- Eli Lilly & Co. on Tuesday reported stronger-than-expected revenues for the first quarter, boosted by fast growth of newer diabetes medicines like Trulicity and a more favorable payer environment for its older insulin products.
- Overall sales rose 9% year over year to total $5.7 billion, more than a quarter of which came from sales of drugs approved since 2014. Anticipating continued improvement in payer mix and foreign exchange rates, Lilly upped its revenue guidance for 2018 to between $23.7 billion and $24.2 billion.
- Yet a surprising drop in sales of the recently launched psoriasis medicine Taltz underscored the uncertainty Lilly faces as it works to offset an aging portfolio with newer drugs.
In a departure from previous quarters, Lilly had better news to share with investors on its diabetes portfolio.
Trulicity (dulaglutide), a GLP-1 agonist that looks set to soon become the pharma's top-selling product, continued its steady growth. Sales in the first quarter rose to $678 million, up 82% from a year ago and ahead of market forecasts by nearly $50 million, according to consensus estimates reported by Jefferies.
More unexpectedly, however, sales of Lilly's older insulin products Humalog (insulin lispro) and Humulin (insulin human injection) came in $105 million higher than Wall Street had anticipated.
Enrique Conterno, head of Lilly diabetes, attributed much of that growth to higher realized prices stemming from changes in estimated rebates and discounts for the drugs. Lilly expects the mix of payers to be more advantageous this year, citing lower Medicaid utilization in particular.
Yet higher competition and declining pricing power still crimp the long-term outlook for drugmakers in diabetes. Facing that pressure, as well as several patent expirations on older drugs, Lilly has bet a slate of new drugs will help it grow sales by 5% annually through 2020.
All told, sales of the eight new drugs specifically flagged by Lilly brought in nearly $1.5 billion in sales during the first quarter — largely driven by Trulicity, Basaglar (insulin glargine) and Jardiance (empagliflozin).
A revenue miss from Taltz (ixekizumab), however, reinforces how Lilly's bet is not yet a sure thing. Sales of Taltz slumped by $31 million from the fourth quarter to the first quarter, falling $57 million short of market estimates.
Lilly chalked up the decline to the impact from inventory changes down the pipeline — something rival Novartis AG reported last week for its competing IL-17A inhibitor Cosentyx (secukinumab).
While the changes in the first quarter may be transient, Taltz has plenty of competition that could present market challenges.
Lilly executives, however, said they were confident in Taltz's potential. "A lot is happening with Taltz and we feel very good about our chances of winning the marketplace," said Christi Shaw, head of Lilly BioMedicines, on an April 24 call with investors.
The future for other new products is uncertain as well. Baricitinib, an arthritis drug approved in Europe but held up in the U.S., this week won an important panel recommendation for a lower dose regimen. But committee experts were split on the drug's overall safety and it's not clear if the Food and Drug Administration will approve the treatment.
Galcanezumab, a preventative treatment for migraine, is another blockbuster hopeful of Lilly's. Yet there too, Lilly will likely enter behind Novartis and Amgen Inc.'s rival Aimogiv (erenumab) and is likely to compete with other drugs from Teva Pharmaceutical Industries Ltd. and Alder BioPharmaceuticals Inc. in the future.