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Eli Lilly Crushes Earnings. Will Separate Elanco Animal Health with IPO

Posted on July 24, 2018 by Medtech[y] Staff


Eli Lily ($LLY) announced Q2 earnings before the bell, exceeding expectations, pushing the stock up over 4% in midday action. 

Worldwide revenue for the quarter was $6.355 billion, an increase of 9% compared with Q2 of 2017. U.S. revenue was $3.602 billion, an increase of 8%, with OUS revenue increasing 10% to $2.753 billion. 

Lilly CEO, David Ricks, attributed much of the company's growth to their newest products.

“Lilly delivered strong results once more in the second quarter in terms of operational performance, pipeline advancements, and strategic objectives,” said David Ricks, Lilly’s chairman and CEO. “The increase in our worldwide revenue was fueled by volume growth of our new medicines, while we also maintained a keen focus on containing costs and improving productivity. Our pipeline continued to demonstrate our commitment to scientific innovation, highlighted by forward progress for key molecules, several positive late-stage data readouts and the addition of promising new assets through business development. In addition, the strategic decision to pursue an IPO for our Elanco animal 3 health business will maximize the after-tax value for Lilly shareholders and provide Lilly with even greater focus on our human pharmaceutical business. ”

Other Q2 Developments

Price Increases

“As it relates to U.S. drug pricing, the Administration has accelerated an important discussion, and Lilly is committed to working for greater affordability and access to our medicines,” added Ricks. “We have not taken a list price increase on any of our medicines since the President’s Blueprint was announced, as we remain focused on driving revenue growth through volume, not price. Our second quarter 2018 results reflect this strategy, and the guidance we have provided for 2018 does not assume U.S. price increases for the remainder of the year. As the responses to the Blueprint are considered, we are hopeful that progress will be made on implementing proposals that lower the out-of-pocket cost of medicines for patients.”

Elanco Animal Health

After a strategic review of Elanco Animal Health, the company has stated that they will file a registration statement in the coming weeks with the U.S. Securities and Exchange Commission (SEC) for a potential initial public offering (IPO) of a minority ownership stake in Elanco as a separate company.

"Based on our strategic review, we concluded that after-tax value for Lilly shareholders would be maximized by pursuing an initial public offering of Elanco," said David A. Ricks, Lilly's chairman and CEO.  "We believe this will allow Elanco to efficiently deploy its resources to those growth opportunities that best serve its customers. In addition, this will provide Lilly even greater focus on the human pharmaceutical business to pursue our purpose of creating life-changing medicines for patients."

"With more than six decades of expertise in animal health, we are prepared to take this step to become an independent company," said Jeffrey Simmons, president of Elanco Animal Health. "With a sole focus on animal health, we will help our customers address the greatest challenges of keeping animals healthy, and together advance a vision of food and companionship enriching life."

Key Drug Performances

Humalog

For the second quarter of 2018, worldwide Humalog revenue increased 13 percent compared with the second quarter of 2017, to $769.8 million. Revenue in the U.S. increased 19 percent, to $464.5 million driven by higher realized prices due to changes in estimates to rebates and discounts and changes in payer segment mix, and, to a lesser extent, increased volume.  Revenue outside the U.S. increased 6 percent, to $305.2 million, driven by the favorable impact of foreign exchange rates and increased volume, partially offset by lower realized prices.

Alimta

For the second quarter of 2018, Alimta generated worldwide revenue of $555.9 million, which increased 4 percent compared with the second quarter of 2017. U.S. Alimta revenue increased 3 percent, to $281.3 million, driven by increased demand and customer buying patterns. Alimta revenue outside the U.S. increased 6 percent, to $274.6 million, driven by the favorable impact of foreign exchange rates and higher realized prices, partially offset by decreased volume driven by competitive pressure and loss of exclusivity in several countries.

Cialis

For the second quarter of 2018, worldwide Cialis revenue decreased 14 percent to $538.7 million. U.S. Cialis revenue was $345.7 million in the second quarter, a 9 percent decrease compared with the second quarter of 2017, driven by decreased demand due to the entry of generic sildenafil, partially offset by higher realized prices. The company now expects the entry of generic tadalafil in the U.S. in late September 2018. Cialis revenue outside the U.S. decreased 22 percent to $193.0 million, driven by the loss of exclusivity in Europeand, to a lesser extent, lower realized prices, partially offset by the favorable impact of foreign exchange rates.

