10-QPeriod: Q1 FY2012

ELI LILLY & Co Quarterly Report for Q1 Ended Mar 31, 2012

Filed April 30, 2012For Securities:LLY

Summary

Eli Lilly and Company reported $5.60 billion in revenue for the first quarter of 2012, a decrease of 4% compared to the same period in 2011. This decline was primarily attributed to the loss of patent exclusivity for its drug Zyprexa, which significantly impacted sales. Despite the revenue dip, net income remained strong at $1.01 billion, though it was down 4% year-over-year, resulting in diluted earnings per share of $0.91. The company's strategic focus remains on growing its patent-protected products, expanding in emerging markets and Japan, and advancing its animal health business to offset patent expirations. Lilly also highlighted its robust late-stage pipeline with several new molecular entities in Phase III trials across various therapeutic areas. Operationally, research and development expenses increased slightly to $1.15 billion, supporting its ongoing drug development efforts. The company also addressed a significant increase in its effective tax rate to 24.3% from 17.1% in the prior year, partly due to the absence of certain tax benefits. Lilly maintained a strong liquidity position with $4.12 billion in cash and cash equivalents as of March 31, 2012, and reiterated its commitment to dividends and its ongoing share repurchase program, although no shares were repurchased in Q1 2012.

Financial Highlights

49 data points
Beta

Revenue

$5.60B

78.6% Gross Margin

Net Income

$1.01B

18.0% Net Margin

EPS (Diluted)

$0.91

Total Assets

$32.24B

Cash & Equivalents

$4.12B

Free Cash Flow

$852.50M

Financial Statements
Beta
Revenue$5.60B
Cost of Revenue$1.20B
Gross Profit$4.40B
R&D Expenses$1.15B
SG&A Expenses$1.85B
Operating Expenses$3.00B
Interest Expense$45.30M
Net Income$1.01B
EPS (Basic)$0.91
EPS (Diluted)$0.91

Key Highlights

  • 1Revenue declined 4% year-over-year to $5.60 billion, primarily due to the loss of patent exclusivity for Zyprexa.
  • 2Net income decreased 4% to $1.01 billion, with diluted EPS at $0.91.
  • 3Research and development expenses increased 2% to $1.15 billion, signaling continued investment in pipeline development.
  • 4The effective tax rate increased significantly to 24.3% from 17.1% in the prior year.
  • 5Cash and cash equivalents stood at $4.12 billion as of March 31, 2012, indicating a solid liquidity position.
  • 6The company is actively managing patent expirations by focusing on growth in protected products, emerging markets, and its animal health segment.
  • 7Multiple late-stage pipeline assets are in Phase III trials, offering future growth potential.

Frequently Asked Questions

The primary driver of the revenue decrease was the loss of patent exclusivity for Zyprexa in most major markets, which led to a significant decline in its sales.

Eli Lilly is focusing on offsetting the impact of patent expirations by driving growth in its patent-protected products, expanding in emerging markets and Japan, and continuing to grow its Elanco Animal Health business. They also have a robust late-stage pipeline to introduce new revenue streams.

R&D expenses increased slightly to $1.15 billion for the quarter. The company anticipates R&D expense to be flat to increasing for the full year 2012, in the range of $5.0 billion to $5.3 billion, reflecting ongoing commitment to drug development.

As of March 31, 2012, Eli Lilly had $4.12 billion in cash and cash equivalents. Total debt decreased to $5.41 billion due to debt repayment. The company believes its cash generated from operations and available cash will be sufficient to fund its operating needs, debt service, capital expenditures, and dividends.