INDIANAPOLIS, Jan. 29 /PRNewswire-FirstCall/ --
-- Q4 Sales Essentially Flat, While Full-Year 2008 Sales Grew 9%
-- 2008 Worldwide Sales Top $20 Billion; Animal Health Sales Top
$1 Billion
-- 8 Products Each Exceed $1 Billion in Annual Sales
-- Gross Margin Improvements Continue
-- Company Reports Q4 Loss of $3.31 per share Resulting From ImClone
Acquisition; Excluding Charges, Q4 Non-GAAP EPS Rises 19% to $1.07
-- Full-Year 2008 Results Include Loss of $1.89 per share on a Reported
Basis, or Non-GAAP EPS of $4.02
-- 2009 EPS Guidance Range Reconfirmed at $4.00 to $4.25.
Eli Lilly and Company (NYSE: LLY) today announced financial results for
the fourth quarter and full year of 2008.
Due to significant strategic actions taken by the company in 2008,
financial results are presented on both a reported basis and a pro forma
non-GAAP basis. Reported results were prepared in accordance with generally
accepted accounting principles (GAAP) and include all sales and expenses
recognized by the company during the period. Pro forma non-GAAP results
exclude significant items described in the reconciliation tables and also
assume the ICOS acquisition was completed January 1, 2007. The pro forma
non-GAAP results are presented in order to provide additional insights into
the underlying trends in the company's business. The company's financial
guidance is also being provided on both a reported and a pro forma non-GAAP
basis. Pro forma non-GAAP guidance assumes the ImClone acquisition was
completed on January 1, 2008.
Fourth-Quarter Highlights
-- Sales of $5.210 billion were essentially flat compared with the fourth
quarter of 2007.
-- Products launched this decade -- Alimta(R), Byetta(R), Cialis(R),
Cymbalta(R), Forteo(R), Strattera(R), Symbyax(R), Xigris(R) and Yentreve(R) --
collectively grew 10 percent, to $1.912 billion, and accounted for 37 percent
of total sales, compared with 33 percent of total sales in the fourth quarter
of 2007.
-- The company recorded pre-tax charges of $4.730 billion related to the
acquisition of ImClone Systems.
-- Primarily as a result of the ImClone acquisition charges, the company
reported a net loss of $3.629 billion and a loss per share of $3.31, compared
with fourth-quarter 2007 net income of $854.4 million and earnings per share
of $.78. On a pro forma non-GAAP basis, excluding significant items totaling
$4.38 per share, earnings rose 19 percent to $1.07 per share.
2008 Highlights
-- Sales increased 9 percent, to $20.378 billion, with 8 products each
exceeding $1 billion in annual sales.
-- Products launched this decade collectively grew 22 percent on a
reported basis, to $7.310 billion, and accounted for 36 percent of total
sales, compared with 32 percent of total sales in 2007.
-- As a result of the ImClone acquisition charges and the charges related
to the resolution of Zyprexa investigations by the U.S. Attorney for the
Eastern District of Pennsylvania (EDPA) and multiple states, the company
reported a net loss of $2.072 billion and a loss per share of $1.89, compared
with 2007 net income of $2.953 billion and earnings per share of $2.71. On a
pro forma non-GAAP basis, excluding significant items totaling $5.91 per
share, earnings rose 14 percent to $4.02 per share.
"2008 was a year of significant transformation for our company," commented
John C. Lechleiter, chairman and chief executive officer. "Throughout the
year, Lilly executed well on its operational and strategic priorities. Despite
a tempering of sales growth in the fourth quarter due to unfavorable exchange
rates, moderation in U.S. demand and some variations in wholesaler and
retailer buying patterns, the company delivered 9 percent sales growth for the
year, with a record 8 products each achieving over $1 billion in sales. Our
solid financial performance, driven by volume-based sales growth, improved
gross margins and better productivity, allowed us to make important
investments to advance our pipeline of promising molecules, resolve much of
the uncertainty surrounding product litigation, and complete several strategic
business development transactions, most notably the ImClone acquisition. We
enter 2009 with an unprecedented 60 molecules in clinical development, and an
unwavering commitment to deliver improved outcomes for individual patients."
Significant Events Over the Last Three Months
-- The company completed the acquisition of ImClone Systems Incorporated
for approximately $6.5 billion.
-- The company reached resolution with the United States Attorney for the
Eastern District of Pennsylvania (EDPA) and the Office of Consumer Litigation
of the Department of Justice regarding the previously-reported government
investigation into the company's past U.S. marketing and promotional practices
for Zyprexa(R). In addition, the company has agreed to settle civil
investigations brought by the State Medicaid Fraud Control Units of the states
that have coordinated with the EDPA in its investigation.
-- The company and its partner Daiichi Sankyo Company, Limited were
notified that the U.S. Food and Drug Administration's (FDA) Cardiovascular and
Renal Drugs Advisory Committee (CRDAC) will review prasugrel during an
advisory committee hearing on February 3, 2009.
-- The Committee for Medicinal Products for Human Use (CHMP) of the
European Medicines Agency issued a positive opinion recommending approval of
prasugrel for the prevention of atherothrombotic events in patients with acute
coronary syndromes (ACS) undergoing percutaneous coronary intervention (PCI).
The CHMP positive opinion is now referred for final action to the European
Commission.
-- Olanzapine long-acting injection was approved by the European
Commission under the trade name Zypadhera(TM).
