INDIANAPOLIS,
July 25, 2017 /PRNewswire/ -- Eli
Lilly and Company (NYSE: LLY) today announced financial results for
the second quarter of 2017.
|
|
|
|
|
$ in millions, except
per share data
|
Second
Quarter
|
%
|
|
2017
|
|
2016
|
Change
|
Revenue
|
$
|
5,824.3
|
|
|
$
|
5,404.8
|
|
8%
|
Net Income –
Reported
|
1,008.0
|
|
|
747.7
|
|
35%
|
EPS –
Reported
|
0.95
|
|
|
0.71
|
|
34%
|
|
|
|
|
|
Net Income –
Non-GAAP
|
1,177.4
|
|
|
908.8
|
|
30%
|
EPS –
Non-GAAP
|
1.11
|
|
|
0.86
|
|
29%
|
Certain financial information for 2017 and 2016 is presented on
both a reported and a non-GAAP basis. Some numbers in this press
release may not add due to rounding. Reported results were prepared
in accordance with generally accepted accounting principles (GAAP)
and include all revenue and expenses recognized during the periods.
Non-GAAP measures exclude the items described in the reconciliation
tables later in the release. The company's 2017 financial guidance
is also being provided on both a reported and a non-GAAP basis. The
non-GAAP measures are presented to provide additional insights into
the underlying trends in the company's business.
"Lilly delivered strong revenue growth in the second quarter,
building on the momentum of Trulicity, Taltz and the other new
products in our portfolio," said David A.
Ricks, Lilly's chairman, president and CEO. "To deliver on
our mission and maximize our opportunity, we have four key
priorities -- launching with excellence, replenishing the pipeline,
driving productivity, and building talent and capability in our
core areas of focus."
Today the company is providing an update to its oncology
research and development strategy. In addition to building upon new
oncology products such as Cyramza® (ramucirumab),
Lartruvo™ (olaratumab) and
abemaciclib, Lilly will pursue new standard-of-care changing
therapies that target tumor dependencies in molecularly enriched
populations, build rational combinations that overcome resistance,
and develop next-generation immunotherapies. Using this framework,
Lilly will now focus on seven pipeline assets for priority internal
development and three additional assets which are pending data from
ongoing trials. The company has or will seek external partners on
the other molecules in clinical development as appropriate.
Additional details will be provided in the company's 2017
second-quarter earnings call.
Key Events Over the Last Three Months
Regulatory
- The U.S. Food and Drug Administration (FDA) granted Priority
Review designation for abemaciclib, a cyclin-dependent kinase (CDK)
4 & 6 inhibitor. The company's submission of abemaciclib
includes two indications: abemaciclib monotherapy for patients with
hormone-receptor-positive (HR+), human epidermal growth factor
receptor 2-negative (HER2-) advanced breast cancer who had prior
endocrine therapy and chemotherapy for metastatic disease; and
abemaciclib in combination with fulvestrant in women with HR+,
HER2- advanced breast cancer who had disease progression following
endocrine therapy.
- The FDA granted Fast Track designation for tanezumab for the
treatment of chronic pain in patients with osteoarthritis and
chronic low back pain. Tanezumab, which is being studied in
collaboration with Pfizer, is an investigational humanized
monoclonal antibody that selectively targets, binds to and inhibits
nerve growth factor.
- The company and Incyte announced that a resubmission to the FDA
for the New Drug Application (NDA) for baricitinib, a once-daily
oral medication for the treatment of moderate-to-severe rheumatoid
arthritis, will be delayed beyond 2017. The companies will be
further discussing the path forward with the agency and evaluating
options for resubmission, including the potential for an additional
clinical study, as requested by the FDA. The length of time to a
resubmission for the NDA will depend on which option the companies
pursue and further FDA discussions, but is anticipated to be a
minimum of 18 months.
- Japan's Ministry of Health,
Labor and Welfare granted marketing approval for
Olumiant® (baricitinib) 2-mg and 4-mg tablets for the
treatment of rheumatoid arthritis (including the prevention of
structural injury of joints) in patients with inadequate response
to standard-of-care therapies. Olumiant is part of a collaboration
with Incyte.
Clinical
- The company announced that galcanezumab, an investigational
treatment for the prevention of episodic and chronic migraine, met
its primary endpoint in three Phase 3 studies demonstrating
statistically significant reductions in the number of monthly
migraine headache days compared to placebo at both studied
doses.
- The company announced that a Phase 3 study of Cyramza met its
primary endpoint of progression-free survival, demonstrating a
statistically significant improvement. The Phase 3 global,
randomized, double-blinded, placebo-controlled trial is evaluating
ramucirumab in combination with docetaxel in patients with locally
advanced or unresectable or metastatic urothelial carcinoma whose
disease progressed on or after platinum-based chemotherapy.
- The company passed an interim analysis in a Phase 3 study of
lanabecestat in patients with early Alzheimer's disease. As a
result, Lilly will make a $50 million
milestone payment in the third quarter of 2017 as part of the
company's collaboration with AstraZeneca.
Business Development/Other
- The UK Supreme Court has decided in the litigation relating to
alternative salt forms of Alimta® (pemetrexed disodium)
that Actavis's products directly infringe Lilly's vitamin regimen
patents in the UK, France,
Italy and Spain. The UK Supreme Court also affirmed the
indirect infringement finding by the UK Court of Appeal.
- The company entered into a settlement agreement with generic
companies to resolve pending patent litigation in the U.S. District
Court for the Eastern District of Virginia regarding the Cialis®
(tadalafil) unit dose patent. This patent was set to expire on
April 26, 2020. As part of the
agreement, Cialis exclusivity is now expected to end at the
earliest on September 27, 2018.
