INDIANAPOLIS, Oct. 25, 2016 /PRNewswire/ -- Eli Lilly and
Company (NYSE: LLY) today announced financial results for the third
quarter of 2016.
|
|
|
|
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$ in millions, except
per share data
|
Third
Quarter
|
%
|
|
2016
|
|
2015
|
Change
|
Revenue
|
$
|
5,191.7
|
|
|
$
|
4,959.7
|
|
5%
|
Net Income –
Reported
|
778.0
|
|
|
799.7
|
|
(3)%
|
EPS –
Reported
|
0.73
|
|
|
0.75
|
|
(3)%
|
|
|
|
|
|
Net Income –
Non-GAAP
|
931.0
|
|
|
949.6
|
|
(2)%
|
EPS –
Non-GAAP
|
0.88
|
|
|
0.89
|
(1)%
|
|
Certain financial information for 2016 and 2015 is presented on
both a reported and a non-GAAP basis. Some numbers in this press
release may not add due to rounding. Reported results were prepared
in accordance with generally accepted accounting principles (GAAP)
and include all revenue and expenses recognized during the periods.
Non-GAAP measures exclude the items described in the reconciliation
tables later in the release. The company's 2016 financial
guidance is also being provided on both a reported and a non-GAAP
basis. The non-GAAP measures are presented to provide additional
insights into the underlying trends in the company's business.
"Lilly's volume-driven growth in the third quarter was once
again led by our portfolio of recently approved medicines including
Trulicity, Cyramza, Taltz and Jardiance," said John C. Lechleiter, Ph.D., Lilly's chairman,
president and chief executive officer. "Our pipeline also
continues to advance with a wide array of promising treatments for
conditions from Alzheimer's disease to diabetes and cancer. Our
focus on innovation and bringing important new medicines to the
people who need them is leading Lilly into a new era of growth for
the benefit of patients and shareholders alike."
Key Events Over the Last Three Months
Regulatory
- The U.S. Food and Drug Administration (FDA) granted approval of
Lartruvo™ (olaratumab), in combination with
doxorubicin, for the treatment of adults with soft tissue sarcoma
with a histologic subtype for which an anthracycline-containing
regimen is appropriate and which is not amenable to curative
treatment with radiotherapy or surgery. Lartruvo's indication was
approved under the Accelerated Approval process and is based on
data from a Phase 2 trial. Continued approval for this indication
may be contingent upon verification and description of clinical
benefit in a confirmatory trial.
- The company and AstraZeneca received FDA Fast Track designation
for the development program in Alzheimer's disease for AZD3293, an
oral beta secretase cleaving enzyme (BACE) inhibitor currently in
Phase 3 clinical trials. The FDA's Fast Track program is designed
to expedite the development and review of new therapies to treat
serious conditions and address key unmet medical needs.
- The European Medicines Agency's (EMA) Committee for Medicinal
Products for Human Use (CHMP) issued positive opinions
recommending:
- Conditional marketing authorization for Lartruvo (olaratumab),
in combination with doxorubicin, for the treatment of adults with
advanced soft tissue sarcoma not amenable to curative treatment
with radiotherapy or surgery and who have not been previously
treated with doxorubicin.
- Marketing authorization for Glyxambi®, a single
tablet combining Jardiance® (empagliflozin) and
Trajenta® (linagliptin), for use in adults with type 2
diabetes. Glyxambi, Jardiance and Trajenta are part of the
company's alliance with Boehringer Ingelheim.
Clinical
- Following a pre-planned interim analysis, an independent Data
Monitoring Committee recommended continuing a Phase 3 trial of
abemaciclib without modification as the interim efficacy criteria
were not met. The trial will continue into the first half of 2017.
The trial compares abemaciclib with fulvestrant versus placebo
with fulvestrant in women with hormone-receptor-positive, human
epidermal growth factor receptor 2-negative locally advanced or
metastatic breast cancer.
- Taltz® met its primary endpoint of ACR20 response
rate in a Phase 3 study investigating the treatment of psoriatic
arthritis. Taltz showed improved signs and symptoms in adult
patients who have previously been treated with a biologic
disease-modifying antirheumatic drug. Lilly plans to submit to the
FDA during the first half of 2017.
- Earlier this month, last patient visit was achieved in the
Phase 3 trial evaluating solanezumab in patients with mild
Alzheimer's disease. As a result, the company plans to issue a
top-line press release before the end of the year.
Business Development/Other
- The company announced an agreement to acquire Boehringer
Ingelheim Vetmedica, Inc.'s U.S. feline, canine and rabies vaccines
portfolio, as well as a fully integrated manufacturing and research
and development site, for approximately $885 million,
including the estimated cost of acquired inventory. The acquisition
is anticipated to close by early 2017, subject to approval by the
U.S. Federal Trade Commission and also subject to both antitrust
approval of and the closing of a previously announced asset swap
transaction between Boehringer Ingelheim and Sanofi SA.
- The U.S. Patent and Trademark Office determined that the
method-of-use patents for Effient® are invalid. The
patents would have provided intellectual property protection until
2023. The owners of the patent, Daiichi Sankyo and Ube, have
appealed this ruling.
- The company announced that John C.
Lechleiter will retire as president and chief executive
officer from the company effective December 31,
2016. Lechleiter will continue on Lilly's board of directors
until May 31, 2017, serving as non-executive
chairman. David A. Ricks, currently senior vice president and
president, Lilly Bio-Medicines, will assume the role of president
and chief executive officer and join the board on January 1,
2017. He will become chairman of the board on June 1,
2017.
