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Drugmaker Eli Lilly Reports Fourth-Quarter Earnings

By Todd Campbell - Jan 30, 2020 at 3:02PM

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The pharmaceutical giant reported top- and bottom-line results that exceeded analysts' estimates.

Increasing demand for Eli Lilly's (LLY 4.39%) diabetes and oncology treatments helped push its fourth-quarter 2019 revenue up 8.5% year-over-year to $6.1 billion. The company also reported GAAP earnings per share (EPS) of $1.64, up 49.1% year-over-year, due to expanding margins. Those results exceeded industry watchers' consensus revenue and EPS estimates for $5.92 billion and $1.54, respectively.

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As one of the largest manufacturers of medications used to control blood sugar levels, Eli Lilly benefited last quarter from increased sales of diabetes drugs Trulicity, Basaglar, and Jardiance.

Sales of Trulicity, a once-weekly glucagon-like peptide-1 (GLP-1) drug that increases insulin production, grew 31% year-over-year to $1.2 billion. Basaglar, a biosimilar to the long-lasting insulin Lantus, saw its revenue increase 32% year-over-year to $307 million; and sales of Jardiance, a sodium glucose co-transporter 2 (SGLT2) inhibitor that increases glucose excretion in urine, improved 39% to $268 million. Those gains more than offset a 1% slide in the sales of the fast-acting insulin Humalog. 

Eli Lilly also benefited from growing demand for the autoimmune disease drug Taltz and the launch of migraine treatment Emgality. Taltz revenue rose 37% year-over-year to $420.1 million, and Emgality sales totaled $66.3 million. Sales of erectile dysfunction drug Cialis dropped 44%, due to the expiration in fall 2018 of its patent protection and the arrival of generic competition.  

Overall, revenue was driven by a 10% increase in volume, slightly offset by a 1% decline in drug prices.

Impacting the bottom line, research and development spending increased 6% to $1.58 billion, while marketing, selling, and administrative expenses were essentially flat at $1.7 billion. Sales growth, cost controls, and share repurchases resulted in Lilly's better-than-expected earnings. 

As for 2020, management now says it expects sales of at least $23.7 billion, up from its prior guidance for $23.6 billion. However, it lowered its EPS outlook from a range of $6.38 to $6.48 to a range of to $6.18 to $6.28 due to costs associated with its $1.1 billion acquisition of Dermira, a biotech company focused on treatments for chronic skin conditions.

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