INDIANAPOLIS, January 31,2018 /PRNewswire/ --
- Fourth-quarter 2017 revenue increased 7 percent, driven
primarily by volume growth from new pharmaceutical products, while
operating expenses remained flat.
- Fourth-quarter 2017 earnings per share (EPS) reflected a
loss of $1.58 on a reported basis,
primarily due to an estimated charge of $1.9
billion associated with recently enacted U.S. tax reform
legislation and charges associated with reducing the
company's cost structure. Fourth-quarter 2017 EPS were
$1.14 on a non-GAAP basis.
- Full-year 2017 revenue increased 8 percent to $22.9 billion. Full-year 2017 EPS totaled a loss
of $0.19 on a reported basis.
Full-year 2017 EPS totaled $4.28 on a
non-GAAP basis.
- Pharmaceutical revenue in the fourth quarter of 2017 grew 9
percent. New product revenue, composed of Trulicity, Cyramza,
Taltz, Basaglar, Jardiance, Lartruvo, Olumiant, Verzenio and
Portrazza, drove 12 percent volume growth and represented 23
percent of total revenue.
- Pipeline milestones included the approval of Taltz in the
U.S. and European Union for active psoriatic arthritis and
early-stage pipeline progress, including the initiation of a
clinical trial for Lilly's automated insulin delivery
system.
- The company has increased 2018 EPS to be in the range of
$4.39 to $4.49 on a reported basis and $4.81 to $4.91 on a
non-GAAP basis. This change reflects the estimated benefit from
recently enacted U.S. tax reform legislation.
Eli Lilly and Company (NYSE: LLY) today announced financial
results for the fourth quarter and full year of 2017.
$ in millions, except
per share data Fourth Quarter % Full Year %
2017 2016 Change 2017 2016 Change
Revenue $6,160.7 $5,760.5 7% $22,871.3 $21,222.1 8%
Net Income
(Loss) - Reported (1,656.9) 771.8 NM (204.1) 2,737.6 NM
Earnings (Loss)
Per Share - Reported (1.58) 0.73 NM (0.19) 2.58 NM
Net Income - Non-GAAP 1,206.7 1,013.4 19% 4,530.4 3,735.6 21%
EPS - Non-GAAP 1.14 0.95 20% 4.28 3.52 22%
Certain financial information for 2017 and 2016 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 2018 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 new products, including Trulicity, Taltz and Jardiance,
continued to drive solid revenue growth in the fourth quarter of
2017, while we maintained flat operating expenses," said
David A. Ricks, Lilly's chairman and
CEO. "Momentum continues for our innovation-based strategy. We
recently received approval for Taltz in the U.S. and European Union
for active psoriatic arthritis, are encouraged by early use of
Verzenio for breast cancer and expect further pipeline progress in
2018 in areas of significant patient need, including cancer,
immunologic disorders, diabetes, neurodegeneration and pain."
Key Events Over the Last Three Months
Regulatory
- Regarding Taltz® (ixekizumab), for the treatment of
adults with active psoriatic arthritis:
- The U.S. Food and Drug Administration (FDA) issued its approval
and the company launched in the U.S.
- The European Commission issued its approval.
Clinical
- The company announced top-line results from its Phase 3 study
of Cyramza® (ramucirumab) in combination with cisplatin
and capecitabine or 5-FU (5-fluorouracil) in the first-line
treatment of patients with HER2-negative metastatic gastric or
gastroesophageal junction adenocarcinoma. The trial met its primary
endpoint of progression-free survival but did not improve overall
survival, a secondary endpoint. The company does not intend to seek
regulatory approval based on the results of this study.
- The company initiated a clinical trial to evaluate the
functionality and safety of its automated insulin delivery system
in Type 1 diabetes, which is a hybrid closed-loop platform that
uses connected devices -- an insulin pump with a dedicated
controller, dosing algorithm and continuous glucose monitor -- to
automate insulin dosing. This system is part of the Connected
Diabetes Ecosystem, which is being designed to make diabetes
management easier by enabling people to use insulin more
effectively.
Fourth-Quarter Reported Results
In the fourth quarter of 2017, worldwide revenue was $6.161 billion, an increase of 7 percent compared
with the fourth quarter of 2016. The revenue increase was driven by
a 4 percent increase due to volume, a 2 percent increase due to
higher realized prices, and a 1 percent increase due to the
favorable impact of foreign exchange rates.
Revenue in the U.S. increased 6 percent, to $3.423 billion, due to increased volume for new
pharmaceutical products, including Trulicity®,
Basaglar®, Taltz, Jardiance®,
Lartruvo™ and Verzenio™, as well as higher realized prices for
several pharmaceutical products, primarily Forteo® and
Humulin®. The increase in revenue was partially offset
by decreased volume due to loss of exclusivity for
Strattera® and Effient®, as well as decreased
demand for Cialis® and food animal products, and lower
realized prices for Humalog®. Realized prices reflect
increased revenue related to changes in estimates for rebates and
discounts of a similar magnitude in the fourth quarter of both 2017
and 2016.
Revenue outside the U.S. increased 8 percent, to $2.738 billion, largely due to increased volume
for several new pharmaceutical products, including Trulicity,
Taltz, Cyramza, Jardiance and Olumiant® and, to a lesser
extent, the favorable impact of foreign exchange rates.
