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Eli Lilly in 2Q17: Oncology Products Lose Revenues

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Jul. 31 2017, Updated 8:10 a.m. ET

Oncology franchise

Eli Lilly and Company’s (LLY) Human Pharmaceuticals segment includes its oncology franchise. Key drugs in this segment include Alimta, Erbitux, Cyramza, and Portrazza.

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Alimta

Alimta is a chemotherapy drug used in the treatment of patients with advanced non-small cell lung cancer. Alimta sales fell ~12.0% to $532.9 million in 2Q17 compared to $607.1 million in 2Q16. That included a 6.0% fall in US markets and an ~18.0% fall in international sales. Alimta is exposed to competition from other products in US markets as well as generic competition in international markets.

Erbitux

Erbitux, a drug used in the treatment of metastatic colorectal cancer and head and neck cancer, reported a fall in sales of 12.0% to $159.1 million in 2Q17 compared to ~$180.6 million in 2Q16. Eli Lilly took back the commercialization rights for Erbitux in North America from Bristol-Myers Squibb (BMY) on October 1, 2015. Revenues for the drug have fallen due to competition from other products. The US market reported a fall of 15.0%, while the international market reported a rise of 10.0% in 2Q17. Erbitux competes with Roche’s (RHHBY) Avastin and Amgen’s (AMGN) Vectibix.

Other drugs in the oncology franchise

Other drugs in the oncology franchise include Cyramza and Portrazza. Cyramza revenues rose 27.0% to $186.3 million in 2Q17 following a strong uptake in international markets. Portrazza reported revenues of ~$2.3 million in 2Q17, which was a fall of 43.0% compared to 2Q16.

To divest the company-specific risks, you can consider the PowerShares Dynamic Large Cap Growth ETF (PWB), which holds 3.1% of its total assets in Eli Lilly. PWB also holds 3.4% in UnitedHealth Group (UNH), 3.2% in Celgene (CELG), and 3.1% in Bristol-Myers Squibb (BMY).

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