Third-Quarter Reported Results
In the third quarter of 2016, worldwide revenue was $5.192 billion, an increase of 5 percent
compared with the third quarter of 2015. The increase in revenue
was driven by a 4 percent increase in volume and 1 percent
favorable impact of foreign exchange rates, partially offset by 1
percent due to lower realized prices. The increase in worldwide
volume was driven by new pharmaceutical products, including
Trulicity®, Cyramza®, Taltz and Jardiance, as
well as Humalog® and Erbitux® (due to the
transfer of commercialization rights in North America to Lilly), partially offset by
lower volumes for Zyprexa®, animal health products,
Alimta® and Cialis®.
Revenue in the U.S. increased 12 percent to $2.838 billion, driven by increased volume
for several pharmaceutical products, including Trulicity, Humalog,
Taltz and Jardiance, as well as Erbitux (due to the transfer of
commercialization rights in North
America to Lilly), partially offset by lower volumes for
animal health products, Zyprexa and Cialis. Higher realized prices
in the U.S., primarily for Cialis and Forteo®, were
largely offset by lower realized prices for Humalog. When the
Cymbalta® patent expired at the end of 2013, the return
reserve was increased to reflect expected product returns. As a
result of lower-than-expected return volume, a reduction of
approximately $145 million in the
Cymbalta return reserve increased U.S. revenue in the third quarter
of 2016, favorably impacting both volume and price.
Revenue outside the U.S. decreased 3 percent to
$2.354 billion, as lower realized
prices and volume, primarily from the losses of exclusivity for
Cymbalta in Europe and
Canada, Zyprexa in Japan and Alimta in several countries, more
than offset increased volume for several recently launched
pharmaceutical products, including Trulicity and Cyramza, and the
favorable impact of foreign exchange rates, primarily the Japanese
yen, partially offset by other foreign currencies.
Gross margin increased 2 percent to $3.791 billion in the third quarter of 2016
compared with the third quarter of 2015. Gross margin as a percent
of revenue was 73.0 percent, a decline of 2.1 percentage points
compared with the third quarter of 2015. The decline in gross
margin percent was primarily due to a lower benefit from foreign
exchange rates on international inventories sold and, to a lesser
extent, the transfer of Erbitux® commercialization
rights in North America.
Operating expenses in the third quarter of 2016, defined as the
sum of research and development and marketing, selling and
administrative expenses, were $2.802
billion, an increase of 3 percent compared with the
third quarter of 2015. Research and development expenses increased
8 percent to $1.236 billion,
driven primarily by higher late-stage clinical development costs.
Marketing, selling and administrative expenses decreased
1 percent to $1.565 billion, as reduced spending on
late-life-cycle products was largely offset by expenses related to
new products.
The company recognized asset impairment, restructuring and other
special charges of $45.5 million and
$42.4 million in the third
quarters of 2016 and 2015, respectively, primarily related to
integration and severance costs for Novartis Animal Health.
Operating income in the third quarter of 2016 was $943.5 million, a decline of 2 percent
compared with the third quarter of 2015, driven by higher research
and development expenses, partially offset by higher gross
margin.
Other income (expense) was income of $27.2 million in the third quarter of 2016,
compared with income of $86.5 million
in the third quarter of 2015. The decline in other income was
driven by lower net gains on investments in the third quarter of
2016 compared with 2015.
The effective tax rate was 19.9 percent in the third quarter of
2016, compared with 23.7 percent in the third quarter of 2015. The
decline in the effective tax rate for the third quarter of 2016 is
primarily due to the benefit of certain U.S. tax provisions,
including the R&D tax credit, reinstated for 2016.
In the third quarter of 2016, net income and earnings per share
decreased 3 percent to $778.0 million, and $0.73, respectively, compared with $799.7 million and $0.75, respectively, in the third quarter of
2015. The declines in net income and earnings per share were driven
by lower other income and lower operating income, partially offset
by a lower effective tax rate.
Third-Quarter 2016 Non-GAAP Measures
On a non-GAAP basis, third-quarter 2016 gross margin increased 3
percent to $3.967 billion. Gross
margin as a percent of revenue was 76.4 percent, a decline of 1.4
percentage points compared with the third quarter of 2015. The
decline in gross margin percent was primarily due to a lower
benefit from foreign exchange rates on international inventories
sold.
Operating income decreased $10.7
million, or 1 percent, to $1.167
billion in the third quarter of 2016, as higher operating
expenses were largely offset by higher gross margin.
The effective tax rate was 22.0 percent in the third
quarter of 2016, compared with 24.9 percent in the third quarter of
2015. The decline in the effective tax rate for the third quarter
of 2016 is primarily due to the benefit of certain U.S. tax
provisions, including the R&D tax credit, reinstated for
2016.
Net income decreased 2 percent to $931.0
million, and earnings per share decreased 1 percent to
$0.88 in the third quarter of 2016,
compared with $949.6 million and
$0.89, respectively, in the third
quarter of 2015. The declines in net income and earnings per share
were driven by lower other income and, to a lesser extent, lower
operating income, partially offset by a lower effective tax
rate.
For further detail of non-GAAP measures, see the reconciliation
below as well as the Reconciliation of GAAP Reported to Selected
Non-GAAP Adjusted Information table later in this press
release.
|
Third
Quarter
|
|
2016
|
|
2015
|
% Change
|
Earnings per share
(reported)
|
$
|
0.73
|
|
|
$
|
0.75
|
|
(3)%
|
Amortization of
intangible assets
|
.11
|
|
|
.10
|
|
|
Asset impairment,
restructuring and other special charges
|
.03
|
|
|
.03
|
|
|
Novartis Animal
Health inventory step-up
|
—
|
|
|
.01
|
|
|
Earnings per share
(non-GAAP)
|
$
|
0.88
|
|
|
$
|
0.89
|
|
(1)%
|
|
|
|
|
|
Numbers may not add
due to rounding.
|
|
|
|
|
Year-to-Date Results
For the first nine months of 2016, worldwide revenue increased 6
percent to $15.462 billion compared
with $14.583 billion in the same
period in 2015. Reported net income and earnings per share were
$1.966 billion and $1.85, respectively. Net income and earnings per
share, on a non-GAAP basis, were $2.722 billion and $2.57, respectively.