-- The company received a complete response letter from the FDA for
olanzapine long-acting injection for acute and maintenance treatment of
schizophrenia in adults. Lilly is continuing to work with the agency on the
new drug application (NDA). The FDA does not require any additional clinical
trials for the continued review of the NDA. Per the agency's request, the
company is preparing a proposed Risk Evaluation and Mitigation Strategy
(REMS), which will be submitted in the near future.
-- The company withdrew its supplemental New Drug Application (sNDA) from
the FDA for Cymbalta for the management of chronic pain. The company plans to
resubmit the application in the first half of 2009, adding data from a
recently completed study in chronic osteoarthritis pain of the knee.
-- The company entered into a license and supply arrangement with United
Therapeutics Corporation related to the U.S. commercialization rights for the
pulmonary arterial hypertension (PAH) indication of tadalafil. The indication
is currently under review by the FDA.
-- The Federal Supreme Court (BGH) in Germany re-established the company's
Zyprexa patent that had been declared invalid in 2007 by the German Federal
Patent Court. As a result of this ruling, generic olanzapine has been
withdrawn from the German market.
Fourth-Quarter Significant Items Affecting Reported Net Income (Loss)
The reported results for the fourth quarters of 2008 and 2007 were
affected by significant items totaling $4.38 and $.12 per share, respectively,
which are summarized below and in the table that follows:
2008
-- The company recognized pre-tax charges totaling $4.730 billion, or
$4.46 per share after tax, related to the acquisition of ImClone Systems. This
amount includes a charge of $4.685 billion for in-process research and
development, as well as ImClone operating results subsequent to the
acquisition, incremental interest costs and amortization of the intangible
asset associated with Erbitux(R).
-- The company recognized a charge of $80.0 million, or $.05 per share,
for asset impairments, restructuring and other special charges described in
footnote (a) of the attached pro forma non-GAAP income statement.
-- The company recognized a tax benefit of $136.9 million, or $.13 per
share, based upon the determination at final resolution of the agreement that
a portion of the EDPA settlement charge, taken in the third quarter of 2008,
is tax deductible.
2007
-- The company recognized a charge of $98.2 million, or $.07 per share,
for asset impairments, restructuring and other special charges related to
previously announced manufacturing site closures and Zyprexa product
liability.
-- The company recognized a charge of $89.0 million, or $.05 per share,
for acquired in-process research and development associated with the
MacroGenics and Glenmark in-licensings.
Fourth Quarter
--------------
2008 2007 % Growth
------ ------ --------
Earnings (Loss) per share (reported) ($3.31) $.78 NM
Asset impairments, restructuring and
other special charges .05 .07
In-process research and development
charge associated with the MacroGenics
and Glenmark in-licensings - .05
Net impact associated with ImClone
acquisition 4.46 -
Tax benefit associated with EDPA settlement (.13) -
------ ------
Earnings per share (non-GAAP)(excluding
impact of ImClone acquisition) $1.07 $.90 19%
------ ------
Fourth-Quarter Results
Worldwide sales for the quarter were $5.210 billion, essentially flat
compared with the fourth quarter of 2007. U.S. sales grew 3 percent to $2.938
billion, while sales outside the U.S. declined 3 percent to $2.272 billion.
Increased net effective selling prices in the U.S. and increased volume
outside the U.S. were offset by the unfavorable impact of foreign exchange
rates and, to a lesser extent, lower U.S. volume caused in part by variations
in wholesaler buying patterns for Zyprexa. Worldwide sales volume increased 1
percent and selling prices contributed 2 percentage points of sales growth,
while the impact of exchange rates decreased sales growth by 3 percent.
Gross margin as a percent of sales increased by 6.9 percentage points, to
82.4 percent. Substantially all of this increase was due to the impact of the
rapid decline in the Euro compared to the U.S. Dollar during the fourth
quarter of 2008, resulting in a benefit to cost of sales.
Marketing, selling and administrative expenses decreased 2 percent, to
$1.727 billion. This decrease was due to the impact of foreign exchange rates
and decreased advertising costs, partially offset by increased prasugrel
pre-launch activities, as well as funding for the Lilly Foundation. Research
and development expenses were $1.059 billion, or 20 percent of sales. Compared
with the fourth quarter of 2007, research and development expenses grew 11
percent due primarily to increased late-stage clinical trial and discovery
research costs.
The company recognized a charge of $4.685 billion in the fourth quarter of
2008 for acquired in-process research and development associated with the
acquisition of ImClone Systems. In the fourth quarter of 2007, the company
recognized a charge of $89.0 million for acquired in-process research and
development associated with the MacroGenics and Glenmark in-licensings.
The company recognized asset impairments, restructuring, and other special
charges of $80.0 million in the fourth quarter of 2008. In the fourth quarter
of 2007, the company recognized asset impairments, restructuring, and other
special charges of $98.2 million.
Other income decreased by $113.3 million, to a net expense of $81.2
million, primarily due to a $47.6 million net loss on investment securities
(the majority of which are unrealized) and higher interest expense associated
with the ImClone acquisition.
The company recognized income tax expense of $292.0 million in the fourth
quarter of 2008 despite having a loss before income taxes of $3.337 billion.
The company's net loss for the fourth quarter was driven by the $4.685 billion
in-process research and development charge for ImClone. The in-process
research and development charge was not tax deductible. In addition, the
company recorded tax expense associated with the ImClone acquisition, as well
as a discrete income tax benefit of $136.9 million in the fourth quarter of
2008, which was associated with the EDPA settlement recorded in the third
quarter of 2008. The effective tax rate was 18.8 percent in the fourth
quarter of 2007.
