Eli Lilly Q3 Profits down 6% on Marketing and Severance Costs

October 20 00:00 2011

New York, October 20 (RainbowNewsLine.com) – The Indianapolis drug maker, Eli Lilly and Co has reported a 6% decrease in profits for Q3 mainly due to its extra expenditure in marketing and selling its medicines and in paying millions of dollars on severance costs for shrinking its employees. It has also narrowed its guidance for full-year profits.

Lilly posted a profit of $1,236 billion, or $1.11 a share in the third-quarter, down about 5 percent from a year ago and slightly less than Wall Street’s expectation of $1.13 a share. However, it posted strong revenue of $6.15 billion, up 9 percent which was as per analysts’ expectations. This impressive result came despite the weakening sales of Gemzar, a blockbuster chemotherapy drug, which lost patent protection last year. Its sales dropped 72 percent in the quarter, to $91 million.

However, sales of several other products rose 20 percent or more during the quarter, including antidepressant drug Cymbalta, diabetes medicine Humalog, ADHD drug Strattera, osteoporosis drug Forteo, and its line of animal-health products.

Lilly has been cutting its workforce for the past two years by about 5,000 jobs worldwide in order to meet the challenge of reduced sales but in the short-run, it is costing the company millions of dollars by way of severance costs to laid-off workers.