Lilly says manufacturing and pricing swayed revenue rise

By Flora Southey

- Last updated on GMT


Related tags Eli lilly and company

Manufacturing efficiencies and positive pricing boosted Eli Lilly’s margins in the second quarter, offsetting lower sales outside the US.

The firm reported a global revenue increase of 8%, with a gross margin of 73.4% - a 0.5% increase compared to Q2 2016 - which CEO Dave Ricks said can be linked to manufacturing improvements.

 “This increase was driven by higher realised prices and manufacturing efficiencies, partially offset by higher expenses to support new pharmaceutical products,” ​said Ricks.

The firm did not respond to questions regarding its manufacturing operations.

Operating expenses reduced by 3.9% compared to Q2 2016.

Volume increase

Ricks said that globally, the volume of pharmaceutical products sold has grown in various geographies.

“It’s worth noting that in our human pharma business, each major geography drove volume growth this quarter.”

“The US pharmaceutical business increased 19%, driven by both price and volume. Price growth was primarily driven by our late life cycle products, Cialis and Forteo while Trulicity was the main driver of US volume growth,”​ said Ricks.

New drugs

According to Ricks, new drugs in European markets - such as the diabetes treatment Trulicity (dulaglutide) – increased Lilly’s revenue.

“European pharma revenue growth was 4% driven entirely by volume, despite significant headwinds on Alimta. Excluding Alimta, the rest of our European pharma revenue grew 10% on a performance basis led by Trulicity,” ​said Ricks.

Other new products to positively impact revenue include Taltz, Basaglar, Jardiance, Lartruvo and Cyramza.

Elsewhere outside of the US, pharma revenue also increased.

“In Japan, despite a large negative impact from the entry of generic Zyprexa last June, pharma revenue increased 2%,” ​said Ricks.

Off-patent losses

Despite the increase in sales volumes, Eli Lilly reported a decrease in revenue outside the US in Q2 2017. The firm attributed the decline to patent loss in Asia, Canada and Europe.

“Revenue outside the US decreased 1%, to $2.5bn ​(€2bn) due to the loss of exclusivity of Zyprexa in Japan and Cymbalta in Canada and Europe, as well as increased competition, lower released prices and loss of exclusivity for Alimta in several countries,” ​said the company.

Unfavourable foreign exchange rates also contributed to lower revenue this quarter, compared to Q2 2016, said the firm.

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