Lilly Sees Slower Profit Growth in 2007

Posted 07 December 2006 @ 03:55 pm EET     Print     Reprint     E-Mail     Comments

NEW YORK (Reuters) - Eli Lilly and Co. said on Thursday it is on track to meet its 2006 growth forecast of 8 percent to 12 percent, but projected slower profit growth in 2007 though its revenues will grow at a faster pace next year.

The Indianapolis drugmaker, whose shares slipped 42 cents to $54.44 in early electronic trading, provided the forecasts before beginning a meeting in New York with hundreds of Wall Street analysts to describe its pipeline of experimental products.

Lilly, which makes schizophrenia treatment Zyprexa and anti-impotence drug Cialis, said it is counting on steady introduction of new drugs to keep earnings growing.

"Our goal is to launch at least one new product per year, on average, through the remainder of this decade, and to position ourselves to launch two per year early in the next decade," the company said in a statement. Lilly said it continues to expect a 2006 profit of between $3.10 to $3.20 per share, excluding special items.

It projected 2007 earnings of $3.25 to $3.35 per share, including the estimated 10 cent per share dilutive impact of Lilly's planned $2.1 billion acquisition of biotechnology company ICOS.

Analysts polled by Reuters Estimates, on average, expected $3.40 per share, but the forecast did not include the 10-cent per share negative impact of the ICOS deal.

Lilly spokesman Phil Belt said Lilly's 2007 forecast is therefore indeed within the range of Wall Street expectations. But Morgan Stanley analyst Jami Rubin predicted investors "will be disappointed" with the 2007 forecast.

"The real question that looms is post-2011," she said, referring to the year that Zyprexa's U.S. patent lapses, making Lilly's top-selling product prey to cheaper generics.

"The jury is still out, but based on what we see today, they're going to need a lot more in their pipeline" of experimental drugs to replace lost sales of Zyprexa, Rubin said before the presentation began.

From 2008 to 2010, Lilly said it expects earnings-per share growth in the "high single to low double digits" percentage range. Reuters Estimates had projected escalating double digit growth in 2008, 2009 and 2010.

Company revenue in 2006 will grow about 7 percent, but will expand in the high-single or low-double-digit range next year, Lilly said.

The accelerating sales growth next year will be fueled by new drugs and by Lilly's ownership of Cialis once the drugmaker completes its planned purchase of ICOS, with which it now co-markets the long-acting impotence treatment, Lilly said.

Lilly's most important experimental drug is prasugrel a compound to prevent blood clots that has shown advantages in clinical trials over Bristol-Myers Squibb's widely used Plavix. It hopes to complete late-stage trials of the medicine next year.