actively repurchased shares, repurchasing $1.70 billion in 2013.
  • 6Lilly is managing its legal and regulatory environment, including ongoing patent litigation for Alimta and investigations into marketing practices.
  • 7The company has a strong late-stage pipeline with multiple promising new molecular entities across various therapeutic areas.

Frequently Asked Questions

In 2013, Eli Lilly's revenue growth was driven by products such as Cialis, Humalog, Trajenta, Alimta, and Forteo. The Elanco animal health division also contributed positively to the company's top-line performance.

The primary challenges highlighted are the loss of patent exclusivity for key products like Cymbalta and Evista, which is expected to lead to significant revenue declines due to generic competition. The company also faces intense competition, the high cost and uncertainty of pharmaceutical R&D, and increasing government price controls and regulations globally.

Eli Lilly is addressing patent expirations by heavily investing in its research and development pipeline. The company has numerous drug candidates in various stages of development, including several in late-stage clinical trials for diseases such as diabetes, cancer, and Alzheimer's. This R&D focus is crucial for replacing revenue lost from products going off-patent.

The company demonstrates a strong financial position with a 15% increase in net income and a healthy gross margin. Despite the anticipated revenue impact from patent expirations, Lilly's financial outlook for 2014 projected revenues between $19.2 billion and $19.8 billion, indicating resilience. The company is also committed to shareholder returns through dividends and share repurchases, supported by operating cash flow.