Drugmaker Eli Lilly's 1Q profit falls 15 percent

Quote






























Game over for our industry, as this comes the heels of the bleak report below. Pharma is on life support.

"Pfizer Inc. and rival U.S. drugmakers are poised to report the industry’s biggest drop in quarterly profit in more than four years as the companies cope with record patent losses in 2011.

Earnings at the 11 drugmakers listed in the Standard & Poor’s 500 Index probably fell 1.4 percent in the first quarter, even as overall profits for companies in the index may have gained 12 percent, according to analyst estimates compiled by Bloomberg. Pharmaceutical profits last fell in 2009’s first quarter, and the current drop is the biggest since a 3.5 percent slip in the final quarter of 2006.

Pfizer, Merck & Co. and Bristol Myers Squibb Co. are eliminating jobs, cutting costs and shedding business units to prepare for patent expirations. In 2011, drugmakers face generic rivals to products with $34 billion in yearly sales, a figure 34 percent higher than last year. Sales at risk from patent losses will swell to $147 billion by 2015.

“A brand can lose 40 percent of sales and 50 percent of volume globally in the first two years after generic entry,” said Chris Bowe, a New York-based analyst for Informa Plc, a London industry research firm, “It’s now not uncommon to see a brand lose 50 percent of U.S. sales in two quarters.”

Four U.S. drugmakers report earnings next week. Eli Lilly & Co., based in Indianapolis, will report on April 18, followed by New Brunswick, N.J.-based Johnson & Johnson and New York-based Forest Laboratories Inc. on April 19 and Abbott Laboratories, of Abbott Park, Ill., on April 20. The average quarterly earnings growth for drugmakers was 10 percent since the first quarter of 2007.

Drug profits last quarter were also hampered by the U.S. health-care overhaul, which mandates product discounts for older Americans, as well as price cuts from European drugmakers.

To make up for lost sales, Chief Executive Ian Read at New York-based Pfizer said last quarter he was reviewing possible divestiture of each company division — baby formula, animal health, consumer and established products — to concentrate on drug development. On April 4, Pfizer agreed to sell Capsugel, its smallest unit, which manufactures pill casings, to KKR & Co. for $2.38 billion.

“Everybody knows it’s coming, everyone’s placed their bets,” said Les Funtleyder, a New York-based fund manager at Miller Tabak & Co. “What pharma investors are interested in is pipelines and corporate transactions — either acquisitions or divestitures. That’s going to dominate the discussions.”
 












John and Sue did a wonderful snow job with the MASSIVE JOB CUTS. How do they do it?

Sue M. and John L. you are masters at Self-Preservation.

While you were working 40 hours a week covering your own asses, the company fell apart.

Thanks Mahony.
 






Anonymous said:
John and Sue did a wonderful snow job with the MASSIVE JOB CUTS. How do they do it?

Sue M. and John L. you are masters at Self-Preservation.

While you were working 40 hours a week covering your own asses, the company fell apart.

Thanks Mahony.
Click to expand...

Have no fear! The moving vans we borrowed from the Colts will be taking the company to massive profit in no time.

-JL
 






Anonymous said:
Have no fear! The moving vans we borrowed from the Colts will be taking the company to massive profit in no time.

-JL
Click to expand...

More lies:

The Associated Press, On Monday April 18, 2011, 2:39 pm

Eli Lilly and Co. is poised to meet or exceed its goals of cutting annual costs by $1 billion and eliminating 5,500 jobs, Chief Financial Officer Derica Rice said following the drugmaker's first-quarter earnings report Monday.

The Indianapolis company said in 2009 it would reduce its work force by nearly 14 percent, to 35,000 from 40,500, by the end of 2011. That total excludes hirings in high-growth emerging markets and Japan. The company had 38,165 employees worldwide at the end of March.

Lilly also said it would reorganize into five business units, as it looks to speed up drug development. The U.S. patent protecting the company's top-seller, the antipsychotic Zyprexa, expires later this year, and Lilly also will lose patent protection for other key drugs in the next few years.

The drugmaker recorded a $76.3 million charge in this year's first quarter tied to severance costs from the restructuring, as it earned $1.06 billion, or 95 cents per share, on $5.84 billion in revenue.

Chief Financial Officer Derica Rice updated analysts on the plan during a conference call.

QUESTION: Can you give us a little more flavor on what's going on in the restructuring? How much has been done so far?