- The company and Nektar Therapeutics announced a strategic
collaboration to co-develop NKTR-358, a novel immunological therapy
discovered by Nektar. NKTR-358, which achieved first human dose in
Phase 1 clinical development in March of 2017, has the potential to
treat a number of autoimmune and other chronic inflammatory
conditions. Subject to clearance under the Hart-Scott-Rodino
Antitrust Improvements Act and other customary closing conditions,
Lilly expects to provide an initial payment of $150 million to Nektar in 2017.
- The company and KeyBioscience entered into a new collaboration
focused on the development of Dual Amylin Calcitonin Receptor
Agonists (DACRAs), a potential new class of treatments for
metabolic disorders such as type 2 diabetes. Lilly will provide an
initial payment of $55 million to
KeyBioscience in the third quarter of 2017.
- The company and Purdue University
announced a strategic collaboration to conduct life science
research in a five-year agreement, where Lilly will provide up to
$52 million.
- The company announced completion of a $90 million expansion of its Biotechnology Center
in San Diego, California. Lilly's
new space will help foster and accelerate the discovery of
medicines within the company's core therapeutic areas of
immunology, diabetes, oncology and neurodegeneration, as well as
the emerging area of pain.
Second-Quarter Reported Results
In the second quarter of 2017, worldwide revenue was
$5.824 billion, an increase of 8
percent compared with the second quarter of 2016. The revenue
increase was driven by a 5 percent increase due to volume and a 4
percent increase due to realized prices, partially offset by a 1
percent decrease due to the unfavorable impact of foreign exchange
rates. The increase in worldwide volume was largely due to 8
percent pharmaceutical growth driven by Trulicity® and
other new products, including Taltz®,
Basaglar®, Jardiance®, Lartruvo and Cyramza.
These volume increases were partially offset by decreased volumes
for Cialis, Zyprexa®, Alimta and Strattera®.
The increase in realized prices was primarily driven by Cialis and
Forteo®. Revenue decreased for animal health products,
despite the inclusion of $78.3
million in revenue from the acquisition of Boehringer
Ingelheim Vetmedica's U.S. feline, canine and rabies vaccine
portfolio.
Revenue in the U.S. increased 15 percent, to $3.324 billion, due to higher realized prices for
several pharmaceutical products, primarily driven by Cialis and
Forteo, and increased volume for new pharmaceutical products,
driven by Trulicity, Taltz, Basaglar, Jardiance and Lartruvo. The
increase in revenue was partially offset by decreased volume for
several established pharmaceutical products, including Cialis and
Strattera, as well as decreased revenue for animal health
products.
Revenue outside the U.S. decreased 1 percent, to $2.500 billion, due to the loss of exclusivity of
Zyprexa in Japan and
Cymbalta® in Canada and
Europe, as well as increased
competition, lower realized prices and loss of exclusivity for
Alimta in several countries. The unfavorable impact of foreign
exchange rates and decreases for food and companion animal products
also contributed to lower revenue. These declines were largely
offset by increased volume for several new pharmaceutical products,
including Trulicity and Cyramza.
Gross margin increased 8 percent, to $4.273 billion, in the second quarter of 2017
compared with the second quarter of 2016. Gross margin as a percent
of revenue was 73.4 percent, an increase of 0.5 percentage points
compared with the second quarter of 2016. The increase in gross
margin percent was primarily due to higher realized prices and
manufacturing efficiencies, partially offset by negative product
mix and higher expenses to support new pharmaceutical products.
Operating expenses in the second quarter of 2017, defined as the
sum of research and development, and marketing, selling and
administrative expenses, remained flat at $2.958 billion. Research and development expenses
decreased 6 percent, to $1.251
billion, or 21.5 percent of revenue. This decrease was
driven primarily by a $100.0 million
charge in the second quarter of 2016, related to a development
milestone for lanabecestat, an oral beta secretase cleaving enzyme
(BACE) inhibitor currently in development with AstraZeneca as a
potential treatment for early Alzheimer's disease. Marketing,
selling and administrative expenses increased 5 percent, to
$1.707 billion, due to increased
expenses related to new pharmaceutical products, partially offset
by decreased expenses related to late life-cycle products.
Operating expenses were 50.8 percent of revenue in the second
quarter of 2017, a reduction of 3.9 percentage points compared with
the second quarter of 2016, as a result of higher revenue and flat
operating expenses.
In the second quarter of 2017, the company recognized asset
impairment, restructuring and other special charges of $50.0 million. The charges are primarily
associated with integration costs and asset impairments related to
the acquisition and integration of Novartis Animal Health. In the
second quarter of 2016, the company recognized asset impairment,
restructuring and other special charges of $58.0 million, composed of integration
costs, severance costs and asset impairments related to the
acquisition and integration of Novartis Animal Health.
Operating income in the second quarter of 2017 was $1.264 billion, an increase of $341.1 million compared with the second quarter
of 2016, primarily driven by higher gross margin.
Other income (expense) was expense of $3.9 million in the second quarter of 2017,
compared with income of $21.2 million
in the second quarter of 2016.
The effective tax rate was 20.0 percent in the second quarter of
2017, compared with 20.8 percent in the second quarter of 2016.
In the second quarter of 2017, net income increased 35 percent,
to $1.008 billion, and earnings
per share increased 34 percent, to $0.95, compared with $747.7 million and $0.71, respectively, in the second quarter of
2016. The increases in net income and earnings per share were
primarily driven by higher operating income.
Second-Quarter Non-GAAP Measures
On a non-GAAP basis, second-quarter 2017 gross margin increased
9 percent, to $4.465 billion. Gross
margin as a percent of revenue was 76.7 percent, an increase of 0.7
percentage points compared with the second quarter of 2016. The
increase in gross margin percent was primarily due to higher
realized prices and manufacturing efficiencies, partially offset by
negative product mix and higher expenses to support new
pharmaceutical products.
Operating expenses were 50.8 percent of revenue in the second
quarter of 2017, a reduction of 3.9 percentage points compared with
the second quarter of 2016, as a result of higher revenue and flat
operating expenses.
