- Eli Lilly continued its heavy investment in research and development in the first quarter, increasing spending by 17% compared to a year ago. The $1.22 billion spent represented a whopping 25.1% of Q1 revenue.
- Higher late-stage clinical development costs were cited as a factor in fueling the spending. Lilly and development partner AstraZeneca recently pushed their BACE inhibitor for the treatment of Alzheimer's disease into Phase 3 after a successful conclusion to Phase 2.
- Lilly also raised its guidance for 2016 R&D spending to between $4.9 billion and $5.1 billion, up from $4.8 billion to $5.0 billion.
The investment in R&D in Q1 continues a trend of higher spending over the past several quarters. In 2015, Lilly dedicated 24% of overall revenue to R&D, a figure which puts it near the top of the industry.
Indeed, Lilly was the third highest spender on R&D in 2015 based on percent of sales, according to EP Vantage. Only Regeneron and Celgene spent more as a share of revenue.
Part of the increase in Q1 was tied to a $55 million milestone payment to Incyte Corporation for the regulatory submission of baricitinib in the U.S. and Europe. The arthritis drug recently notched another success, beating a placebo in a 12-week phase 3 study. Lilly submitted it to the FDA for review in January and hopes it can be competitive in a highly contested market.
Lilly and Boehringer Ingelheim also announced plans for two new outcomes trials to test their diabetes drug Jardiance against chronic heart failure. Both are expected to begin within the next 12 months.
Several mainstay Lilly drugs face declining revenues, particularly Humalog and Cymbalta. A heavy investment in R&D could help compensate for that in the future, provided Lilly's bets pay off.