Gross margin increased 6 percent, to $4.536 billion, in the fourth quarter of 2017
compared with the fourth quarter of 2016. Gross margin as a percent
of revenue was 73.6 percent, a decrease of 1.0 percentage point
compared with the fourth quarter of 2016. The decrease in gross
margin percent was primarily due to the effect of foreign exchange
rates on international inventories sold and product mix, partially
offset by manufacturing efficiencies and higher realized
prices.
Operating expenses in the fourth quarter of 2017, defined as the
sum of research and development and marketing, selling and
administrative expenses, remained flat at $3.254 billion. Research and development expenses
increased 2 percent, to $1.473
billion, or 23.9 percent of revenue. Marketing, selling and
administrative expenses decreased 1 percent, to $1.780 billion, due to decreased expenses related
to late life-cycle products, partially offset by increased expenses
related to new pharmaceutical products. Operating expenses were
52.8 percent of revenue in the fourth quarter of 2017, a reduction
of 3.4 percentage points compared with the fourth quarter of
2016.
In the fourth quarter of 2017, the company recognized an
acquired in-process research and development charge of $50.0 million associated with a strategic
collaboration with CureVac. In the fourth quarter of 2016, the
company recognized an acquired in-process research and development
charge of $30.0 million associated
with an agreement with AstraZeneca to co-develop MEDI1814, a
potential disease-modifying treatment for Alzheimer's disease.
In the fourth quarter of 2017, the company recognized asset
impairment, restructuring and other special charges of $1.003 billion. The charges are primarily
associated with efforts to reduce the company's cost structure,
including the U.S. voluntary early retirement program. In the
fourth quarter of 2016, the company recognized asset impairment,
restructuring and other special charges of $147.6 million, primarily associated with
global severance costs and integration costs related to the
acquisition of Novartis Animal Health.
Operating income in the fourth quarter of 2017 was $229.0 million, a decrease of $647.2 million compared with the fourth quarter
of 2016, primarily driven by higher asset impairment, restructuring
and other special charges, partially offset by higher gross
margin.
Other income (expense) was income of $55.1 million in the fourth quarter of 2017,
compared with income of $15.8 million
in the fourth quarter of 2016. The increase in other income was
driven primarily by higher net gains on sales of investments in the
fourth quarter of 2017 as compared with 2016.
During the fourth quarter of 2017, the company recorded income
tax expense of $1.941 billion, which
included an estimated tax charge of $1.914
billion, despite earning $284.1
million of income before income taxes. The estimated tax
charge is based on recently enacted U.S. tax reform legislation,
including a one-time repatriation transition tax, also known as the
"toll tax," of approximately $3.6
billion. The estimated tax charge is subject to change based
upon additional analysis and subsequent regulations,
interpretations and guidance. As a result of new rules related to
repatriation, Lilly may utilize more than $9
billion in cash held across the company's global
affiliates.
In the fourth quarter of 2017, net income (loss) and earnings
(loss) per share were $(1.657) billion and $(1.58), respectively, compared with $771.8 million and $0.73, respectively, in the fourth quarter of
2016. The decreases in net income (loss) and earnings (loss) per
share were primarily driven by the impact of recently enacted U.S.
tax reform legislation, as well as higher asset impairment,
restructuring and other special charges.
Fourth-Quarter Non-GAAP Measures
On a non-GAAP basis, fourth-quarter 2017 gross margin increased 6
percent, to $4.710 billion. Gross
margin as a percent of revenue was 76.5 percent, a decrease of 0.9
percentage points compared with the fourth quarter of 2016. The
decrease in gross margin percent was primarily due to the effect of
foreign exchange rates on international inventories sold and
product mix, partially offset by manufacturing efficiencies and
higher realized prices.
Operating expenses were 52.8 percent of revenue in the fourth
quarter of 2017, a reduction of 3.4 percentage points compared with
the fourth quarter of 2016.
Operating income increased $239.4
million, or 20 percent, to $1.458
billion in the fourth quarter of 2017, due to higher gross
margin.
The effective tax rate was 20.2 percent in the fourth quarter of
2017, compared with 17.9 percent in the fourth quarter of 2016. The
higher effective tax rate for the fourth quarter of 2017 was
primarily due to a lower net discrete tax benefit compared with the
fourth quarter of 2016.
In the fourth quarter of 2017, net income increased 19 percent,
to $1.207 billion, and earnings per
share increased 20 percent, to $1.14,
compared with $1.013 billion and
$0.95, respectively, in the fourth
quarter of 2016. The increases in net income and earnings per share
were primarily driven by higher operating income.
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.
Fourth Quarter
2017 2016 % Change
Earnings (loss) per share (reported) $ (1.58) $ 0.73 NM
U.S. tax reform legislation 1.81 -
Asset impairment, restructuring and other special charges .75 .10
Amortization of intangible assets .11 .11
Acquired in-process research and development .03 .02
Inventory step-up costs associated with the acquisition
of Boehringer Ingelheim Vetmedica's U.S. feline, canine
and rabies vaccine portfolio .01 -
Earnings per share (non-GAAP) $ 1.14 $ 0.95 20%
Numbers may not add due to rounding.
Full-Year Reported Results
For the full year 2017, worldwide revenue increased 8 percent
compared with 2016 to $22.871
billion. The revenue increase was driven by a 6 percent
increase due to volume and a 2 percent increase due to higher
realized prices.
