Lilly’s revenue estimates
Analysts estimate an increase of ~3.4% in Eli Lilly and Company’s (LLY) 2Q16 revenues to reach ~$5.2 billion, following the contribution of the Animal Health segment acquired from Novartis (NVS) and increased revenues from existing products. Analysts further estimate YoY (year-over-year) growth of ~5.7% for 3Q16 and ~5.0% for 4Q16. On an annual basis, estimates show a growth of ~4.8% for 2016.
The above graph shows the revenues of Lilly in each quarter. The company is exposed to the impact of foreign exchange because almost 50% of Lilly’s total revenues are reported from sales outside the US. The company operates in over 120 countries, with its manufacturing facilities in 13 countries.
Segment expectations 2Q16
Lilly’s revenues have increased over the past few quarters after the inclusion of Novartis’ (NVS) Animal Health business, but these were offset by the patent expiry of its blockbuster drug Cymbalta. Lilly’s business is divided into two segments:
- Human Pharmaceuticals under the brand Lilly
- Animal Health Products under the brand Elanco
The Human Pharmaceuticals segment contributes nearly 84.5% of total revenues for Lilly. Analysts estimate that 2Q16 revenues for this segment will increase due to increasing revenues from products Humalog, Cialis, Strattera, Effient, Erbitux, and Trajenta, partially offset by lower sales of Alimta, Humulin, Cymbalta, and Zyprexa.
Lilly’s animal health segment operates through Elanco. Elanco contributes ~15.5% of total revenues for Lilly. Analysts estimate that 2Q16 revenues will increase over 2Q15, considering the inclusion of Novartis’s Animal Health portfolio, followed by the launch of new products in the Animal Health segment.
To divest risk, investors can consider ETFs like the PowerShares Dynamic Pharmaceuticals Portfolio ETF (PJP), which holds ~5.3% of its total assets in Lilly. PJP also holds ~4.9% of its total assets in Amgen (AMGN) and ~5.2% of its total assets in Bristol-Myers Squibb (BMY).
Continue to the next part for a closer look at Lilly’s endocrine franchise.