01—Abstract
Summary
Summary of the 10-K filed February 19, 2020. Cited figures are marked; the original filing is the authoritative source.
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 billiona 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.
02—Key points
Key Highlights
- Significant gain recognized from the disposition of the remaining Elanco Animal Health stake, boosting net income and EPS.
- Revenue increased by 4% to $22.3 billion, driven by volume growth in key diabetes and immunology products like Trulicity, Jardiance, and Taltz.
- The company completed the acquisition of Loxo Oncology for $6.9 billion, strengthening its oncology pipeline with promising assets like selpercatinib.
- New product launches, including Baqsimi for diabetes and Reyvow for migraine, contributed to revenue growth.
- Challenges remain with patent expirations for products like Forteo and Cialis, leading to significant revenue declines due to generic competition.
- Research and development expenses increased by 11% to $5.6 billion, reflecting continued investment in a robust pipeline for areas like oncology, diabetes, and immunology.
- Eli Lilly announced an agreement to acquire Dermira, Inc. for approximately $1.1 billion to expand its immunology pipeline.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 19, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $22.32B$21.49B | +3.8% |
| Cost of Revenue | $4.72B$4.68B | +0.8% |
| Gross Profit | $17.60B$16.81B | +4.7% |
| R&D Expenses | $5.59B$5.05B | +10.8% |
| SG&A Expenses | $6.21B$5.98B | +4.0% |
| Interest Expense | $400.60M$242.50M | +65.2% |
| Net Income | $8.32B$3.23B | +157.4% |
| EPS (Basic) | $8.93$3.14 | +184.4% |
| EPS (Diluted) | $8.89$3.13 | +184.0% |
| Shares Outstanding (Basic) | 931.06M1.03B | −9.4% |
| Shares Outstanding (Diluted) | 935.68M1.03B | −9.5% |
05—Questions
Frequently Asked Questions
What was the financial impact of the Elanco Animal Health disposition?
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.
Which products are driving revenue growth, and which are facing challenges?
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.
How is Eli Lilly investing in its future growth?
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.
What are the key risks and challenges highlighted in the filing?
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.
06—Continue