Revenue in the U.S. increased 11 percent to $12.785 billion, driven by increased volume for
new pharmaceutical products, including Trulicity, Taltz, Basaglar,
Lartruvo and Jardiance, and higher realized prices for several
pharmaceutical products, primarily Forteo and Cialis, as well as
increased volume for companion animal products from the acquisition
of Boehringer Ingelheim Vetmedica's U.S. feline, canine and rabies
vaccine portfolio. The increase in revenue was partially offset by
decreased volume due to loss of exclusivity for Strattera and
Effient, as well as decreased demand for Cialis and food animal
products. Cymbalta revenue declined $154
million, primarily driven by an increase in revenue due to a
reduction to the return reserve in 2016.
Revenue outside the U.S. increased 4 percent to $10.086 billion, due to increased volume for
several new pharmaceutical products, primarily driven by Trulicity
and Cyramza. The increase in revenue was partially offset by
competitive pressure and the loss of exclusivity for Alimta in
several countries and lower volume from the loss of exclusivity for
Zyprexa in Japan.
Gross margin increased 8 percent to $16.801 billion in 2017. Gross margin as a
percent of revenue was 73.5 percent, an increase of 0.1 percentage
points compared with 2016. The increase in gross margin percent was
primarily due to manufacturing efficiencies and higher realized
prices, offset by the impact of foreign exchange rates on
international inventories sold and product mix.
Total operating expenses increased 1 percent to $11.870 billion in 2017. Research and development
expenses increased 1 percent to $5.282
billion, or 23.1 percent of revenue. Marketing, selling and
administrative expenses increased 2 percent to $6.588 billion, driven by increased marketing
expenses for new products that were partially offset by decreased
expenses related to late life-cycle products. Operating expenses
were 51.9 percent of revenue in 2017, a reduction of 3.2 percentage
points compared with 2016.
In 2017, the company recognized acquired in-process research and
development charges of $1.113 billion
resulting from business development activity, primarily related to
the acquisition of CoLucid Pharmaceuticals. In 2016, the company
recognized acquired in-process research and development charges of
$30.0 million associated with the
agreement with AstraZeneca to co-develop MEDI1814, a potential
disease-modifying treatment for Alzheimer's disease.
In 2017, the company recognized asset impairment, restructuring
and other special charges of $1.674
billion. The charges are primarily associated with efforts
to reduce the company's cost structure, including the U.S.
voluntary early retirement program. In 2016, the company recognized
asset impairment, restructuring, and other special charges of
$382.5 million associated with
integration and severance costs related to the acquisition of
Novartis Animal Health, other global severance costs, and asset
impairments related to the closure of an animal health
manufacturing facility in Ireland.
Operating income in 2017 decreased 38 percent compared with 2016
to $2.145 billion, as higher
operating expenses driven by asset impairment, restructuring, and
other special charges, as well as acquired in-process research and
development, were partially offset by higher gross margin.
Other income (expense) was income of $52.4 million in 2017. Other income (expense) in
2016 was expense of $84.8 million
driven by a $203.9 million charge
related to the impact of the Venezuelan financial crisis, including
the significant deterioration of the bolívar, partially offset by
higher net gains on investments.
During 2017, the company recorded income tax expense of
$2.402 billion, which included an
estimated tax charge of $1.914
billion, despite earning $2.197
billion of income before income taxes. The estimated
tax charge is based on recently enacted U.S. tax reform
legislation, including the toll tax of approximately $3.6 billion. The estimated tax charge is subject
to change based upon additional analysis and subsequent
regulations, interpretations and guidance. As a result of new rules
related to repatriation, Lilly may utilize more than $9 billion in cash held across the company's
global affiliates. The company's effective tax rate in 2016 was
18.9 percent.
For the full year 2017, net income (loss) and earnings (loss)
per share were $(204.1) million and
$(0.19), respectively, compared with
$2.738 billion, and $2.58, respectively, in 2016. The decreases in
net income (loss) and earnings (loss) per share were driven by the
impact of recently enacted U.S. tax reform legislation, as well as
higher asset impairment, restructuring and other special charges
and acquired in-process research and development charges, partially
offset by higher gross margin.
Full-Year Non-GAAP Measures
On a non-GAAP basis for the full year 2017, operating income
increased $1.094 billion, or 24
percent, to $5.649 billion driven by
higher gross margin. The effective tax rate was 20.5 percent in
2017, compared with 20.1 percent in 2016. Net income increased
21 percent and earnings per share increased 22 percent to
$4.530 billion, and $4.28, respectively.
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.
Year-to-Date
2017 2016 % Change
Earnings (loss) per
share (reported) $ (0.19) $ 2.58 NM
U.S. tax reform
legislation 1.81 -
Asset impairment,
restructuring and other
special charges 1.23 .29
Acquired in-process
research and
development .97 .02
Amortization of
intangible assets .44 .44
Inventory step-up costs
associated with the
acquisition of
Boehringer Ingelheim
Vetmedica's U.S.
feline, canine and
rabies vaccine
portfolio .03 -
Venezuela charge - .19
Earnings per share
(non-GAAP) $ 4.28 $ 3.52 22%
Numbers may not add due
to rounding.