Operating income increased $358.6
million, or 31 percent, to $1.509
billion in the second quarter of 2017, due to higher gross
margin.
The effective tax rate was 21.7 percent in the second quarter of
2017, compared with 22.4 percent in the second quarter of 2016.
In the second quarter of 2017, net income increased 30 percent,
to $1.177 billion, and earnings per
share increased 29 percent, to $1.11, compared with $908.8 million and $0.86, respectively, in the second quarter of
2016. The increases in net income and earnings per share were
driven by higher operating income.
For further detail of non-GAAP measures, see the reconciliation
below as well as the Reconciliation of GAAP Reported to Selected
Non-GAAP Adjusted Information table later in this press
release.
|
Second
Quarter
|
|
2017
|
|
2016
|
% Change
|
Earnings per share
(reported)
|
$
|
0.95
|
|
|
$
|
0.71
|
|
34%
|
Amortization of
intangible assets
|
.12
|
|
|
.11
|
|
|
Asset impairment,
restructuring and other special charges
|
.03
|
|
|
.04
|
|
|
Inventory step up
costs associated with the acquisition of Boehringer Ingelheim
Vetmedica's U.S. feline, canine and rabies vaccine
portfolio
|
.01
|
|
|
—
|
|
|
Earnings per share
(non-GAAP)
|
$
|
1.11
|
|
|
$
|
0.86
|
|
29%
|
|
|
|
|
|
Numbers may not add
due to rounding.
|
|
|
|
|
Year-to-Date Results
For the first six months of 2017, worldwide revenue increased 8
percent, to $11.053 billion, compared
with $10.270 billion in the same
period in 2016. Reported net income and earnings per share were
$897.2 million and $0.85, respectively. Net income and earnings per
share, on a non-GAAP basis, were $2.217
billion and $2.10,
respectively.
Year-to-Date Non-GAAP Measures
For further detail of non-GAAP measures, see the reconciliation
below as well as the Reconciliation of GAAP Reported to Selected
Non-GAAP Adjusted Information table later in this press
release.
|
Year-to-Date
|
|
2017
|
|
2016
|
% Change
|
Earnings per share
(reported)
|
$
|
0.85
|
|
|
$
|
1.12
|
|
(24)%
|
Acquired in-process
research and development
|
.81
|
|
|
—
|
|
|
Amortization of
intangible assets
|
.23
|
|
|
.22
|
|
|
Asset impairment,
restructuring and other special charges
|
.19
|
|
|
.16
|
|
|
Inventory step up
costs associated with the acquisition of Boehringer Ingelheim
Vetmedica's U.S. feline, canine and rabies vaccine
portfolio
|
.02
|
|
|
—
|
|
|
Venezuela
charge
|
—
|
|
|
.19
|
|
|
Earnings per share
(non-GAAP)
|
$
|
2.10
|
|
|
$
|
1.69
|
|
24%
|
Numbers may not add
due to rounding.
|
|
|
|
|
Select Revenue
Highlights
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
millions)
|
Second
Quarter
|
|
Year-to-Date
|
|
Established
Pharmaceutical Products
|
2017
|
|
2016
|
|
% Change
|
|
2017
|
|
2016
|
|
% Change
|
|
Humalog®
|
$
|
678.4
|
|
|
$
|
701.9
|
|
|
(3)%
|
|
$
|
1,386.8
|
|
|
$
|
1,308.2
|
|
|
6%
|
|
Cialis
|
627.3
|
|
|
630.5
|
|
|
(0)%
|
|
1,160.9
|
|
|
1,207.2
|
|
|
(4)%
|
|
Alimta
|
532.9
|
|
|
607.1
|
|
|
(12)%
|
|
1,022.8
|
|
|
1,171.3
|
|
|
(13)%
|
|
Forteo
|
446.7
|
|
|
367.6
|
|
|
22%
|
|
794.2
|
|
|
686.3
|
|
|
16%
|
|
Humulin®
|
357.8
|
|
|
332.3
|
|
|
8%
|
|
672.3
|
|
|
688.7
|
|
|
(2)%
|
|
Strattera
|
186.6
|
|
|
224.6
|
|
|
(17)%
|
|
382.8
|
|
|
412.7
|
|
|
(7)%
|
|
Cymbalta
|
206.6
|
|
|
236.5
|
|
|
(13)%
|
|
381.2
|
|
|
435.2
|
|
|
(12)%
|
|
Erbitux®
|
159.1
|
|
|
180.6
|
|
|
(12)%
|
|
313.5
|
|
|
348.6
|
|
|
(10)%
|
|
Zyprexa
|
140.8
|
|
|
210.7
|
|
|
(33)%
|
|
288.3
|
|
|
423.4
|
|
|
(32)%
|
|
Effient®
|
142.9
|
|
|
135.1
|
|
|
6%
|
|
270.7
|
|
|
266.6
|
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Pharmaceutical
Products
|
|
|
|
|
|
|
|
|
|
|
|
|
Trulicity
|
480.2
|
|
|
201.3
|
|
|
139%
|
|
853.1
|
|
|
344.9
|
|
|
147%
|
|
Cyramza
|
186.3
|
|
|
147.0
|
|
|
27%
|
|
357.6
|
|
|
278.0
|
|
|
29%
|
|
Taltz
|
138.7
|
|
|
19.3
|
|
|
618%
|
|
235.4
|
|
|
19.3
|
|
|
1,118%
|
|
Jardiance(a)
|
103.2
|
|
|
40.1
|
|
|
157%
|
|
177.1
|
|
|
78.3
|
|
|
126%
|
|
Basaglar
|
86.6
|
|
|
16.3
|
|
|
432%
|
|
132.6
|
|
|
27.2
|
|
|
388%
|
|
Lartruvo
|
47.4
|
|
|
—
|
|
|
NM
|
|
89.5
|
|
|
—
|
|
|
NM
|
|
Olumiant
|
4.8
|
|
|
—
|
|
|
NM
|
|
6.6
|
|
|
—
|
|
|
NM
|
|
Portrazza®
|
2.3
|
|
|
4.0
|
|
|
(43)%
|
|
5.9
|
|
|
5.7
|
|
|
3%
|
|
Subtotal
|
1,049.5
|
|
|
428.0
|
|
|
145.2%
|
|
1,857.8
|
|
|
753.4
|
|
|
146.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Animal
Health
|
784.8
|
|
|
859.8
|
|
|
(9)%
|
|
1,554.2
|
|
|
1,614.4
|
|
|
(4)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Revenue
|
5,824.3
|
|
|
5,404.8
|
|
|
8%
|
|
11,052.6
|
|
|
10,269.9
|
|
|
8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Jardiance includes Glyxambi® and
Synjardy®
NM – not
meaningful
Numbers may not add
due to rounding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Established Pharmaceutical Products
Humalog
For the second quarter of 2017, worldwide Humalog revenue
decreased 3 percent compared with the second quarter of 2016, to
$678.4 million. Revenue in the U.S.
