Eli Lilly and Co.
saw a steep decline in its first-quarter earnings after recent U.S. patent expirations for two of its best-selling drugs cut sharply into the pharmaceutical
company's revenue.The Indianapolis-based drug maker reported that its net income was down
53% to $727.9 million for the quarter ended March 30, from $1.55 billion in the same period last year.
Revenue for the quarter fell 16% to $4.68 billion from $5.60 billion in the same period the prior year, driven by sales declines for antidepressant Cymbalta and osteoporosis drug Evista. Cymbalta sales were down 64% for the quarter, and Evista sales were down 38%.
Eli Lilly lost its patent protection for Cymbalta in December of last year, and lost the same protection for Evista in March, exposing the company to heightened competition from generic drug makers. But also in March, a U.S. District Court ruled in favor of Eli Lilly and its patent on lung-cancer drug Alimta, extending the company's U.S. protection on its intellectual property for the drug until 2022.
Eli Lilly management updated its outlook for the remainder of 2014, raising revenue expectations to between $19.4 billion and $20.0 billion, to be boosted by expected sales growth from other pharmaceutical products, including Alimta, as well as diabetes drugs Humalog and Trajenta.
Even with the latest court victory and expected higher sales, management still downgraded its earnings expectations for the remainder of the year. Earnings per share guidance had been $2.77 to $2.85 for 2014, but Eli Lilly revised that to a range of $2.72 to $2.80 for the full year.
Last month, Eli Lilly also announced that it would initiate a freeze on a majority of its employees' salaries this year “in recognition of an expected substantial decline in revenue due to significant patent expirations,” according to a proxy statement filed with the Securities and Exchange Commission
.Follow Rachel Landen on Twitter: @MHrlanden