What happened? 

Shares of Eli Lilly (NYSE:LLY) were dropping sharply on Tuesday, down by 5.3% as of 12:12 p.m. EDT after falling by as much as 6.2% earlier. Investors are reacting to the drugmaker's disappointing third-quarter earnings report, which it released before the market opened today. 

So what

During its third quarter, Eli Lilly's revenue came in at $5.7 billion. While that was a 5% increase from last year's third quarter, it also came in short of the $5.91 billion analysts were expecting on average. This was despite several of the company's products performing well during the quarter. For instance, sales of diabetes medicine Trulicity increased by 9% year over year to $1.11 billion, while revenue from plaque psoriasis treatment Taltz soared by 34% to $454.5 million.

Five downward-bound arrows on a blackboard.

Image source: Getty Images.

Alimta, a cancer medicine, saw its sales grow by 14% year over year to $578 million.

Adjusted earnings per share were $1.54, compared with $1.48 during the year-ago period. But again, the pharma giant came up short of expectations on the bottom line; on average, analysts expected the company to deliver adjusted EPS of $1.71.

Now what

Eli Lilly performed well during the first half of the year, but its shares have been dropping since late July. After today's decline, the stock is up by only 2.1% year to date, compared with gains of 5.4% for the S&P 500. Despite its disappointing earnings report, it may be worth it for long-term investors to consider scooping up shares of this pharma stock, particularly at current levels. 

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