10-KPeriod: FY2019

ELI LILLY & Co Annual Report, Year Ended Dec 31, 2019

Filed February 19, 2020For Securities:LLY

Summary

Eli Lilly and Company's 2019 10-K filing highlights a year of significant strategic moves and financial performance, including the substantial gain from the disposition of its remaining stake in Elanco Animal Health. The company reported increased revenue driven by volume growth in key products like Trulicity, Taltz, and Jardiance, alongside new product launches such as Baqsimi and Reyvow. Despite these positive developments, Lilly continues to navigate the challenges posed by patent expirations for older products like Forteo and Cialis, which have led to significant revenue erosion due to generic competition. The company's robust R&D pipeline remains a core focus, with significant investments in potential therapies for oncology, diabetes, neurodegeneration, immunology, and pain. The acquisition of Loxo Oncology in early 2019 for $6.9 billion bolstered Lilly's oncology pipeline, notably with selpercatinib. Looking ahead, Lilly announced an agreement to acquire Dermira, Inc. for approximately $1.1 billion, further strengthening its immunology portfolio. The company also provided financial guidance for 2020, anticipating continued revenue growth driven by its newer products.

Financial Highlights

53 data points
Beta

Revenue

$22.32B

78.8% Gross Margin

Net Income

$8.32B

37.3% Net Margin

EPS (Diluted)

$8.89

Total Assets

$39.29B

Cash & Equivalents

$2.34B

Free Cash Flow

$4.84B

Financial Statements
Beta
Revenue$22.32B
Cost of Revenue$4.72B
Gross Profit$17.60B
R&D Expenses$5.59B
SG&A Expenses$6.21B
Interest Expense$400.60M
Net Income$8.32B
EPS (Basic)$8.93
EPS (Diluted)$8.89
Shares Outstanding (Basic)931.06M
Shares Outstanding (Diluted)935.68M

Key Highlights

  • 1Significant gain recognized from the disposition of the remaining Elanco Animal Health stake, boosting net income and EPS.
  • 2Revenue increased by 4% to $22.3 billion, driven by volume growth in key diabetes and immunology products like Trulicity, Jardiance, and Taltz.
  • 3The company completed the acquisition of Loxo Oncology for $6.9 billion, strengthening its oncology pipeline with promising assets like selpercatinib.
  • 4New product launches, including Baqsimi for diabetes and Reyvow for migraine, contributed to revenue growth.
  • 5Challenges remain with patent expirations for products like Forteo and Cialis, leading to significant revenue declines due to generic competition.
  • 6Research and development expenses increased by 11% to $5.6 billion, reflecting continued investment in a robust pipeline for areas like oncology, diabetes, and immunology.
  • 7Eli Lilly announced an agreement to acquire Dermira, Inc. for approximately $1.1 billion to expand its immunology pipeline.

Frequently Asked Questions

In March 2019, Eli Lilly completed the disposition of its remaining ownership in Elanco Animal Health. This resulted in a significant gain of approximately $3.7 billion recognized in the first quarter of 2019, which substantially boosted the company's net income and earnings per share for the year. Elanco has been presented as discontinued operations in the financial statements.

Revenue growth in 2019 was primarily driven by increased volume for key products such as Trulicity, Taltz, Jardiance, and Verzenio. New products like Baqsimi and Reyvow also contributed. However, products like Cialis and Forteo experienced significant revenue declines due to loss of patent exclusivity and subsequent generic competition.

Eli Lilly is heavily investing in research and development, with expenses increasing to $5.6 billion in 2019. The company is focused on its pipeline for oncology, diabetes, neurodegeneration, immunology, and pain. Strategic acquisitions, such as the purchase of Loxo Oncology and the announced acquisition of Dermira, further bolster its pipeline with innovative therapies.

Key risks include the high cost and uncertainty of pharmaceutical R&D, with potential for drug candidates to fail at any stage. The loss of intellectual property protection for key products is a significant challenge, leading to rapid revenue declines. Intense competition from generic and biosimilar manufacturers, pricing and reimbursement pressures from payers, and regulatory hurdles are also highlighted risks.