Selected Revenue Highlights
(Dollars in millions) Fourth Quarter Year-to-Date
Established Pharma % %
Products 2017 2016 Change 2017 2016 Change
Humalog $ 782.2 $ 819.8 (5)% $ 2,865.2 $ 2,768.8 3%
Cialis 597.4 676.3 (12)% 2,323.1 2,471.6 (6)%
Alimta 525.2 541.6 (3)% 2,062.5 2,283.3 (10)%
Forteo 513.2 422.5 21% 1,749.0 1,500.0 17%
Humulin 362.6 355.3 2% 1,335.4 1,365.9 (2)%
Cymbalta 192.8 181.8 6% 757.2 930.5 (19)%
Erbitux(R) 168.9 153.7 10% 645.9 687.0 (6)%
Strattera 98.3 243.2 (60)% 618.2 854.7 (28)%
Zyprexa(R) 152.2 153.0 (1)% 581.2 725.3 (20)%
Effient 62.3 140.9 (56)% 388.9 535.2 (27)%
New Pharma
Products
Trulicity 649.0 337.0 93% 2,029.8 925.5 119%
Cyramza 204.8 177.1 16% 758.3 614.1 23%
Taltz 172.5 61.3 182% 559.2 113.1 394%
Jardiance(a) 143.2 76.1 88% 447.5 201.9 122%
Basaglar 153.8 39.5 289% 432.1 86.1 402%
Lartruvo 59.0 11.9 396% 203.0 11.9 1,607%
Olumiant 23.0 - NM 45.9 - NM
Verzenio 21.0 - NM 21.0 - NM
Portrazza(R) 2.1 3.8 (44)% 10.3 14.8 (30)%
Subtotal 1,428.4 706.7 102% 4,507.0 1,967.4 129%
Animal Health 790.9 837.6 (6)% 3,085.6 3,158.2 (2)%
Total Revenue 6,160.7 5,760.5 7% 22,871.3 21,222.1 8%
(a) Jardiance includes Glyxambi(R) and Synjardy(R)
NM - not meaningful
Numbers may not add due to rounding
Selected Established Pharma
Products
Humalog
For the fourth quarter of 2017, worldwide Humalog revenue decreased
5 percent compared with the fourth quarter of 2016, to $782.2 million. Revenue in the U.S. decreased 12
percent, to $463.4 million, driven by
lower realized prices and, to a lesser extent, decreased volume
associated with buying patterns. Realized prices reflect increased
revenue related to changes in estimates for rebates and discounts
of a similar magnitude in the fourth quarter of both 2017 and 2016.
Changes in segment and payer mix contributed to the decline in
realized prices. Revenue outside the U.S. increased 8 percent,
to $318.8 million, driven by
increased volume, the favorable impact of foreign exchange rates
and, to a lesser extent, higher realized prices.
For the full year 2017, worldwide Humalog revenue increased 3
percent to $2.865 billion. U.S.
Humalog revenue for 2017 was $1.718
billion, a 2 percent increase, driven primarily by higher
realized prices due to changes in estimates for rebates and
discounts, which decreased revenue in 2016 and increased revenue in
2017. Humalog revenue outside the U.S. was $1.147 billion, a 6 percent increase, driven
by increased volume and, to a lesser extent, higher realized
prices, partially offset by the unfavorable impact of foreign
exchange rates.
Cialis
For the fourth quarter of 2017, worldwide Cialis revenue decreased
12 percent to $597.4 million. U.S.
Cialis revenue was $361.4 million in
the fourth quarter, a 13 percent decrease compared with the fourth
quarter of 2016, driven by decreased demand. Cialis revenue outside
the U.S. decreased 10 percent to $236.0
million, driven by decreased volume, partially offset by the
favorable impact of foreign exchange rates.
For the full year 2017, worldwide Cialis revenue decreased 6
percent to $2.323 billion. U.S.
Cialis revenue for 2017 was $1.359
billion, an 8 percent decrease, driven by decreased demand,
partially offset by higher realized prices. Cialis revenue outside
the U.S. was $964.5 million, a 4
percent decline, driven by decreased volume, partially offset by
higher realized prices.
Alimta
For the fourth quarter of 2017, Alimta generated worldwide revenue
of $525.2 million, which decreased 3
percent compared with the fourth quarter of 2016. U.S. Alimta
revenue increased 1 percent, to $272.4 million, driven by increased volume,
partially offset by lower realized prices. Alimta revenue outside
the U.S. decreased 7 percent, to $252.8
million, driven by competitive pressure and loss of
exclusivity in several countries.
For the full year 2017, worldwide Alimta revenue decreased 10
percent to $2.063 billion. U.S.
Alimta revenue for 2017 was $1.034
billion, a 6 percent decline, driven by decreased demand due
to competitive pressure. Alimta revenue outside the U.S. was
$1.028 billion, a 13 percent decline,
driven by competitive pressure and the loss of exclusivity in
several countries.
Forteo
For the fourth quarter of 2017, worldwide revenue for Forteo was
$513.2 million, a 21 percent increase
compared with the fourth quarter of 2016. U.S. revenue increased 32
percent, to $303.7 million, driven by
higher realized prices and, to a lesser extent, increased volume,
primarily due to wholesaler buying patterns. Revenue outside the
U.S. increased 8 percent, to $209.5 million, driven by increased volume
and, to a lesser extent, higher realized prices.
For the full year 2017, worldwide Forteo revenue increased 17
percent to $1.749 billion. U.S.
