Analysts Rain on Lilly's Effient Parade; 70% of Sales Go Generic After 2011

Last Updated Jul 13, 2009 11:05 AM EDT

The FDA's approval of Eli Lilly's new blood-thinner, Effient/prasugrel, was a huge moment for a company that has not had a new drug approved in five years. But Wall Street's analysts seem determined to rain on Lilly's parade. The spreadsheet jockeys grumbled Friday evening about the black box warning and the assumed price premium over Bristol-Myers Squibb's Plavix, and they rounded down their estimates of total Effient sales:
"I think it will make it tough for them to compete against Plavix," said Deutsche Bank analyst Barbara Ryan [to Dow Jones Newswires]. She has estimated the drug could generate peak annual sales of $1 billion, but said Friday that projection might prove to be too high. Ryan rates Lilly shares at hold.
Tony Butler, an analyst at Barclays Capital in New York, said [to Bloomberg] the strict warning may affect his estimate of $1.5 billion in global sales.
Yasuhiro Nakazawa, an analyst at Mitsubishi UFJ Securities Co. in Tokyo ... projects annual sales of Effient will climb to as much as 150 billion yen ($1.6 billion).
But none was a bigger Debbie Downer than Leerink Swann. The company's Seamus Fernandez and Kathryn C. Alexander forecasted a bullish $1.9 billion in sales but concentrated more on Lilly's remaining problems:
With over 70% of [Lilly's] forecasted 2010 sales losing patent protection globally in 2011-2016 (Zyprexa, Gemzar, Evista, Cymbalta, Humalog, Alimta, Cialis), we believe LLY must move aggressively on partnering and acquisition activity, but it has less flexibility to do so than its peers ...
Lilly must be getting used to this by now. The Effient approval has been a long-fought slog for the company, featuring a last-minute attempt to nix the drug by its inventor, some controversial maneuvering on the FDA panel that reviewed the application, and a hedge that required the acquisition of ImClone.