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Eli Lilly’s 1Q17 Earnings: Cialis and Other Cardiovascular Products

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Cardiovascular franchise

Eli Lilly & Co.’s (LLY) cardiovascular franchise contributes ~15% to the company’s total revenues. Key drugs in this segment include Cialis and Effient.

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Cialis

Cialis is a drug for the treatment of erectile dysfunction and benign prostatic hyperplasia. Cialis sales decreased over 7% to $533.6 million during 1Q17, compared to $576.7 million for 1Q16. This included a decrease of 8% in revenues to $296.7 million from the US and a decrease of ~6% in revenues from its international markets to $236.9 million.

The drug’s sales in US markets were driven by lower sales, while its sales in international markets were driven by lower sales, partially offset by higher realized prices. Foreign exchange also had a negative impact on its international sales. Cialis competes with Pfizer’s (PFE) Viagra, Auxilium’s (AUXL) Stendra, and GlaxoSmithKline (GSK) and Bayer’s Levitra.

Effient

Effient is an antiplatelet used with aspirin for the prevention of blood clots in arteries and stents, reducing the chance of heart-related events for patients with acute coronary syndrome. Effient sales decreased 3% to $127.8 million in 1Q17, compared to $131.5 million in 1Q16. Its US sales increased 7%, while its international sales decreased 51% during 1Q17.

To divest company-specific risk, investors can consider the SPDR S&P Pharmaceuticals ETF (XPH), which invests 5.0% of its portfolio in Eli Lilly. XPH also holds 4.5% of its total assets in Pfizer (PFE), 4.6% of its total assets in Merck & Co. (MRK), and 5.1% of its total assets in Allergan (AGN).

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