Forteo revenue for 2017 was $965.2
million, a 25 percent increase driven by higher realized
prices and increased volume, primarily due to wholesaler buying
patterns. Forteo revenue outside the U.S. was $783.8 million, a 7 percent increase driven by
increased volume, partially offset by the unfavorable impact of
foreign exchange rates and lower realized prices.
Humulin
For the fourth quarter of 2017, worldwide Humulin revenue increased
2 percent compared with the fourth quarter of 2016, to $362.6 million. U.S. revenue increased 13
percent, to $249.7 million, driven by
higher realized prices due to changes in estimates for rebates and
discounts and shifts in segment and business mix, partially offset
by decreased volume. Revenue outside the U.S. decreased
15 percent, to $112.8 million,
driven by decreased volume, primarily due to buying patterns in
China and, to a lesser extent,
lower realized prices, partially offset by the favorable impact of
foreign exchange rates.
For the full year 2017, worldwide Humulin revenue decreased 2
percent to $1.335 billion. U.S.
revenue for 2017 was $884.6 million,
a 3 percent increase, driven by higher realized prices. Revenue
outside the U.S. was $450.7 million,
an 11 percent decline, driven primarily by decreased volume and
lower realized prices.
Selected New Pharma Products
Trulicity
Fourth-quarter 2017 worldwide Trulicity revenue was $649.0 million, an increase of 93 percent
compared with the fourth quarter of 2016. U.S. revenue increased 94
percent, to $519.8 million, driven by
increased share of market for Trulicity and growth in the GLP-1
class. Revenue outside the U.S. was $129.2
million, an increase of 87 percent.
For the full year 2017, worldwide Trulicity revenue was
$2.030 billion, an increase of 119
percent compared with 2016. U.S. revenue increased 118 percent, to
$1.610 billion, driven by increased
share of market for Trulicity and growth in the GLP-1 class.
Revenue outside the U.S. increased 123 percent, to $419.9 million.
Cyramza
For the fourth quarter of 2017, worldwide Cyramza revenue was
$204.8 million, an increase of
16 percent compared with the fourth quarter of 2016. U.S. revenue
was $74.4 million, an increase
of 17 percent, driven by increased volume. Revenue outside the U.S.
was $130.4 million, an increase
of 15 percent, primarily due to strong volume growth in
Japan, partially offset by lower
realized prices and, to a lesser extent, the unfavorable impact of
foreign exchange rates.
For the full year 2017, worldwide Cyramza revenue was
$758.3 million, an increase of 23
percent compared with 2016. U.S. revenue increased 3 percent, to
$278.8 million, driven by increased
volume. Revenue outside the U.S. increased 39 percent, to
$479.6 million, primarily due to
strong volume growth in Japan,
partially offset by lower realized prices and, to a lesser extent,
the unfavorable impact of foreign exchange rates.
Taltz
For the fourth quarter of 2017, Taltz generated worldwide revenue
of $172.5 million. U.S. revenue
was $142.5 million, an increase
of $11.1 million compared with the
third quarter of 2017.
For the full year 2017, Taltz generated worldwide revenue of
$559.2 million. U.S. revenue was
$486.0 million.
Jardiance
The company's worldwide Jardiance revenue during the fourth quarter
of 2017 was $143.2 million, an
increase of 88 percent compared with the fourth quarter of 2016.
U.S. revenue increased 65 percent, to $92.1
million, driven by increased share of market for Jardiance
and growth in the SGLT2 class. Revenue outside the U.S. was
$51.1 million, an increase of 151
percent, primarily driven by increased volume in several countries
and, to a lesser extent, the favorable impact of foreign exchange
rates. Jardiance is part of the company's alliance with Boehringer
Ingelheim, and Lilly reports as revenue a portion of Jardiance's
gross margin.
For the full year 2017, worldwide Jardiance revenue was
$447.5 million, an increase of 122
percent compared with 2016. U.S. revenue increased 101 percent, to
$290.4 million, driven by increased
share of market for Jardiance and growth in the SGLT2 class.
Revenue outside the U.S. increased 173 percent, to $157.0 million, primarily driven by increased
volume in several countries.
Basaglar
For the fourth quarter of 2017, Basaglar generated worldwide
revenue of $153.8 million. U.S.
revenue was $114.4 million, which was
essentially flat compared with the third quarter of 2017, as
changes in estimates for rebates and discounts increased revenue in
the third quarter of 2017 and decreased revenue in the fourth
quarter of 2017. Basaglar is part of the company's alliance with
Boehringer Ingelheim, and Lilly reports total sales as revenue,
with payments made to Boehringer Ingelheim for its portion of the
gross margin reported as cost of sales.
For the full year of 2017, Basaglar generated worldwide revenue
of $432.1 million. U.S. revenue was
$311.1 million.
Lartruvo
For the fourth quarter of 2017, Lartruvo, a treatment in
combination with doxorubicin for a subset of adult patients with
advanced soft tissue sarcoma, generated worldwide revenue of
$59.0 million. U.S. revenue was
$41.5 million, which was essentially
flat compared with the third quarter of 2017.
For the full year of 2017, Lartruvo generated worldwide revenue
of $203.0 million. U.S. revenue was
$161.7 million.
Olumiant
For the fourth quarter of 2017, Olumiant, a treatment for
moderate-to-severe rheumatoid arthritis, generated worldwide
revenue of $23.0 million, an increase
of $6.8 million compared with the
third quarter of 2017, reflecting strong launch uptake in
Germany.
