10-QPeriod: Q3 FY2021

ELI LILLY & Co Quarterly Report for Q3 Ended Sep 30, 2021

Filed October 27, 2021For Securities:LLY

Summary

Eli Lilly and Company (LLY) reported a strong increase in revenue for the nine months ended September 30, 2021, up 19% year-over-year to $20.3 billion, driven by higher volumes across key products and contributions from COVID-19 therapies. Despite revenue growth, net income and diluted EPS saw a decline of 5% and 5% respectively, primarily due to increased operating expenses, particularly in research and development for late-stage assets, and a significant debt extinguishment loss of $405.2 million. The company also incurred a substantial $435.1 million net inventory impairment charge for its COVID-19 antibodies due to changing demand and near-term expiry dates. Management has updated its full-year 2021 financial guidance, anticipating revenue between $27.2 billion and $27.6 billion, and EPS between $6.38 and $6.48, reflecting improved COVID-19 antibody revenue projections. Key product highlights include robust growth for Trulicity (up 29% YTD) and Taltz (up 21% YTD), while Alimta faces significant revenue erosion due to generic competition following patent expiries. The company continues to invest heavily in its late-stage pipeline, with approximately 45 candidates in clinical development, including promising advancements in areas like Alzheimer's disease (Donanemab) and Type 2 diabetes (Tirzepatide). The company's financial position remains solid, with cash and cash equivalents increasing and substantial unused credit facilities available.

Financial Highlights

52 data points
Beta

Revenue

$6.77B

78.9% Gross Margin

Net Income

$1.11B

16.4% Net Margin

EPS (Diluted)

$1.22

Total Assets

$48.19B

Cash & Equivalents

$3.79B

Free Cash Flow

$1.63B

Financial Statements
Beta
Revenue$6.77B
Cost of Revenue$1.43B
Gross Profit$5.34B
R&D Expenses$1.71B
SG&A Expenses$1.58B
Interest Expense$83.60M
Net Income$1.11B
EPS (Basic)$1.22
EPS (Diluted)$1.22
Shares Outstanding (Basic)906.70M
Shares Outstanding (Diluted)910.80M

Key Highlights

  • 1Revenue increased by 19% year-over-year for the nine months ended September 30, 2021, reaching $20.3 billion, driven by strong volume growth in key products and COVID-19 therapies.
  • 2Net income and diluted EPS decreased by 5% for the nine months ended September 30, 2021, impacted by higher operating expenses, particularly in R&D, and a $405.2 million debt extinguishment loss.
  • 3A significant $435.1 million net inventory impairment charge was recognized for COVID-19 antibodies due to evolving demand and expiration dates.
  • 4Key product Trulicity showed strong YTD revenue growth of 29%, while Alimta experienced a decline due to generic competition post-patent expiry.
  • 5The company raised its full-year 2021 revenue guidance to $27.2 - $27.6 billion and its EPS guidance to $6.38 - $6.48.
  • 6Significant investment in R&D continues, with approximately 45 pipeline candidates in clinical development, including advancements in Alzheimer's (Donanemab) and Type 2 diabetes (Tirzepatide).
  • 7The company completed the acquisition of Prevail Therapeutics Inc. for approximately $747.4 million, strengthening its gene therapy pipeline.

Frequently Asked Questions

Revenue growth is primarily driven by increased volume across key products such as Trulicity and Taltz, as well as significant contributions from COVID-19 therapies. The company also saw increased demand for Jardiance and Verzenio.

Net income decreased primarily due to higher operating expenses, particularly in research and development for late-stage assets. Additionally, a substantial debt extinguishment loss of $405.2 million and a $435.1 million net inventory impairment charge for COVID-19 antibodies significantly impacted profitability.

Alimta revenue is expected to decline rapidly and severely due to generic competition following patent expiries in Europe and Japan, with a similar impact anticipated in the U.S. starting in early 2022. Humalog's revenue decline is not expected to be rapid and severe, but pricing pressure and market share loss are anticipated to continue due to competition in the insulin market.

Eli Lilly continues to make significant investments in its R&D pipeline, with approximately 45 drug candidates in clinical development. Key areas of focus include treatments for Alzheimer's disease (Donanemab), Type 2 diabetes (Tirzepatide), and various immunological and oncological indications. The company also strategically invests in external research and technologies through acquisitions, such as the Prevail Therapeutics acquisition, to bolster its pipeline.