01—Abstract
Summary
Summary of the 10-K filed February 23, 2022. Cited figures are marked; the original filing is the authoritative source.
Eli Lilly and Company (LLY) reported strong revenue growth in 2021, driven primarily by increased sales volumes across key therapeutic areas like diabetes and immunology, alongside contributions from COVID-19 therapies.
Despite a notable increase in operating expenses, particularly in research and development for late-stage assets, the company's gross margin remained robust. However, net income and earnings per share (EPS) saw a decline compared to 2020, largely due to significant charges, including an inventory impairment for COVID-19 antibodies and debt extinguishment costs, which offset the revenue gains. The company's pipeline remains a key focus, with approximately 45 new medicine candidates in clinical development or under regulatory review across diabetes, immunology, neuroscience, and oncology.
Key late-stage developments include submissions for Tirzepatide for type 2 diabetes and Donanemab for Alzheimer's disease. Investors should note the ongoing patent expirations for established products like Alimta and Forteo, which are expected to lead to revenue erosion due to generic competition, particularly in the U.S. for Alimta in 2022. Lilly is actively managing its capital structure, with significant investments planned for new manufacturing facilities and ongoing share repurchases.
02—Key points
Key Highlights
- Revenue increased by 15% to $28.3 billion in 2021, primarily driven by volume growth in key products like Trulicity, Taltz, Jardiance, and Verzenio, as well as significant sales from COVID-19 antibodies.
- Operating expenses rose by 10% to $13.5 billion, largely due to increased development expenses for late-stage pipeline assets.
- Net income decreased by 10% to $5.6 billion, and diluted EPS fell by 10% to $6.12, impacted by higher operating expenses and notable one-time charges.
- The company's robust late-stage pipeline includes approximately 45 new medicine candidates, with key submissions for Tirzepatide (diabetes) and Donanemab (Alzheimer's disease) underway.
- Significant patent expiries are noted for Alimta and Forteo, with Alimta facing expected rapid revenue decline in the U.S. in 2022 due to generic competition.
- The company made strategic acquisitions in 2021, including Prevail Therapeutics, to bolster its gene therapy capabilities.
- Lilly demonstrated strong cash flow from operations, increasing to $7.3 billion, and continued to return capital to shareholders through dividends and share repurchases.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 23, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $28.32B$24.54B | +15.4% |
| Cost of Revenue | $7.31B$5.48B | +33.4% |
| Gross Profit | $21.01B$19.06B | +10.2% |
| R&D Expenses | $6.93B$5.98B | +16.0% |
| SG&A Expenses | $6.43B$6.12B | +5.1% |
| Interest Expense | $339.80M$359.60M | −5.5% |
| Net Income | $5.58B$6.19B | −9.9% |
| EPS (Basic) | $6.15$6.82 | −9.8% |
| EPS (Diluted) | $6.12$6.79 | −9.9% |
| Shares Outstanding (Basic) | 906.96M907.63M | −0.1% |
| Shares Outstanding (Diluted) | 911.68M912.50M | −0.1% |
05—Questions
Frequently Asked Questions
What were the main drivers of Eli Lilly's revenue growth in 2021?
Revenue growth in 2021 was primarily driven by increased sales volumes for key products such as Trulicity, Taltz, Jardiance, and Verzenio. The company also saw significant revenue contributions from its COVID-19 antibody treatments.
What factors led to the decrease in net income and EPS in 2021 compared to 2020?
The decrease in net income and EPS was mainly due to an increase in operating expenses, particularly in research and development for late-stage pipeline assets. Additionally, the company incurred significant charges, including a $339.7 million inventory impairment charge related to COVID-19 antibodies and a $405.2 million debt extinguishment loss, which impacted profitability.
What is the company's outlook regarding patent expirations and generic competition?
Eli Lilly faces upcoming patent expirations for established products like Alimta and Forteo. The company anticipates a rapid and severe decline in revenue for Alimta in the U.S. starting in 2022 due to generic competition. While competition for Humalog (insulin lispro) has not caused a severe revenue decline, it is expected to lead to ongoing pricing pressure and market share loss.
How is Eli Lilly investing in future growth?
The company is investing heavily in its research and development pipeline, with around 45 new medicine candidates in clinical development or under regulatory review across its key therapeutic areas. Strategic acquisitions, such as Prevail Therapeutics for gene therapy, and planned investments in new manufacturing facilities in North Carolina and Ireland also highlight its commitment to future growth.
06—Continue