Primarily as a result of the ImClone acquisition charges, on a reported
basis the company recorded a net loss of $3.629 billion, or $3.31 per share in
the fourth quarter of 2008, compared with fourth-quarter 2007 net income of
$854.4 million and earnings per share of $.78.
On a non-GAAP basis, net income was $1.177 billion, or $1.07 per share in
the fourth quarter of 2008, compared with fourth-quarter 2007 net income of
$986.4 million, or $.90 per share. This increase was driven by an improvement
in gross margin as a percent of sales.
Full-Year 2008 Significant Items Affecting Reported Net Income (Loss)
In addition to the fourth-quarter 2008 and 2007 significant items
previously mentioned, reported net income for the full-year 2008 and 2007 were
also affected by significant items occurring in the first nine months of the
respective years that are summarized below and included in the table that
follows:
2008
-- In the third quarter, the company recognized pre-tax charges totaling
$1.477 billion, or $1.33 per share, related to Zyprexa investigations with the
U.S. Attorney for the Eastern District of Pennsylvania, as well as the
resolution of multi-state investigations regarding Zyprexa. Note that in the
fourth quarter of 2008, a tax benefit of $.13 per share was recorded,
resulting in a net charge for these investigations of $1.20 per share for
full-year 2008.
-- The company recognized asset impairments, restructuring and other
special charges of $417.0 million, or $.25 per share, related to the sale of
its Greenfield, Indiana site, the termination of the AIR(R) Insulin program,
and previously-announced strategic exit activities related to manufacturing
operations.
-- The company recognized asset impairments associated with certain
manufacturing operations (included in cost of sales) of $57.1 million, which
decreased earnings per share by $.04.
-- The company incurred in-process research and development charges
totaling $150.0 million, or $.10 per share, associated with the acquisition of
SGX and licensing arrangements with BioMS Medical Corp. and TransPharma
Medical Ltd.
-- The company recognized a discrete income tax benefit of $210.3 million
as a result of the resolution of a substantial portion of the IRS audit of its
federal income tax returns for years 2001 through 2004, which increased
earnings per share by $.19.
2007
-- The company recorded a charge of $81.3 million, or $.06 per share,
related to the reduction in expected insurance recoveries.
-- The company recognized asset impairments, restructuring, and other
special charges associated with previously announced decisions affecting
manufacturing and research facilities of $123.0 million, which decreased
earnings per share by $.08.
-- The company incurred in-process research and development charges
associated with the acquisitions of ICOS ($303.5 million), Hypnion ($291.1
million) and Ivy Animal Health ($37.0 million), as well as the licensing
arrangement with OSI Pharmaceuticals ($25.0 million), which decreased earnings
per share by $.58 in total.
Full Year
---------
2008 2007 % Growth
------ ------ --------
Earnings (Loss) per share (reported) ($1.89) $2.71 NM
Net impact associated with ImClone
acquisition 4.46 -
Charges related to Zyprexa investigations
(net of $0.13 tax benefit) 1.20 -
Asset impairments and restructuring
charges (included in asset impairments,
restructuring and other special charges) .30 .15
Asset impairments (included in cost of sales) .04 -
In-process research and development charges
associated with SGX acquisition (2008),
ICOS, Hypnion, and Ivy acquisitions (2007)
and in-licensing transactions with BioMS
and TransPharma (2008) and OSI, MacroGenics
and Glenmark (2007) .10 .63
Benefit from resolution of IRS audit (.19) -
Charge for a reduction in expected insurance
recoveries - .06
Pro forma as if the ICOS acquisition was
completed on January 1, 2007 - (.01)
------ ------
Earnings per share (pro forma non-GAAP)
(excluding impact of ImClone acquisition) $4.02 $3.54 14%
------ ------
Full-Year 2008 Results
Worldwide sales for 2008 were $20.378 billion, an increase of 9 percent
compared with 2007. Sales volume increased 5 percent, while exchange rates
contributed 3 percent of worldwide sales growth and selling prices contributed
2 percent (numbers do not add due to rounding).
Gross margin as a percent of sales increased by 1.3 percentage points, to
78.5 percent. This increase was primarily due to the favorable effect of
foreign exchange rates.
Marketing, selling and administrative expenses rose 9 percent, to $6.626
billion. This increase was due to increased marketing and selling expenses,
including prasugrel pre-launch activities and marketing costs associated with
Cymbalta and Evista(R), the impact of foreign exchange rates and increased
litigation-related expenses. Research and development expenses were $3.841
billion, or 19 percent of sales. Compared with the full-year 2007, research
and development expenses grew 10 percent. This increase was primarily due to
increased late-stage clinical trial and discovery research costs.
The company recognized charges of $4.835 billion in 2008 for acquired
in-process research and development associated with the ImClone and SGX
acquisitions and the in-licensing arrangements with BioMS and Transpharma
Medical. In 2007, the company recognized a charge of $745.6 million for
acquired in-process research and development associated with the acquisitions
of ICOS, Hypnion and Ivy, and the in-licensing arrangements with MacroGenics,
Glenmark and OSI.
The company recognized asset impairments, restructuring, and other special
charges of $1.974 billion in 2008, primarily associated with charges totaling
$1.477 billion related to Zyprexa investigations with the U.S. Attorney for
the Eastern District of Pennsylvania and multiple states. In 2007, the company
recognized asset impairments, restructuring, and other special charges of
$302.5 million.
Other income decreased by $148.1 million in 2008, to a net expense of
$26.1 million, primarily due to lower out-licensing income and a net loss on
investment securities (the majority of which are unrealized).