For the full year of 2017, Olumiant generated worldwide revenue
of $45.9 million, reflecting strong
launch uptake in Germany.
Verzenio
For the fourth quarter and full year of 2017, Verzenio, a treatment
for women with HR+, HER2- advanced breast cancer, generated
worldwide revenue of $21.0 million.
Verzenio was launched in the U.S. in the fourth quarter of
2017.
Animal Health
In the fourth quarter of 2017, worldwide animal health revenue
totaled $790.9 million, a decrease of
6 percent compared with the fourth quarter of 2016. Worldwide
food animal revenue decreased 8 percent, to $547.4 million, primarily driven by market access
and competitive pressure in the U.S. for Posilac®
and Optaflexx®, respectively. Worldwide companion animal
revenue increased 1 percent, to $243.4
million, driven by the inclusion of $36.5 million in revenue from the acquisition of
Boehringer Ingelheim Vetmedica's U.S. feline, canine and rabies
vaccine portfolio, largely offset by a reduction to U.S.
distributor inventory levels as well as competitive pressure.
For the full year of 2017, worldwide animal health revenue
totaled $3.086 billion, a decline of
2 percent compared with the full year of 2016. Worldwide food
animal revenue decreased 8 percent, to $2.017 billion, primarily driven by market access
and competitive pressure in the U.S. for Posilac and
Optaflexx, respectively. Worldwide companion animal revenue
increased 10 percent, to $1.069
billion, driven by the inclusion of $216.7 million in revenue from the acquisition of
Boehringer Ingelheim Vetmedica's U.S. feline, canine and rabies
vaccine portfolio, partially offset by competitive pressure.
2018 Financial Guidance
The company has revised certain elements of its 2018 financial
guidance on a reported and non-GAAP basis. Earnings per share for
2018 are being increased to be in the range of $4.39 to $4.49 on a
reported basis and $4.81 to
$4.91 on a non-GAAP basis, to reflect
the estimated impact of recently enacted U.S. tax reform
legislation.
2018 % Change from
Expectations 2017
Earnings per share (reported) $4.39 to $4.49 NM
Amortization of intangible assets .42
Earnings per share (non-GAAP) $4.81 to $4.91 12% to 15%
Numbers may not add due to rounding
The company still anticipates 2018 revenue between $23.0 billion and $23.5
billion. Revenue growth is expected to be driven by new
products including Trulicity, Taltz, Basaglar, Jardiance, Verzenio,
Cyramza, Olumiant and Lartruvo.
The 2018 tax rate is now expected to be approximately 18.0
percent on a reported and non-GAAP basis to reflect the estimated
impact of recently enacted U.S. tax reform legislation. The 2018
tax rate benefits from a lower corporate income tax rate, partially
offset by the changes to certain business exclusions, deductions,
credits and international tax provisions and is subject to change
based upon changes in our interpretations of the tax laws, along
with subsequent regulations, interpretations and guidance.
The following table summarizes the company's 2018 financial
guidance:
2018 Guidance
Prior Revised
Revenue $23.0 to $23.5 billion Unchanged
Gross Margin % of Revenue (reported) Approx. 73.0% Unchanged
Gross Margin % of Revenue (non-GAAP) Approx. 75.0% Unchanged
Marketing, Selling & Administrative $6.1 to $6.4 billion Unchanged
Research & Development $5.0 to $5.2 billion Unchanged
Other Income/(Expense) $75 to $175 million Unchanged
Tax Rate (reported) Approx. 20.5% Approx. 18.0%
Tax Rate (non-GAAP) Approx. 21.5% Approx. 18.0%
Earnings per Share (reported) $4.24 to $4.34 $4.39 to $4.49
Earnings per Share (non-GAAP) $4.60 to $4.70 $4.81 to $4.91
Capital Expenditures Approx. $1.2 billion Unchanged
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 fourth-quarter 2017 financial results
conference call through a link on Lilly's website at www.lilly.com.
The conference call will be held today from 9 a.m. to 10:30 a.m. Eastern time (ET) 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
voluntarism. 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 due to various factors. There are significant risks and
uncertainties in pharmaceutical research and development. There can
be no guarantees that pipeline products will receive the necessary
clinical and manufacturing regulatory approvals or that they will
prove to be commercially successful. With respect to the review of
and any potential initial public offering, merger, sale, or
retention of the Elanco animal health business, there can be no
guarantee that the company will realize the expected benefits of
the review or other strategic efforts or that the review or other
strategic efforts will be completed on the anticipated timeline, if
at all. 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, including the impact of tax reform
legislation enacted in December 2017
and related guidance; 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 Securities and
Exchange Commission (SEC); acquisitions and business development
transactions and related integration costs; the impact of exchange
rates and global macroeconomic conditions; and the impact of any
strategic alternatives the company decides to pursue for it animal
health products business. 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-Q and 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)
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)
Olumiant® (baricitinib, Lilly)
Optaflexx® (ractopamine, Lilly)
Portrazza® (necitumumab, Lilly)
Posilac® (recombinant bovine somatotropin, Lilly)
Strattera® (atomoxetine hydrochloride, Lilly)
Synjardy® (empagliflozin/metformin, Boehringer
Ingelheim)
Taltz® (ixekizumab, Lilly)
Trajenta® (linagliptin, Boehringer Ingelheim)
Trulicity® (dulaglutide, Lilly)
Verzenio™ (abemaciclib, Lilly)
Zyprexa® (olanzapine, Lilly)
Eli Lilly and Company Employment Information
December 31, 2017 December 31, 2016
Worldwide Employees 40,655 41,975
Eli Lilly and Company
Operating Results (Unaudited) - REPORTED
(Dollars in millions, except per share data)
Three Months Ended
December 31,
2017 2016 % Chg.