decreased 7 percent, to $390.4
million, due to lower realized prices and, to a lesser
extent, decreased volume. Revenue outside the U.S. increased 2
percent, to $288.0 million, driven by
increased volume and, to a lesser extent, higher realized prices,
partially offset by the unfavorable impact of foreign exchange
rates.
Cialis
For the second quarter of 2017, worldwide Cialis revenue
remained flat at $627.3 million. U.S.
revenue of Cialis was $381.0 million
in the second quarter, a 1 percent decrease compared with the
second quarter of 2016, driven by decreased demand offset almost
entirely by higher realized prices. Revenue of Cialis outside the
U.S. remained flat at $246.3 million,
driven by the unfavorable impact of foreign exchange rates and
decreased volume, almost entirely offset by higher realized
prices.
Alimta
For the second quarter of 2017, Alimta generated worldwide
revenue of $532.9 million, which
decreased 12 percent compared with the second quarter of 2016. U.S.
revenue of Alimta decreased 6 percent, to $274.3 million, driven by decreased demand
due to competitive pressure, partially offset by higher realized
prices. Revenue outside the U.S. decreased 18 percent, to
$258.6 million, driven by increased
competition, lower realized prices, loss of exclusivity in several
countries and, to a lesser extent, the unfavorable impact of
foreign exchange rates.
Forteo
Second-quarter 2017 worldwide revenue for Forteo was
$446.7 million, a 22 percent increase
compared with the second quarter of 2016. U.S. revenue increased 34
percent, to $249.8 million, driven by
higher realized prices and, to a lesser extent, increased volume.
Revenue outside the U.S. increased 9 percent, to $196.9 million, driven by increased volume
and, to a lesser extent, higher realized prices, partially offset
by the unfavorable impact of foreign exchange rates.
Humulin
Worldwide Humulin revenue for the second quarter of 2017
increased 8 percent compared with the second quarter of 2016, to
$357.8 million. U.S. revenue
increased 11 percent, to $226.5
million, driven by higher realized prices and, to a lesser
extent, increased volume. Revenue outside the U.S. increased
3 percent, to $131.3 million,
driven by increased volume, partially offset by lower realized
prices and, to a lesser extent, the unfavorable impact of foreign
exchange rates.
Selected New Pharmaceutical Products
Trulicity
Second-quarter 2017 worldwide Trulicity revenue was $480.2 million. U.S. revenue was $380.9 million, driven by growth in the GLP-1
market and increased share of market for Trulicity. Revenue outside
the U.S. was $99.3 million, primarily
driven by uptake in Europe and
Japan.
Cyramza
For the second quarter of 2017, worldwide Cyramza revenue was
$186.3 million, an increase of
27 percent compared with the second quarter of 2016. U.S. revenue
was $68.7 million, an increase
of 1 percent, driven by higher realized prices, partially offset by
decreased demand due to competitive pressure. Revenue outside the
U.S. was $117.6 million, an
increase of 49 percent, primarily due to strong volume growth in
Japan, partially offset by lower
realized prices.
Taltz
For the second quarter of 2017, Taltz generated worldwide
revenue of $138.7 million. U.S.
revenue was $124.4 million, an
increase of $36.6 million compared
with the first quarter of 2017, reflecting strong launch
uptake.
Jardiance
The company's worldwide Jardiance revenue during the second
quarter of 2017 was $103.2 million,
an increase of 157 percent compared with the second quarter of
2016. U.S. revenue increased 157 percent, to $66.8 million, driven by increased share of
market for Jardiance and growth in the SGLT2 class. Revenue outside
the U.S. was $36.3 million. Jardiance
is part of the company's alliance with Boehringer Ingelheim, and
Lilly reports as revenue a portion of Jardiance's gross margin.
Basaglar
For the second quarter of 2017, Basaglar generated worldwide
revenue of $86.6 million. U.S.
revenue was $59.5 million, an
increase of $37.5 million compared
with the first quarter of 2017, reflecting strong launch uptake.
Basaglar is part of the company's alliance with Boehringer
Ingelheim, and Lilly reports as revenue total sales, with payments
made to Boehringer Ingelheim for its portion of the gross margin
reported as cost of sales.
Lartruvo
For the second quarter of 2017, Lartruvo, a treatment in
combination with doxorubicin for a subset of adult patients with
advanced soft tissue sarcoma, generated worldwide revenue of
$47.4 million. U.S. revenue was
$39.7 million, an increase of
$1.7 million compared with the first
quarter of 2017.
Olumiant
For the second quarter of 2017, Olumiant, a treatment for
moderate-to-severe rheumatoid arthritis, generated worldwide
revenue of $4.8 million.
