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Eli Lilly and Company (NYSE:LLY) released its second quarter returns, which significantly addressed its replacement of expiring patents and management of on hand patents.
The quarterly performance of Eli Lilly has been greatly impacted by the expiry of patents the company previously had. The top line of the firm had a downtrend of 17%, which is driven by lower sales volume. The second quarter of 2014 for Eli Lilly revealed that its top medications had lower sales, which include Cymbalta and Evista. Revenue of the major drug Cymbalta plunged deeper following its decreased sales last December. On the other hand, patent protection for Evista was also voided last March, which affected the revenue downturn.
Eli Lilly and Company’s returns were also largely affected by the industry’s generic competition. If the losses caused by Evista and Cymbalta sales in the U.S. will be disregarded, the revenue of Eli Lilly could have grown by 6% as driven by more eminent sales volume.
The net margin of Eli Lilly also dropped by 5.5% during 2014’s second quarter. This event is attributed to the downturn in selling and administration expenses, cost of sales, and research and development compensation and advertising (2.2%, 4.5%, and 1.8% respectively). The lapse of R&D tax credit also caused the company to reimburse for a higher tax. To respond to current poor performance of the company, Eli Lilly is trimming down its bonuses and reducing the expenses through decreasing its headcount.
The negative growth due to the expiration of drug patents may be addressed by the current Cyramza authorization given to Eli Lilly. Cyramza is a medication for gastroesophageal junction “GEJ” or metastatic or advanced gastric cancer. The treatment is the only FDA-approved medication during or after platinum-containing chemotherapy or fluoropyrimidine-based chemotherapy.
Besides, Eli Lilly reported having the European Medicines Agency “EMA” positive opinion with regards to its treatment of diabetes, Abasria. The research and development undertakings of the company seem to be paying off. At present, it has three medications for diabetes that are under the review of FDA. After two years, Eli Lilly is anticipating the seven types of insulin marketing for diabetic patients. The movement will elevate the company’s financials and also cover up the expiring patents of its medications.
The costs and timing of research for Eli Lilly will possibly be cut down since the company has merged with Immunocare Limited for T-cell immunotheraperies development. Conclusively, Eli Lilly is dealing with expirations of patents sensibly and will recover with positive returns soon.