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How Will Eli Lilly’s Neuroscience Franchise Fare in 4Q16?

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Neuroscience franchise

Another franchise from Eli Lilly’s (LLY) human pharmaceuticals segment is the neuroscience franchise. The neuroscience franchise contributes over ~13% of Lilly’s total revenues. Key drugs in this segment include Zyprexa, Cymbalta, and Strattera.

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Cymbalta

Cymbalta is an antidepressant used for the treatment of depression and anxiety, and at times in bone and muscle pain. Cymbalta sales are expected to fall in 4Q16 due to lower sales in both the US and international markets and the negative impact of foreign exchange.

Zyprexa

Zyprexa is an antipsychotic drug used in the treatment of brain disorders like schizophrenia or bipolar disorders. Zyprexa sales are expected to fall in 4Q16 due to lower sales in international markets, the loss of patent exclusivity in Japan for use of Zyprexa in the treatment of schizophrenia, and the negative impact of foreign exchange on international sales. Zyprexa has generic competition from Mylan (MYL) and Teva Pharmaceuticals (TEVA).

Other drugs in the neuroscience franchise

Other drugs in the neuroscience franchise include Strattera and Prozac. Strattera, a drug for attention deficit or hyperactivity disorder, is expected to report an increase in revenues during 4Q16 due to increased sales worldwide. Prozac, another antidepressant from Lilly, is expected to report a decline in 4Q16 revenues.

Strattera competes with Shire’s (SHPG) Vyvanse and Intuniv as well as Johnson & Johnson’s (JNJ) Concerta. Investors can consider ETFs like the iShares S&P Global Healthcare ETF (IXJ), which holds 1.9% of its total assets in Lilly, in order to divest the risk.

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