Animal Health
In the second quarter of 2017, worldwide animal health revenue
totaled $784.8 million, a decrease of
9 percent compared with the second quarter of 2016. Worldwide
food animal revenue decreased 14 percent, to $473.0 million, driven by market access pressure
and competitive pressure in cattle and swine. Worldwide companion
animal revenue increased 1 percent, to $311.8 million, driven by the inclusion of
$78.3 million in revenue from the
acquisition of Boehringer Ingelheim Vetmedica's U.S. feline, canine
and rabies vaccine portfolio, largely offset by wholesaler buying
patterns in the second quarter of 2016 and worldwide competitive
pressure. The company expects these pressures to continue,
to a lesser extent, for the balance of 2017.
2017 Financial Guidance
The company has revised certain elements of its 2017 financial
guidance on a reported basis and on a non-GAAP basis. Earnings per
share for 2017 are being decreased to be in the range of
$2.51 to $2.61 on a reported basis.
Earnings per share for 2017 are being increased to be in the range
of $4.10 to $4.20 on a non-GAAP
basis.
|
2017
Expectations
|
% Change from
2016
|
Earnings per share
(reported)
|
$2.51 to
$2.61
|
(3)% to
1%
|
Acquired in-process
research and development charges related to the acquisition of
CoLucid Pharmaceuticals and the collaborations with Nektar
Therapeutics and KeyBioscience
|
.94
|
|
Amortization of
intangible assets (1)
|
.44
|
|
Asset impairment,
restructuring and other special charges, including Novartis Animal
Health integration costs
|
.19
|
|
Inventory step-up
costs associated with the acquisition of Boehringer Ingelheim
Vetmedica's U.S. feline, canine and rabies vaccines portfolio
(1)
|
.03
|
|
Earnings per share
(non-GAAP)
|
$4.10 to
$4.20
|
16% to
19%
|
(1) Subject to
acquisition accounting adjustments
|
|
|
Numbers may not add
due to rounding
|
|
|
The company now anticipates 2017 revenue between $22.0 billion and $22.5 billion. Excluding the
impact of foreign exchange rates, the company expects revenue
growth from new pharmaceutical products including Trulicity, Taltz,
Basaglar, Cyramza, Jardiance and Lartruvo, as well as a number of
established pharmaceutical products including Trajenta®,
Forteo and Humalog.
Gross margin percentage is now expected to be approximately 72.5
percent on a reported basis, and approximately 76.0 percent on a
non-GAAP basis.
Marketing, selling and administrative expenses are still
expected to be in the range of $6.4 billion to $6.6 billion. Research and development
expenses are now expected to be in the range of $5.0 billion
to $5.2 billion.
The 2017 tax rate is now expected to be approximately 23.5
percent on a reported basis. The 2017 tax rate is still expected to
be approximately 22.0 percent on a non-GAAP basis.
The following table summarizes the company's 2017 financial
guidance:
|
2017
Guidance
|
|
Prior
|
|
Revised
|
Revenue
|
$21.8 to $22.3
billion
|
|
$22.0 to $22.5
billion
|
|
|
|
|
Gross Margin % of
Revenue (reported)
|
Approx.
73.5%
|
|
Approx.
72.5%
|
Gross Margin % of
Revenue (non-GAAP)
|
Approx.
77.0%
|
|
Approx.
76.0%
|
|
|
|
|
Marketing, Selling
& Administrative
|
$6.4 to $6.6
billion
|
|
Unchanged
|
|
|
|
|
Research &
Development
|
$4.9 to $5.1
billion
|
|
$5.0 to $5.2
billion
|
|
|
|
|
Other
Income/(Expense)
|
$0 to $100
million
|
|
Unchanged
|
|
|
|
|
Tax Rate
(reported)
|
Approx.
24.5%
|
|
Approx.
23.5%
|
Tax Rate
(non-GAAP)
|
Approx.
22.0%
|
|
Unchanged
|
|
|
|
|
Earnings per Share
(reported)
|
$2.60 to
$2.70
|
|
$2.51 to
$2.61
|
Earnings per Share
(non-GAAP)
|
$4.05 to
$4.15
|
|
$4.10 to
$4.20
|
|
|
|
|
Capital
Expenditures
|
Approx. $1.2
billion
|
|
Approx. $1.1
billion
|
|
|
|
|
Non-GAAP adjustments
are consistent with the earnings per share table above.
|
Webcast of Conference Call
As previously announced, investors and the general public can
access a live webcast of the second-quarter 2017 financial results
conference call through a link on Lilly's website at www.lilly.com.
The conference call will be held today from 9 a.m. to 10:30 a.m. Eastern time (ET) and will
be available for replay via the website.
Lilly is a global healthcare leader that unites caring with
discovery to make life better for people around the world. We were
founded more than a century ago by a man committed to creating
high-quality medicines that meet real needs, and today we remain
true to that mission in all our work. Across the globe, Lilly
employees work to discover and bring life-changing medicines to
those who need them, improve the understanding and management of
disease, and give back to communities through philanthropy and
voluntarism. To learn more about Lilly, please visit us at
www.lilly.com and http://newsroom.lilly.com/social-channels.