The company recognized income tax expense of $764.3 million in 2008
despite having a loss before income taxes of $1.308 billion. The company's net
loss was driven by the $4.685 billion in-process research and development
charge for ImClone and the $1.415 billion Zyprexa investigation settlement.
The in-process research and development charge was not tax deductible, while
the Zyprexa investigation settlement was partially deductible. In addition,
the company recorded tax expense associated with the ImClone acquisition, as
well as a discrete income tax benefit of $210.3 million for the resolution of
the IRS audit. The effective tax rate was 23.8 percent in 2007.
As a result of the charges for the ImClone acquisition and Zyprexa
investigation settlements, on a reported basis the company recorded a 2008 net
loss of $2.072 billion, or $1.89 loss per share, compared with 2007 net income
of $2.953 billion and earnings per share of $2.71.
On a pro forma non-GAAP basis, the company recorded net income of $4.399
billion, or $4.02 per share for the full-year 2008, compared with full-year
2007 net income of $3.863 billion, or $3.54 per share.
Product Sales Highlights
------------------------
(Dollars in millions) % Change % Change
Over/ Over/
Fourth Quarter (Under) Full Year (Under)
2008 2007 2007 2008 2007 2007
-------- -------- ------ -------- -------- ------
Zyprexa $1,146.7 $1,273.9 (10)% $4,696.1 $4,761.0 (1)%
Cymbalta 721.2 628.3 15% 2,697.1 2,102.9 28%
Humalog ( R ) 457.9 414.2 11% 1,735.8 1,474.6 18%
Gemzar ( R ) 413.3 425.5 (3)% 1,719.8 1,592.4 8%
Cialis (1) 368.8 346.2 7% 1,444.5 1,143.8 26%
Alimta 318.7 244.1 31% 1,154.7 854.0 35%
Evista 269.0 285.8 (6)% 1,075.6 1,090.7 (1)%
Humulin ( R ) 262.4 273.4 (4)% 1,063.2 985.2 8%
Forteo 194.5 198.2 (2)% 778.7 709.3 10%
Strattera 146.8 156.8 (6)% 579.5 569.4 2%
Total Sales --
Reported (2) $5,210.5 $5,189.6 0% $20,378.0 $18,633.5 9%
1. The full-year 2007 amount for Cialis represents the reported Cialis
sales in Lilly's financial statements and does not include Cialis
sales from the joint-venture countries prior to the ICOS acquisition
on January 29, 2007. Total worldwide Cialis sales for 2007 were $1.216
billion, resulting in 2008 growth of 19 percent.
2. Reported sales for the fourth quarter and full year of 2008 include
$35.6 million of Erbitux revenue subsequent to the ImClone
acquisition, as well as $40.0 million of incremental Posilac(R)
revenue.
Zyprexa
In the fourth quarter of 2008, Zyprexa sales totaled $1.147 billion, a 10
percent decrease compared with the fourth quarter of 2007. U.S. sales of
Zyprexa decreased 4 percent to $584.0 million, driven by lower demand caused
in part by variations in wholesaler buying patterns, partially offset by
increased net effective selling prices. Zyprexa sales in international markets
decreased 15 percent, to $562.7 million, driven by decreased demand, the
unfavorable impact of foreign exchange rates, and, to a lesser extent, lower
prices. Demand outside the U.S. was unfavorably impacted by generic
competition in Germany and Canada, partially offset by growth in Japan. As
noted above, generic olanzapine has been withdrawn from the German market.
For the full-year of 2008, worldwide Zyprexa sales decreased 1 percent to
$4.696 billion. U.S. Zyprexa sales for 2008 were $2.203 billion, a 1 percent
decrease driven by lower demand, partially offset by higher prices. Zyprexa
sales outside the U.S. were $2.494 billion, a 1 percent decrease driven by
lower demand and decreased selling prices, partially offset by the favorable
impact of foreign exchange rates.
Cymbalta
For the fourth quarter of 2008, Cymbalta generated $721.2 million in
sales, an increase of 15 percent compared with the fourth quarter of 2007.
U.S. sales of Cymbalta increased 10 percent, to $602.7 million, driven
primarily by higher demand and, to a lesser extent, increased prices. Sales
outside the U.S. were $118.5 million, an increase of 46 percent, driven
primarily by higher demand, partially offset by the unfavorable impact of
foreign exchange rates. Higher demand outside the U.S. reflects both increased
demand in established markets, as well as recent launches in new markets
including France, Canada and Australia.
For the full-year of 2008, worldwide Cymbalta sales increased 28 percent
to $2.697 billion. U.S. Cymbalta sales for 2008 were $2.254 billion, a 23
percent increase driven by higher demand and, to a lesser extent, higher
prices. Cymbalta sales outside the U.S. were $443.3 million, a 66 percent
increase driven by increased demand and to a lesser extent the favorable
impact of foreign exchange rates and increased prices.
Humalog
For the fourth quarter of 2008, worldwide Humalog sales increased 11
percent, to $457.9 million. Sales in the U.S. increased 11 percent to $275.2
million, driven by increased net effective selling prices and, to a lesser
extent, increased demand. Sales outside the U.S. increased 10 percent to
$182.8 million, driven by increased demand, partially offset by the
unfavorable impact of foreign exchange rates.
For the full-year of 2008, worldwide Humalog sales increased 18 percent to
$1.736 billion. U.S. Humalog sales for 2008 were $1.008 billion, a 14 percent
increase driven by higher demand and higher prices. Humalog sales outside the
U.S. were $727.4 million, a 24 percent increase driven by increased demand
and, to a lesser extent, the favorable impact of foreign exchange rates.
