Markets

Lilly Q1: Price Rises, End of Zyprexa Woes Boost the Numbers

By Jim Edwards

Updated on: April 20, 2009 / 2:09 PM EDT / MoneyWatch

With its costly Zyprexa settlements out of the way, Eli Lilly got back to business as usual: Raising drug prices. And it seems to have paid off. Lilly's Q1 revenue was $5 billion, up from $4.8 billion the year before (but down sequentially from mid-2008 when quarterly revenues touched $5.2 billion).

The lack of legal settlements -- as much as $7.2 billion* $3.2 billion since 2006 -- contributed to the bottom line, which went up 23 percent to $1.3 billion. This places Lilly in an interesting position: It is more profitable because it hasn't screwed up and gotten sued lately, but its flat revenues are only being sustained by price rises.

Here's a list of Lilly's top products. You can see there's a broad correlation between rising sales and rising prices, offsetting the drugs with declining sales and lower prices:

Brand, prices, sales
Zyprexa, higher, flat
Cymbalta, higher, higher
Humalog, higher, higher
Gemzar, lower, lower
Cialis, higher, higher
Alimta, NA, higher
Evista, higher, lower
Humulin, higher, lower
Strattera, higher, higher

You can tell that it's the price rises that are keeping revenues up because Lilly's sales, marketing and admin costs were roughly the same as a year ago, even though the sales are higher. A year ago, Lilly's sales force earned back $3.10 for every dollar spent on their salaries and overhead. Today, Lilly gets $3.30. That increase came despite Lilly's ramp-up costs for prasugrel/Effient, which currently produces no revenues.

*Oops. That was a typo.