For further detail, see the reconciliation below as well as the
Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted
Information table later in this release.
|
Year-to-Date
|
|
2016
|
|
2015
|
% Change
|
Earnings per share
(reported)
|
$
|
1.85
|
|
|
$
|
1.81
|
|
2%
|
Amortization of
intangible assets
|
.34
|
|
|
.29
|
|
|
Asset impairment,
restructuring and other special charges
|
.19
|
|
|
.15
|
|
|
Venezuela
charge
|
.19
|
|
|
—
|
|
|
Acquired in-process
research and development
|
—
|
|
|
.20
|
|
|
Novartis Animal
Health inventory step-up
|
—
|
|
|
.10
|
|
|
Net charge related to
repurchase of debt
|
—
|
|
|
.09
|
|
|
Earnings per share
(non-GAAP)
|
$
|
2.57
|
|
|
$
|
2.65
|
|
(3)%
|
|
|
|
|
|
Numbers may not add
due to rounding.
|
|
|
|
|
Select Revenue Highlights
(Dollars in
millions)
|
Third
Quarter
|
|
|
|
Year-to-Date
|
|
|
|
Established
Pharmaceutical Products
|
2016
|
|
2015
|
|
% Change
|
|
2016
|
|
2015
|
|
% Change
|
|
Humalog
|
$
|
640.8
|
|
|
$
|
705.0
|
|
|
(9)%
|
|
$
|
1,949.0
|
|
|
$
|
2,043.3
|
|
|
(5)%
|
|
Cialis
|
588.2
|
|
|
566.1
|
|
|
4%
|
|
1,795.3
|
|
|
1,672.3
|
|
|
7%
|
|
Alimta
|
570.4
|
|
|
628.5
|
|
|
(9)%
|
|
1,741.7
|
|
|
1,865.8
|
|
|
(7)%
|
|
Forteo
|
391.2
|
|
|
348.9
|
|
|
12%
|
|
1,077.5
|
|
|
970.4
|
|
|
11%
|
|
Humulin®
|
322.0
|
|
|
316.7
|
|
|
2%
|
|
1,010.6
|
|
|
948.8
|
|
|
7%
|
|
Cymbalta
|
313.5
|
|
|
242.9
|
|
|
29%
|
|
748.7
|
|
|
804.0
|
|
|
(7)%
|
|
Strattera®
|
198.8
|
|
|
196.9
|
|
|
1%
|
|
611.5
|
|
|
562.4
|
|
|
9%
|
|
Zyprexa
|
148.9
|
|
|
237.9
|
|
|
(37)%
|
|
572.3
|
|
|
711.2
|
|
|
(20)%
|
|
Erbitux
|
184.6
|
|
|
85.9
|
|
|
115%
|
|
533.3
|
|
|
308.8
|
|
|
73%
|
|
Effient
|
127.7
|
|
|
132.1
|
|
|
(3)%
|
|
394.3
|
|
|
382.7
|
|
|
3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Pharmaceutical
Products
|
|
|
|
|
|
|
|
|
|
|
|
|
Trulicity
|
243.6
|
|
|
73.7
|
|
|
NM
|
|
588.5
|
|
|
136.2
|
|
|
NM
|
|
Cyramza
|
159.0
|
|
|
111.2
|
|
|
43%
|
|
437.0
|
|
|
266.4
|
|
|
64%
|
|
Jardiance(a)
|
47.5
|
|
|
15.4
|
|
|
NM
|
|
125.8
|
|
|
45.7
|
|
|
NM
|
|
Taltz
|
32.5
|
|
|
—
|
|
|
NM
|
|
51.9
|
|
|
—
|
|
|
NM
|
|
Basaglar®
|
19.4
|
|
|
3.8
|
|
|
NM
|
|
46.6
|
|
|
3.9
|
|
|
NM
|
|
Portrazza®
|
5.3
|
|
|
—
|
|
|
NM
|
|
11.0
|
|
|
—
|
|
|
NM
|
|
Subtotal
|
507.3
|
|
|
204.1
|
|
|
NM
|
|
1,260.8
|
|
|
452.2
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Animal
Health
|
706.2
|
|
|
778.8
|
|
|
(9)%
|
|
2,320.5
|
|
|
2,369.3
|
|
|
(2)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Revenue
|
5,191.7
|
|
|
4,959.7
|
|
|
5%
|
|
15,461.6
|
|
|
14,583.1
|
|
|
6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Jardiance includes Glyxambi and Synjardy®
NM – not
meaningful
|
Selected Established Pharmaceutical Products
Humalog
For the third quarter of 2016, Humalog revenues decreased 9
percent compared with the third quarter of 2015 to $640.8 million. Revenues in the U.S. decreased 14
percent to $378.8 million, driven by
lower realized prices, partially offset by increased demand. The
decrease in realized prices for the third quarter of 2016 also
included changes in estimates for rebates and discounts. Revenues
outside the U.S. decreased 1 percent to $262.0 million, as the unfavorable impact of
foreign exchange rates was largely offset by higher realized
prices.
Cialis
Cialis revenues for the third quarter of 2016 increased 4
percent compared with the third quarter of 2015 to $588.2 million. U.S. revenues of Cialis were
$348.5 million, an 11 percent
increase compared with the third quarter of 2015, driven by higher
realized prices, partially offset by lower demand. Revenues of
Cialis outside the U.S. decreased 5 percent to $239.7 million, driven by decreased volume and
the unfavorable impact of foreign exchange rates, partially offset
by higher realized prices.