F-LLY
This press release contains management's current intentions and
expectations for the future, all of which are forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934. The
words "estimate", "project", "intend", "expect", "believe",
"target", "anticipate" and similar expressions are intended to
identify forward-looking statements. Actual results may differ
materially due to various factors. There are significant risks and
uncertainties in pharmaceutical research and development. There can
be no guarantees that pipeline products will receive the necessary
clinical and manufacturing regulatory approvals or that they will
prove to be commercially successful. The company's results may also
be affected by such factors as the timing of anticipated regulatory
approvals and launches of new products; market uptake of recently
launched products; competitive developments affecting current
products; the expiration of intellectual property protection for
certain of the company's products; the company's ability to protect
and enforce patents and other intellectual property; the impact of
governmental actions regarding pricing, importation, and
reimbursement for pharmaceuticals, including U.S. health care
reform; regulatory compliance problems or government
investigations; regulatory actions regarding currently marketed
products; unexpected safety or efficacy concerns associated with
the company's products; issues with product supply stemming from
manufacturing difficulties or disruptions; regulatory changes or
other developments; changes in patent law or regulations related to
data-package exclusivity; litigation involving current or future
products; the extent to which third-party indemnification
obligations relating to product liability litigation and similar
matters will be performed; unauthorized disclosure of trade secrets
or other confidential data stored in the company's information
systems and networks; changes in tax law and regulations; changes
in inflation, interest rates, and foreign currency exchange rates;
asset impairments and restructuring charges; changes in accounting
standards promulgated by the Financial Accounting Standards Board
and the Securities and Exchange Commission (SEC); acquisitions and
business development transactions and related integration costs;
and the impact of exchange rates and global macroeconomic
conditions. For additional information about the factors that could
cause actual results to differ materially from forward-looking
statements, please see the company's latest Form 10-Q and Form 10-K
filed with the SEC. You should not place undue reliance on
forward-looking statements, which speak only as of the date of this
release. Except as is required by law, the company expressly
disclaims any obligation to publicly release any revisions to
forward-looking statements to reflect events after the date of this
release.
Alimta® (pemetrexed disodium, Lilly)
Basaglar® (insulin glargine injection, Lilly)
Cialis® (tadalafil, Lilly)
Cymbalta® (duloxetine hydrochloride, Lilly)
Cyramza® (ramucirumab, Lilly)
Effient® (prasugrel, Lilly)
Erbitux® (cetuximab, Lilly)
Forteo® (teriparatide of recombinant DNA origin
injection, Lilly)
Glyxambi® (empagliflozin/linagliptin, Boehringer
Ingelheim)
Humalog® (insulin lispro injection of recombinant DNA
origin, Lilly)
Humulin® (human insulin of recombinant DNA origin,
Lilly)
Jardiance® (empagliflozin, Boehringer Ingelheim)
LartruvoTM (olaratumab, Lilly)
Olumiant® (baricitinib, Lilly)
Portrazza® (necitumumab, Lilly)
Strattera® (atomoxetine hydrochloride, Lilly)
Synjardy® (empagliflozin/metformin, Boehringer
Ingelheim)
Taltz® (ixekizumab, Lilly)
Trajenta® (linagliptin, Boehringer Ingelheim)
Trulicity® (dulaglutide, Lilly)
Zyprexa® (olanzapine, Lilly)
Eli Lilly and Company
Employment Information
|
|
|
|
|
June 30,
2017
|
December 31,
2016
|
|
|
|
Worldwide
Employees
|
41,240
|
41,975
|
Eli Lilly and
Company
|
Operating
Results (Unaudited) – REPORTED
|
(Dollars in millions,
except per share data)
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
June 30,
|
|
|
June 30,
|
|
|
2017
|
|
2016
|
%
Chg.
|
|
|
2017
|
|
2016
|
% Chg.
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
5,824.3
|
|
$
|
5,404.8
|
|
8%
|
|
$
|
11,052.6
|
|
$
|
10,269.9
|
|
8%
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
1,551.6
|
|
|
1,465.0
|
|
6%
|
|
|
2,879.3
|
|
|
2,788.0
|
|
3%
|
Research and
development
|
|
1,250.9
|
|
|
1,335.9
|
|
(6)%
|
|
|
2,489.2
|
|
|
2,556.9
|
|
(3)%
|
Marketing, selling
and administrative
|
|
1,707.4
|
|
|
1,622.6
|
|
5%
|
|
|
3,252.1
|
|
|
3,096.5
|
|
5%
|
Acquired in-process
research
and development
|
|
—
|
|
|
—
|
|
NM
|
|
|
857.6
|
|
|
—
|
|
NM
|
Asset impairment,
restructuring
and other special charges
|
|
50.0
|
|
|
58.0
|
|
(14)%
|
|
|
263.9
|
|
|
189.4
|
|
39%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
1,264.4
|
|
|
923.3
|
|
37%
|
|
|
1,310.5
|
|
|
1,639.1
|
|
(20)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
(expense)
|
|
(16.7)
|
|
|
(19.7)
|
|
|
|
|
(30.7)
|
|
|
(38.9)
|
|
|
Net other income
(expense)
|
|
12.8
|
|
|
40.9
|
|
|
|
|
41.9
|
|
|
(88.9)
|
|
|
Other income
(expense)
|
|
(3.9)
|
|
|
21.2
|
|
NM
|
|
|
11.2
|
|
|
(127.8)
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
1,260.5
|
|
|
944.5
|
|
33%
|
|
|
1,321.7
|
|
|
1,511.3
|
|
(13)%
|
Income
taxes
|
|
252.5
|
|
|
196.8
|
|
28%
|
|
|
424.5
|
|
|
323.5
|
|
31%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
1,008.0
|
|
$
|
747.7
|
|
35%
|
|
$
|
897.2
|
|
$
|
1,187.8
|
|
(24)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share –
diluted
|
$
|
0.95
|
|
$
|
0.71
|
|
34%
|
|
$
|
0.85
|
|
$
|
1.12
|
|
(24)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid per
share
|
$
|
0.52
|
|
$
|
0.51
|
|
2%
|
|
$
|
1.04
|
|
$
|
1.02
|
|
2%
|
Weighted-average
shares
outstanding (thousands) – diluted
|
|
1,057,110
|
|
|
1,060,083
|
|
|
|
|
1,057,543
|
|
|
1,061,023
|
|
|
NM – not meaningful
Eli Lilly and
Company
|
|
|
Reconciliation of
GAAP Reported to Selected Non-GAAP Adjusted Information
(Unaudited)
|
|
|
(Dollars in millions,
except per share data)
|
|
|
|
|
|
|
Three Months
Ended
June 30,
2017
|
|
Three Months
Ended
June 30, 2016
|
|
|
|
GAAP
Reported
|
Adjustments(c)
|
Non-GAAP
Adjusted(a)
|
|
GAAP
Reported
|
Adjustments(d)
|
Non-GAAP
Adjusted(a)
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
$
|
1,551.6
|
$
|
(192.4)
|
$
|
1,359.2
|
$
|
1,465.0
|
$
|
(166.6)
|
$
|
1,298.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses(b)
|
|
2,958.3
|
|
(1.8)
|
|
2,956.6
|
|
2,958.5
|
|
(2.0)
|
|
2,956.5
|
Asset impairment,
restructuring and other special charges
|
|
50.0
|
|
(50.0)
|
|
—
|
|
58.0
|
|
(58.0)
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
252.5
|
|
74.7
|
|
327.2
|
|
196.8
|
|
65.6
|
|
262.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
1,008.0
|
|
169.5
|
|
1,177.4
|
|
747.7
|
|
161.1
|
|
908.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share –
diluted
|
|
0.95
|
|
0.16
|
|
1.11
|
|
0.71
|
|
0.15
|
|
0.86
|
Numbers may not add
due to rounding.