Gemzar
Gemzar sales totaled $413.3 million in the fourth quarter of 2008, a
decrease of 3 percent from the fourth quarter of 2007. Sales in the U.S.
increased 7 percent, to $186.5 million, due to increased demand and higher
prices, while sales outside the U.S. decreased 9 percent, to $226.7 million,
as a result of the unfavorable impact of foreign exchange rates, reduced
prices and lower demand.
For the full-year of 2008, worldwide Gemzar sales increased 8 percent to
$1.720 billion. U.S. Gemzar sales for 2008 were $734.8 million, a 10 percent
increase driven by higher demand and higher prices. Gemzar sales outside the
U.S. were $984.9 million, a 7 percent increase driven primarily by the
favorable impact of foreign exchange rates, and increased demand, partially
offset by lower prices.
Cialis
Cialis sales for the fourth quarter of 2008 were $368.8 million,
representing growth of 7 percent compared with fourth-quarter 2007. U.S. sales
of Cialis were $147.8 million in the fourth quarter, an 11 percent increase
compared with the fourth quarter of 2007, driven by higher prices. Sales of
Cialis outside the U.S. increased 4 percent, to $221.0 million, driven
primarily by higher demand, partially offset by the unfavorable impact of
foreign exchange rates.
For the full-year of 2008, worldwide Cialis sales increased 26 percent to
$1.445 billion. U.S. Cialis sales for 2008 were $539.0 million, a 27 percent
increase driven by increased demand and higher prices. Cialis sales outside
the U.S. were $905.5 million, a 26 percent increase driven by increased
demand, the favorable impact of foreign exchange rates and higher prices.
Alimta
For the fourth quarter of 2008, Alimta generated sales of $318.7 million,
an increase of 31 percent compared with the fourth quarter of 2007. U.S. sales
of Alimta increased 28 percent, to $161.2 million, due primarily to increased
demand. Sales outside the U.S. increased 33 percent, to $157.5 million, due
primarily to increased demand, partially offset by the unfavorable impact of
foreign exchange rates and lower prices.
For the full-year of 2008, worldwide Alimta sales increased 35 percent to
$1.155 billion. U.S. Alimta sales for 2008 were $561.9 million, a 25 percent
increase driven by increased demand and, to a lesser extent, higher prices.
Alimta sales outside the U.S. were $592.7 million, a 46 percent increase
driven by increased demand and to a lesser extent the favorable impact of
foreign exchange rates.
Evista
Evista sales were $269.0 million in the fourth quarter of 2008, a 6
percent decrease compared with the fourth quarter of 2007. U.S. sales of
Evista decreased 4 percent at $180.1 million, as a result of lower demand,
partially offset by higher prices. Sales outside the U.S. decreased 9 percent
to $88.9 million, driven by lower demand.
For the full-year of 2008, worldwide Evista sales decreased 1 percent to
$1.076 billion. U.S. Evista sales for 2008 were $700.5 million, a 1 percent
decrease driven by lower demand partially offset by higher prices. Evista
sales outside the U.S. were $375.1 million, a 2 percent decrease driven by
lower volume and reduced selling prices partially offset by the favorable
impact of foreign exchange rates.
Humulin
Worldwide Humulin sales decreased 4 percent in the fourth quarter of 2008,
to $262.4 million. U.S. sales were flat at $101.1 million, due to higher net
effective selling prices offset by lower demand. Sales outside the U.S.
decreased 6 percent, to $161.3 million, driven by the unfavorable impact of
foreign exchange rates.
For the full-year of 2008, worldwide Humulin sales increased 8 percent to
$1.063 billion. U.S. Humulin sales for 2008 were $380.9 million, a 4 percent
increase driven by higher prices. Humulin sales outside the U.S. were $682.3
million, a 10 percent increase driven by the favorable impact of foreign
exchange rates and increased demand.
Forteo
Fourth-quarter sales of Forteo were $194.5 million, a 2 percent decrease
compared with the fourth quarter of 2007. U.S. sales of Forteo decreased 10
percent, to $125.2 million, driven by decreased demand and lower net effective
selling prices, partially offset by wholesaler buying patterns. Sales outside
the U.S. grew 16 percent, to $69.3 million, due to higher demand, partially
offset by the unfavorable impact of foreign exchange rates.
For the full-year of 2008, worldwide Forteo sales increased 10 percent to
$778.7 million. U.S. Forteo sales for 2008 were $489.9 million, a 1 percent
decrease driven by lower demand partially offset by higher prices. Forteo
sales outside the U.S. were $288.8 million, a 34 percent increase driven by
increase demand, and to a lesser extent the favorable impact of foreign
exchange rates.
Strattera
During the fourth quarter of 2008, Strattera generated $146.8 million of
sales, a decrease of 6 percent compared with the fourth quarter of 2007. U.S.
sales decreased 12 percent, to $111.4 million, due to lower demand partially
offset by higher net effective selling prices. Sales outside the U.S.
increased 16 percent, to $35.4 million, due to increased demand and to a
lesser extent higher net effective selling prices, offset by the unfavorable
impact of foreign exchange rates.
For the full-year of 2008, worldwide Strattera sales increased 2 percent
to $579.5 million. U.S. Strattera sales for 2008 were $437.8 million, a 6
percent decrease driven by lower demand partially offset by higher prices.
Strattera sales outside the U.S. were $141.8 million, a 35 percent increase
driven by increased demand.