Alimta
For the third quarter of 2016, Alimta generated revenues of
$570.4 million, a decline of
9 percent compared with the third quarter of 2015. U.S.
revenues of Alimta decreased 7 percent to $277.0 million, driven primarily by decreased
demand due to competitive pressure. Revenues outside the U.S.
decreased 12 percent to $293.4
million, driven primarily by the loss of exclusivity in
several countries, partially offset by the favorable impact of
foreign exchange rates.
Forteo
Third-quarter 2016 revenues of Forteo were $391.2 million, a 12 percent increase compared
with the third quarter of 2015. U.S. revenues of Forteo increased
29 percent to $206.7 million, driven
by higher realized prices. Revenues outside the U.S. decreased 2
percent to $184.5 million,
driven by lower realized prices, partially offset by the favorable
impact of foreign exchange rates.
Humulin
Humulin revenues for the third quarter of 2016 increased 2
percent compared with the third quarter of 2015 to $322.0 million. U.S. revenues increased 5 percent
to $195.6 million, driven by
increased demand, partially offset by lower realized prices.
Revenues outside the U.S. decreased 4 percent to $126.4 million, driven by the unfavorable
impact of foreign exchange rates and lower realized prices,
partially offset by increased volume.
New Pharmaceutical Products
Trulicity
Third-quarter 2016 revenues of Trulicity were $243.6 million. U.S. revenues of Trulicity were
$188.7 million, driven by growth
in the GLP-1 market and increased share of market for Trulicity.
Revenues of Trulicity outside the U.S. were $54.9 million.
Cyramza
For the third quarter of 2016, Cyramza revenues were
$159.0 million, an increase of 43
percent compared with the third quarter of 2015. U.S. revenues were
$67.0 million, a decrease of 12
percent, due to competitive pressure primarily in the non-small
cell lung cancer indication. Revenues outside the U.S. were
$92.0 million, primarily due to
strong uptake for the gastric cancer indication in Japan.
Jardiance
The company's revenues for Jardiance during the third quarter of
2016 were $47.5 million. U.S.
revenues were $32.9 million, driven
by growth in the SGLT2 class and increased share of market for
Jardiance. Revenues outside the U.S. were $14.6 million. Jardiance is part of the company's
alliance with Boehringer Ingelheim, and Lilly reports as revenue a
portion of Jardiance's gross margin.
Taltz
For the third quarter of 2016, Taltz, a treatment for
moderate-to-severe plaque psoriasis, generated revenues of
$32.5 million. Taltz launched in
the U.S. in April 2016 and began
launching in Europe in
July 2016.
Basaglar
For the third quarter of 2016, Basaglar, a treatment to control
high blood sugar in adults and children with type 1 diabetes and
adults with type 2 diabetes, generated revenues of $19.4 million, driven by early uptake in
Japan and various European
countries. Basaglar is part of the company's alliance with
Boehringer Ingelheim.
Portrazza
For the third quarter of 2016, Portrazza, a first-line treatment
for metastatic squamous non-small cell lung cancer, generated
revenues of $5.3 million.
Animal Health
In the third quarter of 2016, animal health revenues totaled
$706.2 million, a decline of
9 percent compared with the third quarter of 2015. U.S. animal
health revenues decreased 14 percent to $338.6 million, primarily due to wholesaler
buying patterns for companion animal products and decreased
revenues for food animal products due to market access pressures.
Animal health revenues outside the U.S. decreased 5 percent to
$367.6 million, negatively
impacted by food animal products, primarily due to macroeconomic
conditions in Latin America.
2016 Financial Guidance
The company has revised certain elements of its 2016 financial
guidance. Full-year 2016 earnings per share are now expected to be
in the range of $2.66 to $2.76 on a
reported basis. On a non-GAAP basis, full-year 2016 earnings per
share are still expected to be in the range of $3.50 to $3.60.
|
2016
Expectations
|
|
Earnings per share
(reported)
|
$2.66 to
$2.76
|
|
Amortization of
intangible assets
|
.42
|
|
Asset impairment,
restructuring and other special charges, including Novartis Animal
Health integration costs and closure of an animal health
manufacturing facility in Ireland
|
.23
|
|
Venezuela
charge
|
.19
|
|
Earnings per share
(non-GAAP)
|
$3.50 to
$3.60
|
|
|
|
|
Numbers may not add
due to rounding.
|
|
|
The company now expects 2016 revenue of between $20.8 billion and $21.2 billion. Excluding the
impact of foreign exchange rates, the company expects revenue
growth from a number of established products including Trajenta,
Cialis, Forteo, Strattera, Erbitux and animal health products, as
well as higher revenues from new products including Cyramza,
Jardiance, Trulicity, Portrazza, Basaglar and Taltz. The company
expects this revenue growth to be partially offset by lower revenue
from Alimta as a result of increased competitive pressures.
Gross margin percentage is still expected to be approximately 73
percent on a reported basis, and 76 percent on a non-GAAP
basis.
Marketing, selling and administrative expenses are now expected
to be in the range of $6.2 billion to $6.4
billion. Research and development expenses are still
expected to be in the range of $4.9 billion
to $5.1 billion.
Other income (expense) is now expected to be in a range between
$150 million and $100 million of
expense on a reported basis. On a non-GAAP basis, other income
(expense) is now expected to be in a range between $50 and $100 million of income.
The 2016 tax rate is still expected to be approximately 21
percent.
Capital expenditures are now expected to be approximately
$1.0 billion.
The following table summarizes the company's 2016 financial
guidance:
|
2016
Guidance
|
|
Prior
|
|
Revised
|
Revenue
|
$20.6 to $21.1
billion
|
|
$20.8 to $21.2
billion
|
|
|
|
|
Gross Margin % of
Revenue (reported)
|
Approx.
