Lilly’s profits cut in half in Q1

Lilly saw its profits plummet 53% in the first three months of 2014, undermined by two major patent expiries.

The US firm saw its worldwide sales fall 16% compared with the first quarter of 2013, comprised of 8% due to lower volume, 6% due to lower prices, and 2% due to the unfavourable impact of foreign exchange rates. 

Antidepressant and pain treatment Cymbalta lost its US patent in December 2013, which was the main reason for the 8% fall in sales volume, while osteoporosis drug Evista went off patent in February – which will ensure further shrinkage in the next quarter.

Total revenue in the US decreased 34% to $2.084 billion, driven primarily by lower demand for Cymbalta as well as lower prices, largely for Cymbalta and Evista. US revenue in the first quarter of 2014 was also hit by wholesaler buying patterns on various products. Total revenue outside the US increased 5% to $2.59 billion, driven by higher volume, partially offset by the unfavourable impact of foreign exchange rates, primarily the Japanese yen.

The quarter also saw Lilly and Takeda hit with a record-breaking fine in relation to the safety of their co-marketed diabetes treatment Actos.

A US court ruled in favour of Terrence Allen and other patients who claimed Actos had caused bladder cancer. On top of $1.475 million in compensatory damages, the jury also awarded $6 billion in punitive damages from Takeda and $3 billion from Lilly. These huge fines were imposed because the companies were found to have concealed data which allegedly showed raised risk of cancer.

Lilly says it will appeal against the verdict, and the size of the damages. Lilly could also face a major dispute with Takeda -the US company says their co-marketing agreement states that Takeda is liable to pay Lilly’s $3 billion share of the fine, but Takeda says it will challenge this.

Good news from Cyramaza

The silver lining to Lilly’s cloudy skies is new cancer treatment Cyramaza (ramucirumab). The FDA has just approved the drug in its first indication – advanced or metastatic gastric cancer or gastroesophageal junction (GEJ) adenocarcinoma with disease progression after prior chemotherapy.

Lilly also announced results from a phase III study of Cyramaza in second-line non-small cell lung cancer. The trial results showed a statistically significant improvement in overall survival in the ramucirumab-plus-docetaxel arm compared to the control arm of placebo plus docetaxel.

Analysts predict the drug could hit $1.3 billion, depending on how many indications it can add to acquire. The drug failed in a late-stage trial in breast cancer last year, but its strong signs in lung cancer has restored confidence.

Further phase III news in liver and colorectal cancers is expected later this year.


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