Byetta
Worldwide sales of Byetta were $186.6 million in the fourth quarter of
2008, a 2 percent increase compared with the fourth quarter of 2007. U.S.
Byetta sales decreased 8 percent, to $162.7 million. Byetta sales outside the
U.S. were $23.9 million. Lilly reports as revenue its 50 percent share of
Byetta's gross margin in the U.S., 100 percent of Byetta sales outside the
U.S., and its sales of Byetta pen delivery devices to its partner, Amylin
Pharmaceuticals. For the fourth quarter, Lilly recognized revenue totaling
$103.0 million, representing a 12 percent increase compared with the fourth
quarter of 2007.
For the full-year of 2008, worldwide Byetta sales increased 16 percent to
$751.4 million. U.S. Byetta sales for 2008 grew 7 percent to $678.5 million.
Byetta sales outside the U.S. were $72.9 million. For 2008, Lilly recognized
revenue totaling $396.1 million, representing a 20 percent increase compared
with 2007.
Animal Health
Worldwide sales of animal health products in the fourth quarter of 2008
were $326.4 million, a decrease of 1 percent compared with the fourth quarter
of 2007. U.S. sales grew 3 percent, to $185.0 million, due to the inclusion of
U.S. Posilac sales and increased prices, partially offset by lower demand in
the food animal segment driven by customer buying patterns. Sales outside the
U.S. decreased 6 percent, to $141.3 million, driven primarily by the
unfavorable impact of exchange rates.
For the full-year of 2008, worldwide animal health sales increased 10
percent to $1.093 billion. U.S. animal health sales for 2008 were $537.3
million, a 12 percent increase driven by the inclusion of U.S. Posilac sales.
Animal health sales outside the U.S. were $556.0 million, an 8 percent
increase driven by increased demand and to a lesser extent the favorable
impact of foreign exchange rates.
2009 Financial Guidance
The company reconfirmed its 2009 earnings per share guidance range of
$4.00 to $4.25, including the estimated $.30 to $.35 dilution impact from the
ImClone acquisition. Excluding the estimated ImClone dilution, 2009 earnings
per share for Lilly's base operations are expected to be in the range of $4.35
to $4.55.
Moving forward, the company's financial results will be reported including
the impact of the ImClone acquisition. Consequently, both earnings per share
and line item guidance will now focus on expectations for the company's
results including ImClone. To provide meaningful yearly growth rates, 2009
non-GAAP results and guidance will be compared to 2008 pro forma non-GAAP
results restated as if Lilly had completed the ImClone acquisition on January
1, 2008. Therefore, 2009 earnings per share guidance of $4.00 to $4.25 will be
compared to 2008 pro-forma non-GAAP earnings per share of $3.82.
2009 Earnings Per Share Expectations:
2009 2008
Expectations Results % Growth
------------ ------- --------
Earnings (Loss) per share
(reported) $4.00 to $4.25 ($1.89) NM
Financial impact of ImClone
acquisition, including in-process
research and development and other
charges - 4.46
Charges related to Zyprexa
investigations - 1.20
Asset impairments and restructuring
charges (included in asset
impairments, restructuring and other
special charges) - .30
Asset impairments (included in cost
of sales) - .04
In-process research and development
charges associated with SGX acquisition
and in-licensing transactions with
BioMS and TransPharma - .10
Benefit from resolution of IRS audit - (.19)
Pro forma as if the ImClone acquisition
was completed on January 1, 2008 (.20)
-------------- -------
Earnings per share (pro forma
non-GAAP) $4.00 to $4.25 $3.82 5% to 11%
Additional information:
Remove dilutive impact of ImClone
acquisition .30 - .35 .20
-------------- -------
Earnings per share (pro forma
non-GAAP) (excluding impact of
ImClone acquisition) $4.35 to $4.55 $4.02 8% to 13%
-------------- -------
The company expects volume growth in sales again in 2009, driven by
Cymbalta, Alimta, Cialis, Humalog and the anticipated launches of prasugrel,
as well as by the Elanco animal health division. However, the negative impact
of weaker foreign currencies and the impact of generic competition in certain
markets for Gemzar are anticipated to partially offset these positive impacts.
As a result, the company expects low-single digit sales growth on a pro-forma
non-GAAP basis and mid-single digit sales growth on a reported basis.
The company expects gross margin as a percent of sales to increase, driven
by the strengthening dollar. This increase could be more pronounced in the
first half of 2009.
Marketing, selling, and administrative expenses are projected to show flat
to low-single digit growth. Research and development expenses are projected to
grow in the high-single digits on a pro forma non-GAAP basis and in the
low-double digits on a reported basis.
Other income is expected to be a net loss of between $200 million and $250
million, and the effective tax rate is expected to be approximately 22
percent. Capital expenditures are expected to be approximately $1.1 billion
and the company expects continued strong operating cash flow.
Webcast of Conference Call
As previously announced, investors and the general public can access a
live webcast of the fourth-quarter and full-year 2008 financial results
conference call through a link on Lilly's website at www.lilly.com. The
conference call will be held today from 9:00 a.m. to 10:00 a.m. Eastern
Standard Time (EST) and will be available for replay via the website through
February 27, 2009.
Lilly, a leading innovation-driven corporation, is developing a growing
portfolio of first-in-class and best-in-class pharmaceutical products by
applying the latest research from its own worldwide laboratories and from
collaborations with eminent scientific organizations. Headquartered in
Indianapolis, Ind., Lilly provides answers -- through medicines and
information -- for some of the world's most urgent medical needs. Additional
information about Lilly is available at www.lilly.com; Lilly's clinical trial
registry is available at www.lillytrials.com.
