Dive Brief:
- Eli Lilly on Tuesday forecasted it would hit annual growth of at least 5% for the next 5 years, announcing the new target alongside strong second quarter earnings which showed a 9% jump in total revenues year over year.
- The increase in revenue was primarily due to growth from the company's six new pharmaceutical products. Altogether, the new drugs pulled in $428 million in sales last quarter, accounting for two-thirds of the jump in overall revenues.
- Growth was led by diabetes drug Trulicity and cancer drug Cyramza. Meanwhile, Jardiance–which has been touted as a potential blockbuster potential given its proven cardiovascular benefit–only notched a small gain from the previous quarter.
Dive Insight:
Eli Lilly's second quarter results underscore the company's growth strategy: as the company's established drugs near patent expiry and mature in sales, the company is focusing on increasing its global sales with a array of new products.
"We grew revenue 8% in the second quarter on a constant currency or performance basis. All of this performance growth was driven by volume," said John Lechleiter, CEO of Eli Lilly, in the company's results presentation. In addition, Lechleiter stressed that 61% of the drug volume growth was directly attributable to the expansion of the company's six new drugs: Trulicity, Cyramza, Jardiance, Taltz, Basaglar and Portazza.
"As an innovation-based pharmaceutical company, our future growth prospects are defined by our ever expanding pipeline," he added. "Over a 10 year period starting 2015, we believe we can launch 20 or more new medicines. . . Having already launched 6 products in the past two years, with more launches possible in the next two years, we expect robust revenue growth from 2016-2020."
Despite heavy R&D investment in developing new products, global revenues have slipped for Lilly recently, with 2015 revenue 13.5% lower than five years ago. But Lilly clearly believes in the potential of its near-term pipeline.
In the short term, Lilly's pipeline is headlined by its rheumatoid arthritis drug baricitinib and the sarcoma treatment olaratumab. But the company will likely have to hit on its breast cancer drug abemaciclib and Alzheimer's drug solanezumab, both currently in Phase 3 testing, to meet the ambitious goals it has set out for itself.
And despite the optimism for the future, not all recently launched drugs have sprinted ahead out of the gate. Jardiance, a type 2 diabetes treatment co-marketed with Boehringer-Ingelheim, for example, has seen slow sales growth despite being the first diabetes drug with a proven cardiovascular benefit.
The company hopes the tide will change for Jardiance if the Food and Drug Administration approves a new cardiovascular label for the drug. The hopes are not unfounded–an FDA Advisory Committee voted 12-11 to recommend the new indication, narrowly concluding substantial evidence exists to establish Jardiance reduces cardiovascular death in adults with Type 2 diabetes.
“Eli Lilly’s broad portfolio and diverse pipeline support management’s aspiration of 5% annual revenue growth through 2020 – a credit positive,” stated Michael Levesque, senior vice president at Moody's, a ratings agency. “Achieving this aspiration will depend on strong uptake in new drugs and sustaining pricing flexibility in the US market amidst industry-wide scrutiny on drug-pricing.”