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Eli Lilly and Co.’s 3Q16 Estimates: Oncology Franchise

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Oct. 20 2016, Updated 10:04 a.m. ET

Oncology franchise

Eli Lilly and Co.’s (LLY) human pharmaceuticals segment also consists of the oncology franchise. The oncology franchise contributes around 18% of total revenues for Lilly. Key drugs in this segment include Alimta, Erbitux, and Cyramza. A new drug, Portrazza, launched in US markets in December 2015.

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Erbitux

Erbitux is a drug used in the treatment of metastatic colorectal cancer as well as head and neck cancer. Lilly has taken back the commercialization rights for Erbitux in North America from Bristol-Myers Squibb (BMY) since October 1, 2015, and so Erbitux revenues for 3Q16 will be reported by Lilly. This is further expected to be supported by increased sales in international markets, thereby reporting growth in Erbitux revenues for 3Q16. Erbitux competes with Roche’s (RHHBY) Avastin and Amgen’s (AMGN) Vectibix.

Alimta

Alimta is a chemotherapy drug used in the treatment of patients with advanced non-small cell lung cancer (or NSCLC). Alimta sales are expected to fall by more than 12% to $551 million in 3Q16 compared to $628.5 million in 3Q15 due to lower sales in US markets, lower realized prices, and the negative impact of foreign exchange in international markets. Alimta is a competitor drug with Allergan (AGN).

Other drugs for oncology franchise

Other drugs for oncology franchise includes Cyramza, Gemzar, and Portrazza. Cyramza revenues are expected to grow by over 37% in 3Q16, following strong uptake in Japan as well as a launch in European markets. Gemzar revenues are expected to fall in 3Q16 due to lower sales. Portrazza, a new drug launched in December 2015, is expected to report revenues of ~$13.5 million in 3Q16.

Investors can consider ETFs like the PowerShares Dynamic Large Growth ETF (PWB), which has invested 3.6% of its portfolio in Lilly, in order to divest risk.

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