F-LLY
This press release contains forward-looking statements that are based on
management's current expectations, but actual results may differ materially
due to various factors. The company cannot guarantee that it will realize
anticipated operational efficiencies following the merger with ImClone. The
current credit market may increase the cost of financing the ImClone
transaction. There are significant risks and uncertainties in pharmaceutical
research and development. There can be no guarantees with respect to pipeline
products that the 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
competitive developments affecting current products; rate of sales growth of
recently launched products; the timing of anticipated regulatory approvals and
launches of new products; regulatory actions regarding currently marketed
products; other regulatory developments and government investigations; patent
disputes and other litigation involving current and future products; the
impact of governmental actions regarding pricing, importation, and
reimbursement for pharmaceuticals; changes in tax law; asset impairments and
restructuring charges; acquisitions and business development transactions; and
the impact of exchange rates and global macroeconomic conditions. For
additional information about the factors that affect the company's business,
please see the company's latest Form 10-Q filed November 2008. The company
undertakes no duty to update forward-looking statements.
-------------------------------------------------------------------------
Alimta(R) (pemetrexed, Lilly)
Byetta(R) (exenatide injection, Amylin Pharmaceuticals)
Cialis(R) (tadalafil, Lilly)
Cymbalta(R) (duloxetine hydrochloride, Lilly)
Erbitux(R) (cetuximab, ImClone Systems, Lilly)
Evista(R) (raloxifene hydrochloride, Lilly)
Forteo(R) (teriparatide of recombinant DNA origin injection, Lilly)
Gemzar(R) (gemcitabine hydrochloride, Lilly)
Humalog(R) (insulin lispro injection of recombinant DNA origin, Lilly)
Humulin(R) (human insulin of recombinant DNA origin, Lilly)
Posilac(R) (recombinant bovine somatotropin, Lilly)
Strattera(R) (atomoxetine hydrochloride, Lilly)
Symbyax(R) (olanzapine fluoxetine combination, or OFC, Lilly)
Xigris(R) (drotrecogin alfa (activated), Lilly)
Yentreve(R) (duloxetine hydrochloride, Lilly)
Zypadhera (TM) (Lilly)
Zyprexa (R) (olanzapine, Lilly)
AIR(R) is a trademark of Alkermes, Inc.
-------------------------------------------------------------------------
Eli Lilly and Company Employment Information
December 31, 2008 December 31, 2007
----------------- -----------------
Worldwide Employees 40,450* 40,600
* Headcount figures for 2008 include all acquisitions completed in 2008
including the 1,300 employees of ImClone.
Eli Lilly and Company
Operating Results (Unaudited) -- REPORTED
(Dollars in millions, except per share data)
Three Months Ended Twelve Months Ended
December 31 December 31
2008 2007 %Chg. 2008 2007 %Chg.
----------------------- ----------------------
Net sales $5,210.5 $5,189.6 0% $20,378.0 $18,633.5 9%
Cost of sales 915.4 1,272.8 (28)% 4,382.8 4,248.8 3%
Research and development 1,059.3 953.6 11% 3,840.9 3,486.7 10%
Marketing, selling
and administrative 1,726.6 1,755.8 (2)% 6,626.4 6,095.1 9%
Acquired in-process
research and development 4,685.4 89.0 NM 4,835.4 745.6 NM
Asset impairments,
restructuring and other
special charges 80.0 98.2 (19)% 1,974.0 302.5 NM
---------- ---------- ---------- ----------
Operating income (loss) (3,256.2) 1,020.2 NM (1,281.5) 3,754.8 NM
Net interest income
(expense) (28.0) (2.1) (17.6) (13.0)
Joint-venture income - - - 11.0
Net other income (loss) (53.2) 34.2 (8.5) 124.0
---------- ---------- ---------- ----------
Other income (loss) (81.2) 32.1 (26.1) 122.0
Income (loss) before
income taxes (3,337.4) 1,052.3 NM (1,307.6) 3,876.8 NM
Income taxes 292.0 197.9 764.3 923.8
Net income (loss) $(3,629.4) $854.4 $(2,071.9) $2,953.0
========== ========== ========== ==========
Earnings (loss) per
share -- basic $(3.31) $0.78 $(1.89) $2.71
========== ========== ========== ==========
Earnings (loss) per
share -- diluted $(3.31) $0.78 $(1.89) $2.71
========== ========== ========== ==========
Dividends paid per
share $.47 $.425 $1.88 $1.70
Weighted-average shares
outstanding
(thousands) - basic 1,096,491 1,092,472 1,094,499 1,090,430
Weighted-average shares
outstanding
(thousands) - diluted 1,096,491 1,092,636 1,094,499 1,090,750
NM -- not meaningful
Eli Lilly and Company
Operating Results (Unaudited) -- Pro forma
Non-GAAP (assumes ICOS acquisition completed January 1, 2007)
(Dollars in millions, except per share data)
Three Months Ended Twelve Months Ended
December 31 December 31
% 2008 2007 %
2008(a) 2007(c) Chg. (a)(b) (c)(d) Chg.