73%
|
|
Unchanged
|
Gross Margin % of
Revenue (non-GAAP)
|
Approx.
76%
|
|
Unchanged
|
|
|
|
|
Marketing, Selling
& Administrative
|
$6.1 to $6.3
billion
|
|
$6.2 to $6.4
billion
|
|
|
|
|
Research &
Development
|
$4.9 to $5.1
billion
|
|
Unchanged
|
|
|
|
|
Other
Income/(Expense) (reported)
|
$(200 million) to
$(125 million)
|
|
$(150 million) to
$(100 million)
|
Other
Income/(Expense) (non-GAAP)
|
$0 to $75
million
|
|
$50 million to $100
million
|
|
|
|
|
Tax Rate
|
Approx.
21.0%
|
|
Unchanged
|
|
|
|
|
Earnings per share
(reported)
|
$2.68 to
$2.78
|
|
$2.66 to
$2.76
|
Earnings per share
(non-GAAP)
|
$3.50 to
$3.60
|
|
Unchanged
|
|
|
|
|
Capital
Expenditures
|
Approx. $1.1
billion
|
|
Approx. $1.0
billion
|
|
|
|
|
Non-GAAP adjustments
are consistent with the earnings per share table above.
|
|
|
|
|
|
|
|
|
|
Webcast of Conference Call
As previously announced, investors and the general public can
access a live webcast of the third-quarter 2016 financial results
conference call through a link on Lilly's website at
https://investor.lilly.com/events.cfm. The conference call will
begin at 9:00 a.m. Eastern Time (ET)
on Tuesday, October 25, 2016, and
will be available for replay via the website.
Lilly is a global healthcare leader that unites caring with
discovery to make life better for people around the world. We were
founded more than a century ago by a man committed to creating
high-quality medicines that meet real needs, and today we remain
true to that mission in all our work. Across the globe, Lilly
employees work to discover and bring life-changing medicines to
those who need them, improve the understanding and management of
disease, and give back to communities through philanthropy and
volunteerism. To learn more about Lilly, please visit us at
www.lilly.com and http://newsroom.lilly.com/social-channels.
F-LLY
This press release contains management's current intentions and
expectations for the future, all of which are forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934. The
words "estimate," "project," "intend," "expect," "believe,"
"target," "anticipate," and similar expressions are intended to
identify forward-looking statements. Actual results may differ
materially from these forward-looking statements due to various
factors. There are significant risks and uncertainties in
pharmaceutical research and development. There can be no guarantees
that pipeline products will succeed in clinical testing, will
receive the necessary clinical and manufacturing regulatory
approvals, or will prove to be commercially successful. The
company's results may also be affected by such factors as the
timing of anticipated regulatory approvals and launches of new
products; market uptake of recently launched products; competitive
developments affecting current products; the expiration of
intellectual property protection for certain of the company's
products; the company's ability to protect and enforce patents and
other intellectual property; the impact of governmental actions
regarding pricing, importation, and reimbursement for
pharmaceuticals, including U.S. health care reform; regulatory
compliance problems or government investigations; regulatory
actions regarding currently marketed products; unexpected safety or
efficacy concerns associated with the company's products; issues
with product supply stemming from manufacturing difficulties or
disruptions; regulatory changes or other developments; changes in
patent law or regulations related to data-package exclusivity;
litigation involving current or future products; the extent to
which third-party indemnification obligations relating to product
liability litigation and similar matters will be performed;
unauthorized disclosure of trade secrets or other confidential data
stored in the company's information systems and networks; changes
in tax law and regulations; changes in inflation, interest rates,
and foreign currency exchange rates; asset impairments and
restructuring charges; changes in accounting standards promulgated
by the Financial Accounting Standards Board and the U.S. Securities
and Exchange Commission (SEC); acquisitions and business
development transactions and related integration considerations;
and the impact of exchange rates and global macroeconomic
conditions, including the effect of the pending exit of the
United Kingdom from the European
Union. For additional information about the factors that could
cause actual results to differ materially from forward-looking
statements, please see the company's latest Form 10-K filed with
the SEC. You should not place undue reliance on forward-looking
statements, which speak only as of the date of this release. Except
as is required by law, the company expressly disclaims any
obligation to publicly release any revisions to forward-looking
statements to reflect events after the date of this release.
Alimta®
(pemetrexed disodium, Lilly)
|
Basaglar®
(insulin glargine injection, Lilly)
|
Cialis®
(tadalafil, Lilly)
|
Cymbalta®
(duloxetine hydrochloride, Lilly)
|
Cyramza®
(ramucirumab, Lilly)
|
Effient®
(prasugrel, Lilly)
|
Erbitux®
(cetuximab, Lilly)
|
Forteo®
(teriparatide of recombinant DNA origin injection,
Lilly)
|
Glyxambi®
(empagliflozin/linagliptin, Boehringer Ingelheim)
|
Humalog®
(insulin lispro injection of recombinant DNA origin,
Lilly)
|
Humulin®
(human insulin of recombinant DNA origin, Lilly)
|
Jardiance®
(empagliflozin, Boehringer Ingelheim)
|
Lartruvo™
(olaratumab, Lilly)
|
Portrazza®
(necitumumab, Lilly)
|
Synjardy®
(empagliflozin/metformin, Boehringer Ingelheim)
|
Taltz®
(ixekizumab, Lilly)
|
Trajenta®
(linagliptin, Boehringer Ingelheim)
|
Trulicity®
(dulaglutide, Lilly)
|
Zyprexa® (olanzapine,
Lilly)
|
Eli Lilly and Company
Employment Information
|
|
September 30,
2016
|
December 31,
2015
|
Worldwide
Employees
|
42,400
|
41,275
|
Eli Lilly and
Company
|
Operating
Results (Unaudited) – REPORTED
|
(Dollars in millions,
except per share data)
|
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
|
September
30,
|
|
|
2016
|
|
2015
|
% Chg.
|
|
|
2016
|
|
2015
|
% Chg.