|
The table above
reflects only line items with non-GAAP adjustments.
|
(a)
|
The company uses
non-GAAP financial measures that differ from financial statements
reported in conformity with U.S. generally accepted accounting
principles (GAAP). The company's non-GAAP measures adjust reported
results to exclude amortization of intangibles and items that are
typically highly variable, difficult to predict, and/or of a size
that could have a substantial impact on the company's reported
operations for a period. The company believes that these non-GAAP
measures provide useful information to investors. Among other
things, they may help investors evaluate the company's ongoing
operations. They can assist in making meaningful period-over-period
comparisons and in identifying operating trends that would
otherwise be masked or distorted by the items subject to the
adjustments. Management uses these non-GAAP measures internally to
evaluate the performance of the business, including to allocate
resources and to evaluate results relative to incentive
compensation targets. Investors should consider these non-GAAP
measures in addition to, not as a substitute for or superior to,
measures of financial performance prepared in accordance with
GAAP.
|
(b)
|
Operating expenses
include research and development and marketing, selling and
administrative expenses.
|
(c)
|
Adjustments to
certain GAAP reported measures for the three months ended June 30,
2017, include the following:
|
(Dollars in millions,
except per share data)
|
Amortization(i)
|
Inventory
step-up(ii)
|
Other specified
items(iii)
|
Total
Adjustments
|
Cost of
sales
|
$
|
(176.3)
|
|
$
|
(16.1)
|
|
$
|
—
|
|
$
|
(192.4)
|
|
|
|
|
|
|
Operating
expenses
|
(1.8)
|
|
—
|
|
—
|
|
(1.8)
|
|
Asset impairment,
restructuring and other special charges
|
—
|
|
—
|
|
(50.0)
|
|
(50.0)
|
|
|
|
|
|
|
Income
taxes
|
55.4
|
|
5.6
|
|
13.7
|
|
74.7
|
|
|
|
|
|
|
Net income
|
122.7
|
|
10.5
|
|
36.3
|
|
169.5
|
|
|
|
|
|
|
Earnings per share –
diluted
|
0.12
|
|
0.01
|
|
0.03
|
|
0.16
|
|
Numbers may not add
due to rounding.
|
The table above
reflects only line items with non-GAAP adjustments.
|
i.
|
Exclude amortization
of intangibles primarily associated with costs of marketed products
acquired or licensed from third parties.
|
ii.
|
Exclude inventory
step-up costs associated with the acquisition of Boehringer
Ingelheim Vetmedica's U.S. feline, canine and rabies vaccine
portfolio.
|
iii.
|
Exclude charges
primarily associated with integration costs and asset impairments
related to the acquisition and integration of Novartis Animal
Health.
|
(d)
|
Adjustments to
certain GAAP reported measures for the three months ended June 30,
2016, include the following:
|
(Dollars in millions,
except per share data)
|
Amortization(i)
|
Other specified
items(ii)
|
Total
Adjustments
|
Cost of
sales
|
$
|
(166.6)
|
|
$
|
—
|
|
$
|
(166.6)
|
|
|
|
|
|
Operating
expenses
|
(2.0)
|
|
—
|
|
(2.0)
|
|
Asset impairment,
restructuring and other special charges
|
—
|
|
(58.0)
|
|
(58.0)
|
|
|
|
|
|
Income
taxes
|
52.7
|
|
12.8
|
|
65.6
|
|
|
|
|
|
Net income
|
115.8
|
|
45.2
|
|
161.1
|
|
|
|
|
|
Earnings per share –
diluted
|
0.11
|
|
0.04
|
|
0.15
|
|
Numbers may not add
due to rounding.
|
The table above
reflects only line items with non-GAAP adjustments.
|
i.
|
Exclude amortization
of intangibles primarily associated with costs of marketed products
acquired or licensed from third parties.
|
ii.
|
Exclude charges
primarily associated with integration and severance costs for
Novartis Animal Health.
|
Eli Lilly and
Company
|
|
|
Reconciliation of
GAAP Reported to Selected Non-GAAP Adjusted Information
(Unaudited)
|
|
|
(Dollars in millions,
except per share data)
|
|
|
|
|
|
|
Six Months
Ended
June 30,
2017
|
|
Six Months Ended
June 30, 2016
|
|
|
|
GAAP
Reported
|
Adjustments(c)
|
Non-GAAP
Adjusted(a)
|
|
GAAP
Reported
|
Adjustments(d)
|
Non-GAAP
Adjusted(a)
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
$
|
2,879.3
|
$
|
(377.1)
|
$
|
2,502.2
|
$
|
2,788.0
|
$
|
(337.2)
|
$
|
2,450.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses(b)
|
|
5,741.3
|
|
(3.6)
|
|
5,737.8
|
|
5,653.4
|
|
(3.9)
|
|
5,649.5
|
Acquired in-process
research and development
|
|
857.6
|
|
(857.6)
|
|
—
|
|
—
|
|
—
|
|
—
|
Asset impairment,
restructuring and other special charges
|
|
263.9
|
|
(263.9)
|
|
—
|
|
189.4
|
|
(189.4)
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
11.2
|
|
—
|
|
11.2
|
|
(127.8)
|
|
203.9
|
|
76.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
424.5
|
|
182.3
|
|
606.8
|
|
323.5
|
|
131.1
|
|
454.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
897.2
|
|
1,319.9
|
|
2,217.0
|
|
1,187.8
|
|
603.3
|
|
1,791.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share –
diluted
|
|
0.85
|
|
1.25
|
|
2.10
|
|
1.12
|
|
0.57
|
|
1.69
|
Numbers may not add
due to rounding.
