Eli Lilly’s revenues
The above graph shows the revenues of Eli Lilly (LLY) in each quarter and estimates for 2Q17. The company has operations in over 120 countries, and nearly 45% of total revenues come from sales outside US markets.
Segment-wise expectations for 2Q17
Lilly’s business is divided into two segments:
- Human Pharmaceuticals under the brand Lilly
- Animal Health Products under the brand Elanco
Lilly’s revenues have risen over the past few quarters. The growth has been driven by the inclusion of Novartis’s (NVS) Animal Health business, which has been substantially offset by patent expiry of its blockbuster drug Cymbalta.
The human pharmaceuticals segment is the largest revenue contributor for Eli Lilly. It contributes over 85% of total revenues for the company. Analysts estimate a strong performance from drugs Cyramza, Erbitux, Humalog, Jardiance, Taltz, and Trulicity, which are expected to be the growth drivers for 2Q17. However, weak performances from Alimta, Cialis, Cymbalta, Humulin, and Zyprexa could offset the growth in 2Q17.
Elanco, the animal health business, contributes ~15% of total revenues for Lilly. Analysts estimate the revenues to rise in 2Q17 as compared to 2Q16. The growth is expected to be driven by overall sales in US markets, partially offset by lower sales in markets outside the US. The revenues for US markets are expected to increase due to strong sales of companion animal products, while outside the US markets are expected to report a weak performance across both companion animal products as well as food animal products in 2Q17.
To divest the risk, investors can consider ETFs like the Healthcare Select Sector SPDR ETF (XLV), which holds 2.7% of its total assets in Eli Lilly. XLV also holds 6.3% in Merck (MRK), 3.2% in Allergan (AGN), and 4.3% in Amgen (AMGN).