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
5,191.7
|
|
$
|
4,959.7
|
|
5%
|
|
$
|
15,461.6
|
|
$
|
14,583.1
|
|
6%
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
1,400.9
|
|
|
1,236.9
|
|
13%
|
|
|
4,188.9
|
|
|
3,648.0
|
|
15%
|
Research and
development
|
|
1,236.4
|
|
|
1,143.4
|
|
8%
|
|
|
3,793.3
|
|
|
3,352.2
|
|
13%
|
Marketing, selling
and administrative
|
|
1,565.4
|
|
|
1,575.7
|
|
(1)%
|
|
|
4,661.9
|
|
|
4,734.6
|
|
(2)%
|
Acquired in-process
research
and development
|
|
—
|
|
|
—
|
|
NM
|
|
|
—
|
|
|
336.0
|
|
(100)%
|
Asset impairment,
restructuring and
other special charges
|
|
45.5
|
|
|
42.4
|
|
7%
|
|
|
234.9
|
|
|
222.8
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
943.5
|
|
|
961.3
|
|
(2)%
|
|
|
2,582.6
|
|
|
2,289.5
|
|
13%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
(expense)
|
|
(18.1)
|
|
|
(18.1)
|
|
|
|
|
(57.0)
|
|
|
(53.8)
|
|
|
Net other income
(expense)
|
|
45.3
|
|
|
104.6
|
|
|
|
|
(43.6)
|
|
|
109.7
|
|
|
Other income
(expense)
|
|
27.2
|
|
|
86.5
|
|
(69)%
|
|
|
(100.6)
|
|
|
55.9
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
970.7
|
|
|
1,047.8
|
|
(7)%
|
|
|
2,482.0
|
|
|
2,345.4
|
|
6%
|
Income
taxes
|
|
192.7
|
|
|
248.1
|
|
(22)%
|
|
|
516.2
|
|
|
415.4
|
|
24%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
778.0
|
|
$
|
799.7
|
|
(3)%
|
|
$
|
1,965.8
|
|
$
|
1,930.0
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share –
diluted
|
$
|
0.73
|
|
$
|
0.75
|
|
(3)%
|
|
$
|
1.85
|
|
$
|
1.81
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid per
share
|
$
|
0.51
|
|
$
|
0.50
|
|
2%
|
|
$
|
1.53
|
|
$
|
1.50
|
|
2%
|
Weighted-average
shares
outstanding (thousands) –
diluted
|
|
1,060,786
|
|
|
1,065,159
|
|
|
|
|
1,061,065
|
|
|
1,065,961
|
|
|
NM – not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eli Lilly and
Company
|
|
|
Reconciliation of
GAAP Reported to Selected Non-GAAP Adjusted Information
(Unaudited)(a)
|
|
|
(Dollars in millions,
except per share data)
|
|
|
|
|
|
|
Three Months
Ended
September 30,
2016
|
|
Three Months
Ended
September 30, 2015
|
|
|
|
GAAP
Reported
|
Adjustments(c)
|
Non-GAAP
Adjusted
|
|
GAAP
Reported
|
Adjustments(d)
|
Non-GAAP
Adjusted
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
5,191.7
|
|
$
|
—
|
|
$
|
5,191.7
|
|
$
|
4,959.7
|
|
$
|
—
|
|
$
|
4,959.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
1,400.9
|
|
|
(175.8)
|
|
|
1,225.1
|
|
|
1,236.9
|
|
|
(137.9)
|
|
|
1,099.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses(b)
|
|
2,801.8
|
|
|
(1.9)
|
|
|
2,799.9
|
|
|
2,719.1
|
|
|
(35.8)
|
|
|
2,683.3
|
|
Acquired
in-process
research and
development
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Asset impairment,
restructuring and other
special charges
|
|
45.5
|
|
|
(45.5)
|
|
|
—
|
|
|
42.4
|
|
|
(42.4)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
27.2
|
|
|
—
|
|
|
27.2
|
|
|
86.5
|
|
|
—
|
|
|
86.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
192.7
|
|
|
70.1
|
|
|
262.9
|
|
|
248.1
|
|
|
66.2
|
|
|
314.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
778.0
|
|
$
|
153.2
|
|
$
|
931.0
|
|
$
|
799.7
|
|
$
|
149.8
|
|
$
|
949.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share
– diluted
|
$
|
0.73
|
|
$
|
0.14
|
|
$
|
0.88
|
|
$
|
0.75
|
|
$
|
0.14
|
|
$
|
0.89
|
|
Numbers may not add
due to rounding.
|
|
(a)
|
The company uses
non-GAAP financial measures that differ from financial statements
reported in conformity with U.S. generally accepted accounting
principles (GAAP). The company's non-GAAP measures adjust reported
results to exclude amortization of intangibles and items that are
typically highly variable, difficult to predict, and/or of a size
that could have a substantial impact on the company's reported
operations for a period. The company believes that these non-GAAP
measures provide useful information to investors. Among other
things, they may help investors evaluate the company's ongoing
operations. They can assist in making meaningful period-over-period
comparisons and in identifying operating trends that would
otherwise be masked or distorted by the items subject to the
adjustments. Management uses these non-GAAP measures internally to
evaluate the performance of the business, including to allocate
resources and to evaluate results relative to incentive
compensation targets. Investors should consider these non-GAAP
measures in addition to, not as a substitute for or superior to,
measures of financial performance prepared in accordance with
GAAP.