|
The table above
reflects only line items with non-GAAP adjustments.
|
(a)
|
The company uses
non-GAAP financial measures that differ from financial statements
reported in conformity with U.S. generally accepted accounting
principles (GAAP). The company's non-GAAP measures adjust reported
results to exclude amortization of intangibles and items that are
typically highly variable, difficult to predict, and/or of a size
that could have a substantial impact on the company's reported
operations for a period. The company believes that these non-GAAP
measures provide useful information to investors. Among other
things, they may help investors evaluate the company's ongoing
operations. They can assist in making meaningful period-over-period
comparisons and in identifying operating trends that would
otherwise be masked or distorted by the items subject to the
adjustments. Management uses these non-GAAP measures internally to
evaluate the performance of the business, including to allocate
resources and to evaluate results relative to incentive
compensation targets. Investors should consider these non-GAAP
measures in addition to, not as a substitute for or superior to,
measures of financial performance prepared in accordance with
GAAP.
|
(b)
|
Operating expenses
include research and development and marketing, selling and
administrative expenses.
|
(c)
|
Adjustments to
certain GAAP reported measures for the six months ended June 30,
2017, include the following:
|
(Dollars in millions,
except per share data)
|
Amortization(i)
|
IPR&D(ii)
|
Inventory
step-up(iii)
|
Other specified
items(iv)
|
Total
Adjustments
|
Cost of
sales
|
$
|
(350.6)
|
|
$
|
—
|
|
$
|
(26.5)
|
|
$
|
—
|
|
$
|
(377.1)
|
|
|
|
|
|
|
|
Operating
expenses
|
(3.6)
|
|
—
|
|
—
|
|
—
|
|
(3.6)
|
|
Acquired in-process
research and development
|
—
|
|
(857.6)
|
|
—
|
|
—
|
|
(857.6)
|
|
Asset impairment,
restructuring and other special charges
|
—
|
|
—
|
|
—
|
|
(263.9)
|
|
(263.9)
|
|
|
|
|
|
|
|
Income
taxes
|
110.6
|
|
—
|
|
9.3
|
|
62.4
|
|
182.3
|
|
|
|
|
|
|
|
Net income
|
243.5
|
|
857.6
|
|
17.2
|
|
201.5
|
|
1,319.9
|
|
|
|
|
|
|
|
Earnings per share –
diluted
|
0.23
|
|
0.81
|
|
0.02
|
|
0.19
|
|
1.25
|
|
Numbers may not add
due to rounding.
|
The table above
reflects only line items with non-GAAP adjustments.
|
i.
|
Exclude amortization
of intangibles primarily associated with costs of marketed products
acquired or licensed from third parties.
|
ii.
|
Exclude costs
associated with upfront payments for acquired in-process research
and development projects acquired in a transaction other than a
business combination. These costs are related to the
acquisition of CoLucid Pharmaceuticals.
|
iii.
|
Exclude inventory
step-up costs associated with the acquisition of Boehringer
Ingelheim Vetmedica's U.S. feline, canine and rabies vaccine
portfolio.
|
iv.
|
Exclude charges
related to severance costs incurred as a result of actions taken to
reduce the company's cost structure, as well as integration costs
and asset impairments related to the acquisition and integration of
Novartis Animal Health.
|
(d)
|
Adjustments to
certain GAAP reported measures for the six months ended June 30,
2016, include the following:
|
(Dollars in millions,
except per share data)
|
Amortization(i)
|
Venezuela(ii)
|
Other specified
items(iii)
|
Total
Adjustments
|
Cost of
sales
|
$
|
(337.2)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(337.2)
|
|
|
|
|
|
|
Operating
expenses
|
(3.9)
|
|
—
|
|
—
|
|
(3.9)
|
|
Asset impairment,
restructuring and other special charges
|
—
|
|
—
|
|
(189.4)
|
|
(189.4)
|
|
|
|
|
|
|
Other income
(expense)
|
—
|
|
203.9
|
|
—
|
|
203.9
|
|
|
|
|
|
|
Income
taxes
|
106.8
|
|
—
|
|
24.3
|
|
131.1
|
|
|
|
|
|
|
Net income
|
234.3
|
|
203.9
|
|
165.1
|
|
603.3
|
|
|
|
|
|
|
Earnings per share –
diluted
|
0.22
|
|
0.19
|
|
0.16
|
|
0.57
|
|
Numbers may not add
due to rounding.
|
The table above
reflects only line items with non-GAAP adjustments.
|
i.
|
Exclude amortization
of intangibles primarily associated with costs of marketed products
acquired or licensed from third parties.
|
ii.
|
Exclude charge
related to the impact of the Venezuelan financial crisis, including
the significant deterioration of the bolivar.
|
iii.
|
Exclude charges
associated with asset impairments related to the closure of an
animal health manufacturing facility in Ireland and integration and
severance costs for Novartis Animal Health.
|
Refer
to:
|
Lauren Zierke;
lauren_zierke@lilly.com; (317) 277-6524 (Media)
|
|
Philip Johnson;
johnson_philip_l@lilly.com; (317) 655-6874 (Investors)
|
View original
content:http://www.prnewswire.com/news-releases/lilly-reports-second-quarter-results-300493447.html
SOURCE Eli Lilly and Company