Revenue $ 6,160.7 $ 5,760.5 7%
Cost of sales 1,624.8 1,466.0 11%
Research and development 1,473.2 1,450.6 2%
Marketing, selling and administrative 1,780.5 1,790.1 (1)%
Acquired in-process research
and development 50.0 30.0 67%
Asset impairment, restructuring
and other special charges 1,003.2 147.6 NM
Operating income 229.0 876.2 (74)%
Net interest income (expense) (10.2) (19.5)
Net other income (expense) 65.3 35.3
Other income (expense) 55.1 15.8 NM
Income before income taxes 284.1 892.0 (68)%
Income taxes 1,941.0 120.2 NM
Net income (loss) $ (1,656.9) $ 771.8 NM
Earnings (loss) per share $ (1.58) $ 0.73 NM
Dividends paid per share $ 0.52 $ 0.51 2%
Weighted-average shares
outstanding (thousands) 1,051,091 1,061,498
NM - not meaningful
Table continues below...
Eli Lilly and Company
Operating Results (Unaudited) - REPORTED
(Dollars in millions, except per share data)
Twelve Months Ended
December 31,
2017 2016 % Chg.
Revenue $ 22,871.3 $ 21,222.1 8%
Cost of sales 6,070.2 5,654.9 7%
Research and development 5,281.8 5,243.9 1%
Marketing, selling and administrative 6,588.1 6,452.0 2%
Acquired in-process research
and development 1,112.6 30.0 NM
Asset impairment, restructuring
and other special charges 1,673.6 382.5 NM
Operating income 2,145.0 3,458.8 (38)%
Net interest income (expense) (57.7) (76.5)
Net other income (expense) 110.1 (8.3)
Other income (expense) 52.4 (84.8) NM
Income before income taxes 2,197.4 3,374.0 (35)%
Income taxes 2,401.5 636.4 NM
Net income (loss) $ (204.1) $ 2,737.6 NM
Earnings (loss) per share $ (0.19) $ 2.58 NM
Dividends paid per share $ 2.08 $ 2.04 2%
Weighted-average shares
outstanding (thousands) 1,052,023 1,061,825
Eli Lilly and Company
Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information (Unaudited)
(Dollars in millions, except per share data)
Three Months Ended
December 31, 2017
GAAP Non-GAAP
Reported Adjustments(c) Adjusted(a)
Cost of sales $ 1,624.8 $ (174.0) $ 1,450.7
Operating expenses(b) 3,253.7 (1.4) 3,252.3
Acquired in-process
research and
development 50.0 (50.0) -
Asset impairment,
restructuring and other
special charges 1,003.2 (1,003.2) -
Income taxes 1,941.0 (1,635.0) 306.1
Net income (loss) (1,656.9) 2,863.6 1,206.7
Earnings (loss) per share (1.58) 2.71 1.14
Numbers may not add due to rounding.
Table continues below...
Eli Lilly and Company
Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information (Unaudited)
(Dollars in millions, except per share data)
Three Months Ended
December 31, 2016
GAAP Non-GAAP
Reported Adjustments(d) Adjusted(a)
Cost of sales $ 1,466.0 $ (162.7) $ 1,303.3
Operating expenses(b) 3,240.7 (1.8) 3,238.9
Acquired in-process
research and
development 30.0 (30.0) -
Asset impairment,
restructuring and other
special charges 147.6 (147.6) -
Income taxes 120.2 100.5 220.7
Net income (loss) 771.8 241.6 1,013.4
Earnings (loss) per share 0.73 0.23 0.95
(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 December
31, 2017, include the following:
(Dollars in millions, Other
except per Inventory specified
share data) Amortization IPR&D step-up items US Tax Total
(i) (ii) (iii) (iv) Reform(v) Adjustments
Cost of sales $ (163.3) $ - $ (10.7) $ - $ - $ (174.0)
Operating expenses (1.4) - - - - (1.4)
Acquired in-process
research and development - (50.0) - - - (50.0)
Asset impairment,
restructuring and
other special charges - - - (1,003.2) - (1,003.2)
Income taxes 50.2 17.5 3.7 207.6 (1,914.0) (1,635.0)
Net income 114.6 32.5 6.9 795.6 1,914.0 2,863.6
Earnings per share 0.11 0.03 0.01 0.75 1.81 2.71
Numbers may not add due to rounding.
The table above reflects only line items with non-GAAP
adjustments.
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 are
related to a collaboration with CureVac.
iii. Exclude inventory step-up costs associated with
the acquisition of Boehringer Ingelheim Vetmedica's U.S. feline,
canine and rabies vaccine portfolio.
iv. Exclude charges primarily associated with
efforts to reduce the company's cost structure, including the U.S.
voluntary early retirement program.
v. Excludes charges related to recently
enacted U.S. tax reform legislation, including the one-time
repatriation transition tax also known as the toll tax.