|
|
|
(b)
|
Operating expenses
include research and development and marketing, selling and
administrative expenses.
|
|
|
(c)
|
Adjustments to
certain GAAP reported measures for the three months ended September
30, 2016, include the following:
|
(Dollars in millions,
except per share data)
|
Amortization(i)
|
Other
specified
items(ii)
|
Total
Adjustments
|
Revenue
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
Cost of
sales
|
(175.8)
|
|
—
|
|
(175.8)
|
|
|
|
|
|
Operating
expenses
|
(1.9)
|
|
—
|
|
(1.9)
|
|
Acquired in-process
research
and development
|
—
|
|
—
|
|
—
|
|
Asset
impairment,
restructuring and other
special charges
|
—
|
|
(45.5)
|
|
(45.5)
|
|
|
|
|
|
Other income
(expense)
|
—
|
|
—
|
|
—
|
|
|
|
|
|
Income
taxes
|
56.4
|
|
13.7
|
|
70.1
|
|
|
|
|
|
Net income
|
$
|
121.3
|
|
$
|
31.9
|
|
$
|
153.2
|
|
|
|
|
|
Earnings per share –
diluted
|
$
|
0.11
|
|
$
|
0.03
|
|
$
|
0.14
|
|
Numbers may not add
due to rounding.
|
|
|
i.
|
Exclude amortization
of intangibles primarily associated with costs of marketed products
acquired or licensed from third parties.
|
|
|
ii.
|
Exclude charges
associated with integration and severance costs for Novartis Animal
Health.
|
(d)
|
Adjustments to
certain GAAP reported measures for the three months ended September
30, 2015, include the following:
|
(Dollars in millions,
except per share data)
|
Amortization(i)
|
Inventory
step-up(ii)
|
Other
specified
items(iii)
|
Total
Adjustments
|
Revenue
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
|
Cost of
sales
|
(116.7)
|
|
(21.2)
|
|
—
|
|
(137.9)
|
|
|
|
|
|
|
Operating
expenses
|
(35.8)
|
|
—
|
|
—
|
|
(35.8)
|
|
Acquired in-process
research
and development
|
—
|
|
—
|
|
—
|
|
—
|
|
Asset
impairment,
restructuring and other
special charges
|
—
|
|
—
|
|
(42.4)
|
|
(42.4)
|
|
|
|
|
|
|
Other income
(expense)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
Income
taxes
|
51.0
|
|
6.0
|
|
9.3
|
|
66.2
|
|
|
|
|
|
|
Net income
|
$
|
101.6
|
|
$
|
15.1
|
|
$
|
33.1
|
|
$
|
149.8
|
|
|
|
|
|
|
Earnings per share –
diluted
|
$
|
0.10
|
|
$
|
0.01
|
|
$
|
0.03
|
|
$
|
0.14
|
|
Numbers may not add
due to rounding.
|
|
|
i.
|
Exclude amortization
of intangibles primarily associated with costs of marketed products
acquired or licensed from third parties.
|
|
|
ii.
|
Exclude inventory
step-up costs associated with the acquisition of Novartis Animal
Health.
|
|
|
iii.
|
Exclude costs
associated with restructuring to reduce the company's cost
structure, asset impairments, and integration costs associated with
the acquisition of Novartis Animal Health.
|
Eli Lilly and
Company
|
|
|
Reconciliation of
GAAP Reported to Selected Non-GAAP Adjusted Information
(Unaudited)(a)
|
|
|
(Dollars in millions,
except per share data)
|
|
|
|
|
|
|
Nine Months
Ended
September 30,
2016
|
|
Nine Months
Ended
September 30,
2015
|
|
|
|
GAAP
Reported
|
Adjustments(c)
|
Non-GAAP
Adjusted
|
|
GAAP
Reported
|
Adjustments(d)
|
Non-GAAP
Adjusted
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
$
|
15,461.6
|
|
$
|
—
|
|
$
|
15,461.6
|
|
$
|
14,583.1
|
|
$
|
—
|
|
$
|
14,583.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
4,188.9
|
|
|
(513.0)
|
|
|
3,675.9
|
|
|
3,648.0
|
|
|
(502.8)
|
|
|
3,145.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses(b)
|
|
8,455.2
|
|
|
(5.8)
|
|
|
8,449.4
|
|
|
8,086.8
|
|
|
(107.4)
|
|
|
7,979.4
|
|
Acquired
in-process
research and
development
|
|
—
|
|
|
—
|
|
|
—
|
|
|
336.0
|
|
|
(336.0)
|
|
|
—
|
|
Asset impairment,
restructuring and other
special charges
|
|
234.9
|
|
|
(234.9)
|
|
|
—
|
|
|
222.8
|
|
|
(222.8)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
(100.6)
|
|
|
203.9
|
|
|
103.3
|
|
|
55.9
|
|
|
152.7
|
|
|
208.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
516.2
|
|
|
201.2
|
|
|
717.4
|
|
|
415.4
|
|
|
423.5
|
|
|
839.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
1,965.8
|
|
|
756.5
|
|
$
|
2,722.2
|
|
$
|
1,930.0
|
|
|
898.1
|
|
$
|
2,828.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
–
diluted
|
$
|
1.85
|
|
|
0.71
|
|
$
|
2.57
|
|
$
|
1.81
|
|
|
0.84
|
|
$
|
2.65
|
|
Numbers may not add
due to rounding.
