It made for great headlines yesterday: "Eli Lilly
Or rather, much ado about something so "last year" that investors couldn't care less. The stock actually ended yesterday slightly up, after the company announced that it had settled the civil and criminal charges over its marketing of the antipsychotic Zyprexa for the treatment of diseases for which it wasn't approved. Eli Lilly had already taken a charge in the third quarter of last year to cover the settlement, so the news had already been factored into the stock price.
Like I said, much ado about nothing.
Now, don't get me wrong; such off-label marketing is illegal. Cephalon
Lawsuits are just a fact of life when investing in drug companies. Whether fending off attacks from the government, battling patent disputes from generic-drug companies like Teva Pharmaceuticals
Sure, more than $1.4 billion is a pretty high price to pay for management's mistake, but drugs fetch pretty high margins, and Zyprexa alone brought in more than $3.5 billion of revenue in the first nine months of last year. I think Eli Lilly can afford to take the hit.
It's hard for investors to see these types of things coming. The best we can do is take it in stride and hope it's a one-time event.
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