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Is Eli Lilly Rebounding from Patent Expiry of Cymbalta?

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Eli Lilly’s growth rate

Eli Lilly and Co. (LLY) reported a growth of ~8.6% in revenues for 2Q16 over 2Q15. The company’s 2Q16 revenues surpassed Wall Street analyst estimates of $5.2 billion with reported revenues of $5.4 billion.

The above graph shows the revenues of Eli Lilly and Co. (LLY) in each quarter. The company is exposed to the impact of foreign exchange as nearly 47% of its total revenues come from sales outside the US. The company operates in over 120 countries and has manufacturing facilities in 13 countries.

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Year-over-year performance

Lilly’s revenues have increased over the past few quarters following the inclusion of Novartis’s (NVS) Animal Health business, majorly offset by patent expiry of its blockbuster drug Cymbalta. Analyst estimates show that revenues will increase by 5.3% to $21.0 billion for 2016. Lilly had reported a revenue increase of 1.7% to $20.0 billion in 2015.

Revenues are estimated to increase following volume and price increases, but the foreign exchange rates will have a negative impact, thereby offsetting the growth during 2016. Some of the key growth drivers include Novartis Animal Health products and pharmaceutical products including Cyramza, Trulicity, Humalog, and Erbitux. We’ll discuss the segment-wise revenues and 2Q16 performance in the rest of this series.

Investors can consider ETFs like the US Healthcare ETF (IYH), which holds ~2.6% of its total assets in Lilly. IYH also holds ~4.2% of its total assets in Amgen (AMGN), ~3.9% of its total assets in Bristol-Myers Squibb (BMY), and ~3.4% of its total assets in AbbVie (ABBV). Other ETFs like the iShares Core S&P 500 ETF (IVV) holds ~0.5% of its total assets in Lilly.

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