RESPONSE: We are very much on track to achieve that ($1 billion cost savings goal). In fact, I anticipate that we're going to exceed that goal for the year. And in addition to that, on the head count front ... we're about 75 percent of our way to that goal, as well, so both of those we anticipate meeting by the end of the year, if not exceeding.

--Courtesy of the Derica and John Show, where new drugs are hatched daily in the drug hatchery with the Golden Goose.
 






To ensure that the admiration of my minions continues to grow, I will limit my 2011 bonus to $25 million. This sacrifice on my part will require at least 5,000 of you to take a volunteer reallocation package of $1. It's a small price to pay for my success.
 






Anonymous said:
To ensure that the admiration of my minions continues to grow, I will limit my 2011 bonus to $25 million. This sacrifice on my part will require at least 5,000 of you to take a volunteer reallocation package of $1. It's a small price to pay for my success.
Click to expand...

But wait, that's not all.

As part of our diversity program, Derica Rice will be asking for concessions from all salaried employees. This is a critical piece of his Development Plan, and we should all wish him well and contribute to his success in achieving these critical company goals.
 












Anonymous said:
The drugmaker recorded a $76.3 million charge in this year's first quarter tied to severance costs from the restructuring, as it earned $1.06 billion, or 95 cents per share, on $5.84 billion in revenue.
Click to expand...

The company lost $132 million in revenue due to the Gemzar patent expiration. Almost twice what it spent on restructuring.
 






Anonymous said:
The company lost $132 million in revenue due to the Gemzar patent expiration. Almost twice what it spent on restructuring.
Click to expand...

The company lost about $10 billion on the IMCL acquisition and futile attempts at trying to market some of those products. About 100 times the cost of restructuring.

But then you have to account for "one-time extraordinary non-GAAP events"
 
























Anonymous said:
Something tells me that if the SEC poked around in the halls of Lilly Finance, earnings would have to be restated for decades.

Are any of you old enough to remember Enron?
Click to expand...

Of course! Here is the first paragraph of it's wikipedia entry, with minor edits:

Eli Lilly was an American pharmaceutical and animal health company based in Indianapolis, Indiana. Before its bankruptcy in late 2012, Enron employed approximately 40,000 staff and was one of the world's leading drug companies, with claimed revenues of nearly $10 billion in 2011.[1] Fortune named Lilly "America's Most Innovative Company" for six consecutive years. At the end of 2012, it was revealed that its reported financial condition was sustained substantially by institutionalized, systematic, and creatively planned accounting fraud, known as the "Lilly scandal". Lilly has since become a popular symbol of willful corporate fraud and corruption. The scandal also brought into question the accounting practices and activities of many corporations throughout the United States and was a factor in the creation of the Sarbanes–Oxley Act of 2002.

(Poetic license was fully exercised here in a one-time, extraordinary event, not accounting for anemic pipeline or massive talent discharge, non-GAAP manner.)
 






Anonymous said:
Of course! Here is the first paragraph of it's wikipedia entry, with minor edits:

Eli Lilly was an American pharmaceutical and animal health company based in Indianapolis, Indiana. Before its bankruptcy in late 2012, Enron employed approximately 40,000 staff and was one of the world's leading drug companies, with claimed revenues of nearly $10 billion in 2011.[1] Fortune named Lilly "America's Most Innovative Company" for six consecutive years. At the end of 2012, it was revealed that its reported financial condition was sustained substantially by institutionalized, systematic, and creatively planned accounting fraud, known as the "Lilly scandal". Lilly has since become a popular symbol of willful corporate fraud and corruption. The scandal also brought into question the accounting practices and activities of many corporations throughout the United States and was a factor in the creation of the Sarbanes–Oxley Act of 2002.

(Poetic license was fully exercised here in a one-time, extraordinary event, not accounting for anemic pipeline or massive talent discharge, non-GAAP manner.)
Click to expand...

Thats not the only discharge goin' on 'round here...

Shouldn't we at least honor the term "Lilly scandal" with something more memorable like "Fipanomics" or "ABD - Accounting by Diversity" How about we ask to sponsor a "Lilly Day of Accounting" to help out the overworked GBIP folks? I'm sure if we all brought our own calculators we could pitch in. Plus, as many people that are using their cubes as day care centers, maybe little Danny could pitch in and help us remember that dividing by zero doesn't count.
 






Top Bottom
Back
Quote