(d) Adjustments to certain GAAP reported measures
for the three months ended December 31,
2016, include the following:
Other
(Dollars in millions, specified Total
except per share data) Amortization(i) IPR&D(ii) items(iii) Adjustments
Cost of sales $ (162.7) $ - $ - $ (162.7)
Operating expenses (1.8) - - (1.8)
Acquired in-process
research and development - (30.0) - (30.0)
Asset impairment,
restructuring and other
special charges - - (147.6) (147.6)
Income taxes 50.8 10.5 39.1 100.5
Net income 113.7 19.5 108.4 241.6
Earnings per share - diluted 0.11 0.02 0.10 0.23
Numbers may not add due to rounding.
The table above reflects only line items with non-GAAP adjustments.
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 are related to an agreement with AstraZeneca to co-develop MEDI1814, a potential disease-modifying treatment for Alzheimer's disease.
iii. Exclude global severance costs and integration costs related to the acquisition of Novartis Animal Health.
Eli Lilly and Company
Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information (Unaudited)
(Dollars in millions, except per share data)
Twelve Months Ended
December 31, 2017
GAAP Non-GAAP
Reported Adjustments(c) Adjusted(a)
Cost of sales $ 6,070.2 $ (711.2) $ 5,359.0
Operating expenses(b) 11,869.9 (6.3) 11,863.6
Acquired in-process
research and
development 1,112.6 (1,112.6) -
Asset impairment,
restructuring and other
special charges 1,673.6 (1,673.6) -
Other income (expense) 52.4 - 52.4
Income taxes 2,401.5 (1,230.8) 1,170.7
Net income (loss) (204.1) 4,734.4 4,530.4
Earnings (loss) per share (0.19) 4.48 4.28
Numbers may not add due to rounding.
Table continues
below...
Eli Lilly and Company
Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information (Unaudited)
(Dollars in millions, except per share data)
Twelve Months Ended
December 31, 2016
GAAP Non-GAAP
Reported Adjustments(d) Adjusted(a)
Cost of sales $ 5,654.9 $ (675.7) $ 4,979.2
Operating expenses(b) 11,695.9 (7.6) 11,688.3
Acquired in-process
research and
development 30.0 (30.0) -
Asset impairment,
restructuring and other
special charges 382.5 (382.5) -
Other income (expense) (84.8) 203.9 119.1
Income taxes 636.4 301.7 938.1
Net income (loss) 2,737.6 998.0 3,735.6
Earnings (loss) per share 2.58 0.94 3.52
Numbers may not add due to rounding.
The table above
reflects only line items with non-GAAP adjustments.
(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 twelve months ended December 31, 2017,
include the following:
(Dollars in millions, Other
except per Inventory specified
share data) Amortization IPR&D step-up items US Tax Total
(i) (ii) (iii) (iv) Reform(v) Adjustments
Cost of sales $ (668.5) $ - $ (42.7) $ - $ - $ (711.2)
Operating expenses (6.3) - - - - (6.3)
Acquired in-process
research
and development - (1,112.6) - - - (1,112.6)
Asset impairment,
restructuring and
other special charges - - - (1,673.6) - (1,673.6)
Income taxes 207.6 89.3 14.9 371.3 (1,914.0) (1,230.8)
Net income 467.1 1,023.3 27.7 1,302.2 1,914.0 4,734.4
Earnings per share 0.44 0.97 0.03 1.23 1.81 4.48
Numbers may not add due to rounding.
The table above
reflects only line items with non-GAAP adjustments.
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 are related to business development activity,
primarily driven by the acquisition of CoLucid Pharmaceuticals.
iii. Exclude
inventory step-up costs associated with the acquisition of Boehringer Ingelheim
Vetmedica's U.S. feline, canine and rabies vaccine portfolio.
iv. Exclude
charges primarily associated with efforts to reduce the company's cost
structure, including the U.S. voluntary early retirement program.
v. Excludes
charges related to recently enacted U.S. tax reform legislation, including the
one-time repatriation transition tax also known as the toll tax.
(d) Adjustments
to certain GAAP reported measures for the twelve months ended December 31, 2016,
include the following:
(Dollars in millions, Other
except per specified Total
share data) Amortization(i) IPR&D(ii) Venezuela(iii) items(iv) Adjustments
Cost of sales $ (675.7) $ - $ - $ - $ (675.7)
Operating expenses (7.6) - - - (7.6)
Acquired in-process
research and
development - (30.0) - - (30.0)
Asset impairment,
restructuring and other
special charges - - - (382.5) (382.5)
Other income (expense) - - 203.9 - 203.9
Income taxes 214.0 10.5 - 77.2 301.7
Net income 469.3 19.5 203.9 305.3 998.0
Earnings per share - diluted 0.44 0.02 0.19 0.29 0.94
Numbers may not add due to rounding.
The table above
reflects only line items with non-GAAP adjustments.
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 are related to an agreement with AstraZeneca to
co-develop MEDI1814, a potential disease-modifying treatment for Alzheimer's
disease.
iii. Exclude
charge related to the impact of the Venezuelan financial crisis, including the
significant deterioration of the bolivar.
iv. Exclude
integration and severance costs related to the acquisition of Novartis Animal
Health, other global severance costs, and asset impairments related to the
closure of an animal health manufacturing facility in Ireland.
Refer to: Lauren Zierke; lauren_zierke@lilly.com;
+1-317-277-6524 (Media)
Philip Johnson; johnson_philip_l@lilly.com; +1-317-655-6874 (Investors)
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