ELI LILLY Subsector : Pharmaceuticals & Biotechnology Sector : Health care Region : USA & CDN Stock exchange : NYSE Recommendation :buy Price: 50,19 USD Quality :good Date: 27/03/2008 Risk profile: very dynamic Source :KBC Asset Management Most recent recommendation change: 13/07/2006
Activities Price chart
Eli Lilly (Lilly) is a global pharmaceutical company with a strong
therapeutic presence in central nervous system, oncology and insulin markets. Eli Lilly also makes antibiotics, cardiovascular
treatments and animal health products. The company has
manufacturing plants in 14 countries with products being sold in
In order to strengthen its manufacturing base, the company
focuses on expanding its biotech business. Accordingly, in 2006,
the company opened a biosynthetic insulin plant in Puerto Rico
and a pilot manufacturing facility in Indianapolis. It also plans to
build a new biotech plant in Ireland and expand its parenteral-
The company acquires companies that complement to its existing
product development strategy. In line with this, it acquired ICOS
and Hypnion in 2007. It has further signed a deal with OSI
Pharmaceuticals to acquire the rights to the latter’s compound to
In line with its Six Sigma initiative that was launched in 2004, the
company expects to complete around 1600 projects in its sales
MSCI ACWI PHARM/BIOTEC - PRICE INDEXMSCI AC WORLD - PRICE INDEX
and marketing affiliates, manufacturing sites, R&D operations
and administrative costs. It expects these initiatives to benefit the
Key figures- source: Reuters turnover turnover earnings (million (million
The net sales of Eli Lilly for 2007 grew 18,8% YoY to 18,6 bln
USD. Revenues from Pharmaceutical segment increased 19% to
Eli Lilly
17,6 bln USD while that from Animal Health grew 13,8% to 995,8
mln USD. The net income was 3 bln USD compared with 2,7 bln
Eli Lilly benefited from strong sales of its products such as
Alimta, Byetta, Cialis, Cymbalta, Forteo, Strattera, Symbyax,
Xigris and Yentreve, which collectively grew 57% during the year.
Segmental Revenues 2007
The top line was boosted by higher revenues of the company’s
largest selling drug, Zyprexa (accounted for 25,6% of the total sales) grew 9,1% to 4,8 bln USD. The sales of Cymbalta
(antidepressant) grew 59,7% to 2,1 bln USD and that of Gemzar
(pancreatic and lung-cancer) increased 13,1% to 1,6 bln USD.
The company experienced a 13,5% growth in sales of Humalog
(diabetes) to 1,5 bln USD and a 430% increase in sales of Cialis (impotency) to 1,1 bln USD. The sales of Evista (osteoporosis)
Going forward, Eli Lilly expects strong sales growth for Cymbalta,
Cialis, Byetta, Alimta and Humalo. The company forecasts EPS to be in the range of 3,80-3,95 USD for the full year 2008.
Eli Lilly collaborates with Sanofi-Aventis to market Cialis
(tadalafil), an erectile-dysfunction drug, to the U.S urologists.
Eli Lilly agrees with Suven Life Sciences for pre-clinical research
of molecules in the therapeutic area of central nervous system.
Our main concern about Eli Lilly was the weak development in prescription
Strengths
behaviour for a number of its key products. Recently the prescription
Strong drug franchises in the product portfolio with low patent
behaviour for its products has stabilised or even accelerated, which musteliminate investors' fears concerning profit forecast downgrades. We
Strong product mix of existing products and new launches
believe that investors' focus will gradually shift to the company's good
long-term prospects. The company has a superior growth profile, with
forecast average earnings growth of 10.2% over the next three years as
Weaknesses
compared with a sector average of just 9.7% for the large pharmaceutica
Heavy dependence on one drug, Zyprexa, for revenue generation
companies. In addition Eli Lilly is subject to only a limited patent risk and
Marketing budgets could be impacted by a spate of product
the company’s dependence on products under development in the
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