What to Expect from Eli Lilly’s Oncology Franchise in 4Q16

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

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 in 4Q16 due to lower sales in US markets, as well as lower realized prices and the negative impact of foreign exchange in international markets. Alimta has a competitor drug from Allergan (AGN).

Erbitux is a drug used in the treatment of metastatic colorectal cancer and head and neck cancer. Lilly took back the commercialization rights for Erbitux in North America from Bristol-Myers Squibb (BMY) as of October 1, 2015. Thus, Lily will report Erbitux revenues for 4Q16. Erbitux competes with Roche’s (RHHBY) Avastin and Amgen’s (AMGN) Vectibix.

Other drugs in the oncology franchise include Cyramza, Gemzar, and Portrazza. Cyramza revenues are expected to increase in 4Q16 following strong uptake in Japan as well as its launch in European markets. Gemzar revenues are expected to fall in 4Q16 due to lower sales. Portrazza, a new drug launched in December 2015, is expected to report growth in revenues during 4Q16.

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