Eli Lilly and Company (Eli Lilly), a diabetes care devices company, has reported total revenues of $5.047 billion for the first quarter of 2009, up 5%, compared with the total revenues of $4.81 billion in the year-ago quarter. It has also reported net income of $1.313 billion or $1.20 per share, for the first quarter of 2009, compared with the net income of $1.064 billion or $0.97 per share, in the year-ago quarter.
The company reconfirmed its 2009 earnings guidance to a range of $4.00-$4.25 per share.
The movement of foreign exchange rates led to an improved gross margin percentage.
On a pro forma non-GAAP basis, net income and earnings per share grew to $1.313 billion and $1.20, respectively, compared with first-quarter 2008 net income of $961.9 million and earnings per share of $0.88.
“Despite the downturn in the economy, in the first quarter of 2009, Lilly delivered strong financial results, with good underlying operational performance, aided in part by movements in exchange rates,” said spokesman of Eli Lilly, said. “Our revenue growth included solid volume-based gains, while our gross margin%age benefited from a stronger U.S. Dollar. These results, in combination with prudent expense management, helped us to achieve operating leverage and robust earnings per share growth.”
First-Quarter Reported Results
Worldwide total revenue of $5.047 billion was comprised of product sales of $4.892 billion, up 4%, and collaboration and other revenue of $155.2 million, up 58%, primarily due to the inclusion of Erbitux revenue as a result of the ImClone acquisition. U.S. total revenue increased 13% to $2.872 billion. Total revenue outside the U.S. decreased 4% to $2.175 billion due to the negative impact of foreign exchange rates.
Gross margin as a percentage of total revenue up by 6.9 percentage points, to 83.8%. This increase was due to the impact on international inventories from the decline in foreign currencies compared to the U.S. dollar, resulting in a benefit to cost of sales.
Marketing, selling and administrative expenses decreased 1%, to $1.529 billion. This decrease was due to the impact of foreign exchange rates and a reduction in expenses related to US marketing programs, partially offset by the impact of the ImClone acquisition and increased prasugrel pre-launch activities. Research and development expenses were $947.3 million, or 19% of revenue. Compared with the first quarter of 2008, research and development expenses grew 8% due primarily to the ImClone acquisition and increased late-stage clinical trial and discovery research costs, partially offset by the impact of foreign exchange rates. Total operating expenses, defined as the sum of research and development, marketing, selling and administrative expenses, increased 2% compared with the first quarter of 2008.
In the first quarter of 2008, the company recognized a charge of $145.7 million for asset impairments, restructuring and other special charges primarily related to the termination of the AIR(R) Insulin program and a charge of $87.0 million for acquired in-process research and development associated with the BioMS in-licensing arrangement.
Operating income increased 69% to $1.754 billion. Excluding the impact of changes in foreign exchange rates, operating income would have increased 45%.
Other income (expense) decreased by $91.0 million, to a net expense of $70.7 million, primarily due to lower interest income and higher interest expense associated with the ImClone acquisition, as well as lower business development income.
The effective tax rate was 22% in the first quarter of 2009. In the first quarter of 2008, the company reported an aggregate income tax benefit of $8.0 million due to the recognition of a $210.3 million discrete benefit as a result of the resolution of a substantial portion of the IRS audit of the company’s federal income tax returns for years 2001 through 2004.