1 Company Diving off the Patent Cliff

The recent performance of some big pharma stocks might have some investors thinking that the patent cliff is nothing to worry about. It's easy to understand how that sort of attitude could exist. Take the performance of a stock like Eli Lilly (NYSE: LLY  ) as an example. Shares have risen some 35% in the past year despite the fact that two huge drugs come off patent next year.

In the following video, health care bureau chief Brenton Flynn runs through the situation, and outlines some recent news that could help the company offset these losses by taking share in the lucrative diabetes market. 

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Brenton Flynn has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On October 23, 2012, at 6:19 PM, kurtdabear wrote:

    LLY has had a bit of a run-up lately, but it should be remembered that LLY has been around well over a century, so presumably has been over the "patent cliff" a time or two without being killed by the fall. Also, while sales do fall off drastically when a compound comes off patent, they don't automatically go to zero, and I'm not aware of any law that would prohibit a brand-name manufacturer from competing on price with manufacturers of generics. Finally, LLY started taking steps years ago to refill its pipeline and has established some partnerships and made some strategic acquisitions to help it accomplish that.

    I'd be more afraid of JNJ than LLY given the frequency with which JNJ has been screwing up of late. There's a limit to how many highly expensive product recalls and replacements that a company, even JNJ, can afford in a couple of years, before its treasury and public image suffer serious damage. (Long LLY)

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