Eli Lilly’s Endocrine Franchise Continues to Grow

Endocrine franchise

As discussed earlier, Eli Lilly’s (LLY) human pharmaceuticals segment reported an increase of ~10% to ~$4,545 million for 2Q16 as compared to ~$4,138 million for 2Q15. This segment deals with different therapeutic areas including endocrine, neuroscience, oncology, cardiovascular, and others. Some of the blockbuster drugs in this franchise are Humalog, Humulin, and Forteo.

Eli Lilly’s Endocrine Franchise Continues to Grow

Humalog

The Humalog portfolio consists of different meal-time insulin products used to lower the blood sugar levels in patients with diabetes. The sales for Humalog products increased by 7% to $701.9 million during 2Q16, as compared to $654 million for 2Q15. This comprised of a 5% increase in US sales to $420 million, and an 11% increase in the international sales to $282 million. The increase was driven by higher demand and volumes traded, partially offset by lower realized prices and the negative impact of foreign exchange.

Humalog competes with Novolog from Novo Nordisk (NVO), and Sanofi (SNY) is developing a biosimilar for Humalog.

Humulin

The Humulin portfolio consists of concentrated insulin products used to lower the blood sugar levels in patients with type 1 and type 2 diabetes mellitus. These are used in cases where patients require a higher dosage of insulin. The sales of Humulin products increased by ~5% to $332 million in 2Q16, as compared to ~$316 million in 2Q15. This includes the increase of ~9% in the US sales and nearly flat revenues from the international sales. The increase was due to higher volumes.

Forteo

Forteo, another blockbuster drug from Lilly, is used in the treatment of osteoporosis. The sales of Forteo increased by ~12% to $368 million in 2Q16, as compared to ~$328 million in 2Q15. This includes the increase of ~29% in US sales, partially offset by a 1% decline in international sales. The increase was due to higher realized prices following changes in government rebates in US markets, partially offset by lower realized prices in the international markets. The volume growth and favorable impact of foreign exchange had substantially offset the decline due to lower realized prices in international markets.

Other drugs for osteoporosis include Allergan’s (ACT) Actonel and Roche’s (RHHBY) subsidiary Genentech’s Boniva.

Investors can consider ETFs like the iShares Core S&P 500 ETF (IVV), which holds ~0.5% of its total assets in Lilly in order to divest the company-specific risk.