Forteo

For the second quarter of 2018, worldwide revenue for Forteo was $434.5 million, a 3 percent decrease compared with the second quarter of 2017. U.S. revenue decreased 10 percent, to $224.5 million, primarily due to decreased demand and lower realized prices. Revenue outside the U.S. increased 7 percent, to $210.0 million, driven by the favorable impact of foreign exchange rates and, to a lesser extent, increased volume, partially offset by lower realized prices.

Humulin

For the second quarter of 2018, worldwide Humulin revenue decreased 3 percent compared with the second quarter of 2017, to $346.0 million. U.S. revenue increased 5 percent, to $238.8 million, driven by higher realized prices. Revenue outside the U.S. decreased 18 percent, to $107.2 million, driven by decreased volume, primarily in China, partially offset by the favorable impact of foreign exchange rates.

Select Products Launched Since 2014

Trulicity

Second-quarter 2018 worldwide Trulicity revenue was $779.8 million, an increase of 62 percent compared with the second quarter of 2017. U.S. revenue increased 61 percent, to $612.4 million, primarily driven by higher demand as a result of increased share of market for Trulicity and growth in the GLP-1 class. Revenue outside the U.S. was $167.4 million, an increase of 69 percent, primarily driven by increased volume and, to a lesser extent, the favorable impact of foreign exchange rates, partially offset by lower realized prices.

Cyramza

For the second quarter of 2018, worldwide Cyramza revenue was $218.8 million, an increase of 17 percent compared with the second quarter of 2017. U.S. revenue was $75.4 million, an increase of 10 percent, driven primarily by increased volume. Revenue outside the U.S. was $143.3 million, an increase of 22 percent, driven by increased volume, and, to a lesser extent, the favorable impact of foreign exchange rates.

Basaglar

For the second quarter of 2018, Basaglar generated worldwide revenue of $201.8 million. U.S. revenue was $156.5 million, an increase of $29.8 million compared with the first quarter of 2018, driven by increased demand. Revenue outside the U.S. was $45.3 million, an increase of $6.0 million compared with the first quarter of 2018. Basaglar is part of the company's alliance with Boehringer Ingelheim, and Lilly reports total sales as revenue, with payments made to Boehringer Ingelheim for its portion of the gross margin reported as cost of sales.

Taltz

For the second quarter of 2018, worldwide Taltz revenue was $220.1 million, an increase of 59 percent compared with the second quarter of 2017. U.S. revenue was $173.6 million, an increase of 39 percent, driven by higher demand, partially offset by lower realized prices. Revenue outside the U.S. was $46.5 million, an increase of $32.2 million, driven by increased volume from new launches.

Jardiance

The company's worldwide Jardiance revenue during the second quarter of 2018 was $147.2 million, an increase of 43 percent compared with the second quarter of 2017. U.S. revenue increased 28 percent, to $85.6 million, driven by increased demand, partially offset by lower realized prices due to changes in estimates to rebates and discounts. Revenue outside the U.S. was $61.6 million, an increase of 70 percent, primarily driven by increased volume and, to a lesser extent, the favorable impact of foreign exchange rates. Jardiance is part of the company's alliance with Boehringer Ingelheim, and Lilly reports as revenue a portion of Jardiance's gross margin.

Lartruvo

For the second quarter of 2018, Lartruvo generated worldwide revenue of $79.9 million. U.S. revenue was $51.3 million, an increase of $8.3 million compared with the first quarter of 2018. Revenue outside the U.S. was $28.6 million, an increase of $7.2 million compared with the first quarter of 2018.

Verzenio

For the second quarter of 2018, Verzenio, a treatment for women with HR+, HER2- advanced breast cancer, generated U.S. revenue of $57.7 million, an increase of $28.0 million compared with the first quarter of 2018.

Olumiant

For the second quarter of 2018, Olumiant generated worldwide revenue of $44.7 million.  U.S. revenue was $1.7 million due to initial wholesaler stocking. Olumiant was launched in the U.S. in June 2018. Revenue outside the U.S. was $42.9 million, an increase of $10.7 million compared with the first quarter of 2018, reflecting uptake of new launches in Europe.

Eli Lilly Q2 Earnings Presentation


From a year-to-date perspective, the company has achieved worldwide revenue of $12.055 billion, an increase of 9%, compared with $11.053 billion in the same period in 2017.