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Eli Lilly offers positive 2006 outlook

By Wai Lang Chu , 13-Dec-2005

US drug company, Eli Lilly, offered a more encouraging outlook than was expected forecasting an earnings growth of up to 12 per cent, a stark contrast to its struggling competitors, who also face generic competition, drug safety and regulation.

At its annual review, the drugmaker said the growth would arise from new drugs such as its antidepressant Cymbalta and the new US Medicare drug subsidy for seniors, as well as a lower tax rate, which were all expected to offset the losses expected from its schizophrenia drug Zyprexa.

Lilly's drug pipeline formed the focus of the company's major meeting. "Given our products, pipeline and the fact that we expect no major patent expirations for the rest of this decade, Lilly is positioned to deliver sustained earnings growth," said Sidney Taurel, chairman and chief executive officer for Lilly.

 

Despite an overall flat US antidepressant market in 2005, Cymbalta has led all branded and promoted products in share-of-market growth during this period. Overseas, Cymbalta performed well at its German launch.

 

Lilly outlined its early-to-mid-stage pipeline developments, which by the end of 2006, should have at least five anti-obesity compounds in clinical development, including a molecule with a novel mechanism of action in Phase 2.

 

In the field of Oncology, Lilly expected to start five Phase 1 studies of oncology agents in 2006 and five more in 2007, including beginning clinical work on the first of two agents that inhibit TGF-beta signalling.

 

In addition, with Lilly's newest subsidiary, Applied Molecular Evolution, the company will initiate clinical trials soon with AME133, an antibody to CD20, for non- Hodgkin's lymphoma. Lilly and its partner, Isis Pharmaceuticals, anticipate Phase 2 trials to begin in late 2006 for the surviving antisense oligonucleotide.

 

In addition, Lilly is focusing on developing medicines that are aimed at blocking or slowing the progression of diabetes at all points of the continuum of the disease.

 

Inhaled insulin is Lilly's lead project, which also includes an oral DPP-IV inhibitor for type 2 diabetes currently in Phase 1; naveglitazar, an oral PPAR alpha/gamma agonist, for type 2 diabetes that has completed Phase 2 studies; and a long-acting release formulation of Byetta for type 2 diabetes currently in Phase 2.

 

Other areas of investigation include the commencement of Phase 2 trials for pruvanserin in insomnia and exploring its potential in other central nervous system conditions.

 

Lilly is also conducting Phase 1-b studies to evaluate two molecules for Alzheimer's disease, a gamma-secretase inhibitor and an A-beta antibody.

 

Since 2001, Lilly have launched nine new products and nine new indications and line extensions. They have also expanded into new markets with their strongest therapies such as its recent submissions of Byetta in Europe for type 2 diabetes, Cialis in Japan for erectile dysfunction, and Cymbalta in key European markets.

 

"Our nine new products are accounting for an increasing portion of our sales - up from 11 per cent at the end of 2004 to 18 per cent this year, and they should grow to about 24 per cent of revenues next year," said Charles Golden, executive vice president and chief financial officer for Lilly.

 

"Our earnings growth next year depends in large part on our success with driving the growth of Cymbalta and our other new products, as well as by the performance of Zyprexa and our ability to manage costs and increase the productivity of our resources," he added.

 

Lilly estimated earnings excluding one-time items would increase 8 - 12 per cent next year to $3.10 - $3.20 per share, from $2.86 per share this year.

 

Sales next year are expected to increase 7-9 per cent to more than $15bn (€12.6 billion). Barriers to this growth are tough US trends in its important markets of antipsychotics and antidepressants.