------------------------- -----------------------
Net sales $5,174.9 $5,189.6 0% $20,342.4 $18,706.2 9%
Cost of sales 899.6 1,272.8 (29)% 4,309.9 4,264.7 1%
Research and development 1,036.1 953.6 9% 3,817.7 3,498.7 9%
Marketing, selling
and administrative 1,718.6 1,755.8 (2)% 6,618.4 6,131.0 8%
Acquired in-process
research and development - - - -
Asset impairments,
restructuring and
other special charges - - - -
---------- ---------- ---------- ----------
Operating income 1,520.6 1,207.4 26% 5,596.4 4,811.8 16%
Net interest income
(expense) 6.1 (2.1) 16.5 (25.5)
Joint-venture income - - - -
Net other income
(loss) (54.3) 34.2 (9.6) 126.0
---------- ---------- ---------- ----------
Other income (loss) (48.2) 32.1 6.9 100.5
Income before income
taxes 1,472.4 1,239.5 19% 5,603.3 4,912.3 14%
Income taxes 295.9 253.1 17% 1,204.7 1,048.9 15%
---------- ---------- ---------- ----------
Net income $1,176.5 $986.4 19% $4,398.6 $3,863.4 14%
========== ========== ========== ==========
Earnings per share
- basic $1.07 $0.90 19% $4.02 $3.54 14%
========== ========== ========== ==========
Earnings per share
- diluted $1.07 $0.90 19% $4.02 $3.54 14%
========== ========== ========== ==========
Dividends paid
per share $.47 $.425 11% $1.88 $1.70 11%
Weighted-average shares
outstanding (thousands)
- basic 1,096,491 1,092,472 1,094,499 1,090,430
Weighted-average
shares outstanding
(thousands) - diluted 1,096,525 1,092,636 1,094,546 1,090,750
NM -- not meaningful
(a) The 2008 fourth-quarter and year-to-date amounts are adjusted to
eliminate a charge of $4.730 billion (pre-tax), or $4.46 per share
(after tax), for acquired in-process research and development as
well as ImClone operating results subsequent to the acquisition,
including $35.6 million of Erbitux sales, incremental interest costs
and amortization of the intangible asset associated with Erbitux; a
charge of $80.0 million (pre-tax), or $0.05 per share (after tax),
for asset impairments, restructuring and other special charges
primarily related to severance costs from previously announced
strategic actions; and a tax benefit of $136.9 million, or $0.13 per
share, based upon a determination that a portion of the EDPA
settlement is tax deductible.
(b) In addition to items in (a), the 2008 year-to-date amounts are also
adjusted to eliminate charges totaling $1.477 billion (pre-tax), or
$1.33 per share (after tax), related to Zyprexa investigations;
$150.0 million (pre- tax), or $0.10 per share (after tax), for
acquired in-process research and development associated with the SGX
acquisition and the in-licensing of compounds from BioMS, and
TransPharma; a charge of $474.1 million (pre-tax), or $0.29 per
share (after tax), for asset impairments, restructuring, and other
special charges; and a discrete income tax benefit of $210.3
million, or $(0.19) per share, related to the resolution of a
substantial portion of an IRS audit.
(c) The 2007 fourth-quarter and year-to-date amounts are adjusted to
eliminate a charge of $98.2 million (pre-tax), or $0.07 per share
(after tax), for asset impairments, restructuring, and other special
charges; and a charge of $89.0 million (pre-tax), or $0.05 per share
(after tax), for acquired in- process research and development
related to the MacroGenics and Glenmark in-licensings; the 2007
year-to-date amounts are also adjusted to eliminate a $81.3 million
(pre-tax) charge, or $0.06 per share (after tax), for special
charges related to an adjustment to insurance recoverables on
product liability litigation; a charge of $328.1 million (pre-tax),
or $0.29 per share (after tax), for acquired in-process research and
development related to the Hypnion and Ivy acquisitions; a $328.5
million (pre-tax) charge, or $0.29 per share (after tax), for
acquired in-process research and development for compounds acquired
from ICOS and OSI; and a $123.0 million (pre-tax) charge, or $0.08
per share (after tax), for asset impairments, restructuring, and
other special charges.
(d) In accordance with generally accepted accounting principles (GAAP),
the year-to-date 2007 financial statement has been restated assuming
the acquisition of ICOS was completed by Lilly effective January 1,
2007.
Eli Lilly and Company
Operating Results (Unaudited) -- Comparison of 2008 non-GAAP results
versus 2008 Pro forma Non-GAAP results (assumes ImClone acquisition
completed January 1, 2008)
(Dollars in millions, except per share data)
Twelve Months Ended
December 31 December 31
2008 2008 (a)
----------- -----------
Net sales $20,342.4 $20,801.8
Cost of sales 4,309.9 4,538.0
Research and development 3,817.7 4,005.4
Marketing, selling and administrative 6,618.4 6,728.3
Acquired in-process research and development - -
Asset impairments, restructuring and other
special charges - -
----------- -----------
Operating income 5,596.4 5,530.1
Net interest income (expense) 16.5 (238.7)
Joint-venture income - -
Net other income (loss) (9.6) (29.2)
----------- -----------
Other income (loss) 6.9 (267.9)
Income before income taxes 5,603.3 5,262.2
Income taxes 1,204.7 1,085.3
----------- -----------
Net income $4,398.6 $4,176.9
=========== ===========
Earnings per share - basic $4.02 $3.82
=========== ===========
Earnings per share - diluted $4.02 $3.82
=========== ===========
(a) In accordance with generally accepted accounting principles (GAAP),
the full-year 2008 financial statement has been restated assuming
the acquisition of ImClone was completed effective January 1, 2008.
The full-year 2008 amounts are also adjusted to eliminate the
applicable non-GAAP charges noted previously.
(Logo:http://www.newscom.com/cgi-bin/prnh/20031219/LLYLOGO )
