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How Is Eli Lilly’s Revenue Trending in 2019?

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Jun. 28 2019, Updated 12:34 p.m. ET

Revenue trends

During its first-quarter earnings investor presentation, Eli Lilly and Company (LLY) guided for revenue of $22.0 billion–$22.5 billion in 2019, lower than its previous revenue guidance of $25.1 billion–$25.6 billion. The new guidance excludes the revenue contribution of Elanco Animal Health and is equivalent to the previous revenue guidance provided by the company for its Pharma Only business. According to LLY’s first-quarter earnings call, in the first quarter, Elanco Animal Health was divested through an exchange offer, where 65 million of Eli Lilly’s shares were retired for $8.2 billion.

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In the first quarter, Eli Lilly’s revenue fell 10.66% YoY (year-over-year) to $5.09 billion, $23.68 million short of the consensus estimate. In the first quarter, the company’s revenue rose 5% YoY on a constant-currency basis, while its prescription volumes rose 7% YoY. Excluding the impact of losses of exclusivity, the company’s product volumes rose 16% YoY.

Major headwinds

According to its first-quarter earnings call, LLY’s loss of patent exclusivity and the subsequent entry of generic competition in September 2018 led to rapid sales erosion for its erectile dysfunction drug, Cialis. The losses of exclusivity of Cialis, Axiron, Cymbalta, Effient, Strattera, Evista, and Zyprexa led to a YoY fall of 530 basis points in its product volumes in the first quarter.

On February 22, the US Senate Finance Committee sent a letter to Eli Lilly probing about the 585% rise in the price of its insulin product, Humalog. According to the company’s annual report, after the latest price rise in May 2017, Humalog’s list price became $594 per person in 2018. However, the drug’s net price was only $135. Hence, it was highlighted that while the list prices of Humalog had risen 51.9% from 2014 to 2018, net prices had declined by 8.1% due to rebates and discounts. Eli Lilly also plans to introduce an authorized generic version of the drug, which will be almost 50% cheaper than the branded version.

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