|
|
|
(a)
|
The company uses
non-GAAP financial measures that differ from financial statements
reported in conformity with U.S. generally accepted accounting
principles (GAAP). The company's non-GAAP measures adjust reported
results to exclude amortization of intangibles and items that are
typically highly variable, difficult to predict, and/or of a size
that could have a substantial impact on the company's reported
operations for a period. The company believes that these non-GAAP
measures provide useful information to investors. Among other
things, they may help investors evaluate the company's ongoing
operations. They can assist in making meaningful period-over-period
comparisons and in identifying operating trends that would
otherwise be masked or distorted by the items subject to the
adjustments. Management uses these non-GAAP measures internally to
evaluate the performance of the business, including to allocate
resources and to evaluate results relative to incentive
compensation targets. Investors should consider these non-GAAP
measures in addition to, not as a substitute for or superior to,
measures of financial performance prepared in accordance with
GAAP.
|
|
|
(b)
|
Operating expenses
include research and development and marketing, selling and
administrative expenses.
|
|
|
(c)
|
Adjustments to
certain GAAP reported measures for the nine months ended September
30, 2016, include the following:
|
(Dollars in millions,
except per share data)
|
Amortization(i)
|
Venezuela(ii)
|
Other
specified
items(iii)
|
Total
Adjustments
|
Revenue
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
|
Cost of
sales
|
(513.0)
|
|
—
|
|
—
|
|
(513.0)
|
|
|
|
|
|
|
Operating
expenses
|
(5.8)
|
|
—
|
|
—
|
|
(5.8)
|
|
Acquired in-process
research
and development
|
—
|
|
—
|
|
—
|
|
—
|
|
Asset impairment,
restructuring and other
special charges
|
—
|
|
—
|
|
(234.9)
|
|
(234.9)
|
|
|
|
|
|
|
Other income
(expense)
|
—
|
|
203.9
|
|
—
|
|
203.9
|
|
|
|
|
|
|
Income
taxes
|
163.2
|
|
—
|
|
38.0
|
|
201.2
|
|
|
|
|
|
|
Net income
|
$
|
355.6
|
|
$
|
203.9
|
|
$
|
196.9
|
|
$
|
756.5
|
|
|
|
|
|
|
Earnings per share –
diluted
|
$
|
0.34
|
|
$
|
0.19
|
|
$
|
0.19
|
|
$
|
0.71
|
|
Numbers may not add
due to rounding.
|
|
|
i.
|
Exclude amortization
of intangibles primarily associated with costs of marketed products
acquired or licensed from third parties.
|
|
|
ii.
|
Exclude charge
related to the impact of the Venezuelan financial crisis, including
the significant deterioration of the bolívar.
|
|
|
iii.
|
Exclude charges
associated with asset impairments related to the closure of an
animal health manufacturing facility in Ireland and integration and
severance costs for Novartis Animal Health.
|
(d)
|
Adjustments to
certain GAAP reported measures for the nine months ended September
30, 2015, include the following:
|
(Dollars in millions,
except per share data)
|
Amortization(i)
|
IPR&D(ii)
|
Inventory
step-up(iii)
|
Repurchase
of debt(iv)
|
Other
specified
items(v)
|
Total
Adjustments
|
Revenue
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(349.8)
|
|
—
|
|
(153.0)
|
|
—
|
|
—
|
|
(502.8)
|
|
|
|
|
|
|
|
|
Operating
expenses
|
(107.4)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(107.4)
|
|
Acquired in-process
research
and development
|
—
|
|
(336.0)
|
|
—
|
|
—
|
|
—
|
|
(336.0)
|
|
Asset
impairment,
restructuring and
other special charges
|
—
|
|
—
|
|
—
|
|
—
|
|
(222.8)
|
|
(222.8)
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
—
|
|
—
|
|
—
|
|
152.7
|
|
—
|
|
152.7
|
|
|
|
|
|
|
|
|
Income
taxes
|
150.8
|
|
117.6
|
|
43.6
|
|
53.5
|
|
58.0
|
|
423.5
|
|
|
|
|
|
|
|
|
Net income
|
$
|
306.3
|
|
$
|
218.4
|
|
$
|
109.4
|
|
$
|
99.3
|
|
$
|
164.7
|
|
$
|
898.1
|
|
|
|
|
|
|
|
|
Earnings per share –
diluted
|
$
|
0.29
|
|
$
|
0.20
|
|
$
|
0.10
|
|
$
|
0.09
|
|
$
|
0.15
|
|
$
|
0.84
|
|
Numbers may not add
due to rounding.
|
|
|
i.
|
Exclude amortization
of intangibles primarily associated with costs of marketed products
acquired or licensed from third parties.
|
|
|
ii.
|
Exclude costs
associated with upfront payments for acquired in-process research
and development projects acquired in a transaction other than a
business combination. These costs included a $200.0 million payment
to Pfizer following the FDA decision allowing the resumption of the
Phase 3 clinical program for tanezumab, a $56.0 million charge
associated with a collaboration with Innovent to develop potential
oncology therapies, a $50.0 million payment to Hanmi related to an
exclusive license and collaboration agreement for Hanmi's oral
Bruton's tyrosine kinase inhibitor for the treatment of autoimmune
and other diseases, and a $30.0 million payment to BioNTech AG
related to a research collaboration to discover novel cancer
immunotherapies.
|
|
|
iii.
|
Exclude inventory
step-up costs associated with the acquisition of Novartis Animal
Health.
|
|
|
iv.
|
Exclude a net charge
associated with the repurchase of $1.65 billion of debt.
|
|
|
v.
|
Exclude costs
associated with restructuring to reduce the company's cost
structure, asset impairments, and integration costs associated with
the acquisition of Novartis Animal Health.
|
Refer to:
Lauren Zierke;
lauren_zierke@lilly.com; (317) 277-6524 (Media)
Philip Johnson;
johnson_philip_l@lilly.com; (317) 655-6874 (Investors)
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SOURCE Eli Lilly and Company