Eli Lilly Shares Fall on Disappointing Byetta Sales

Eli Lilly Monday posted lower-than-expected quarterly earnings, as disappointing sales of its Byetta diabetes drug overshadowed growing demand for its other medicines, sending shares 3.4 percent lower.

"Right now, we're seeing terrific growth from the nine products we launched earlier this decade," said John Lechleiter, Eli Lilly CEO, said on CNBC.

"We're in the business of bringing new medicines to the market that, obviously, have to compete effectively with generics.  I think the kind of growth we saw this first quarter indicates that we've been able to do that."

The Indianapolis-based drugmaker earned $1.06 billion, or 97 cents a share, compared with $508.7 million, or 47 cents per share, in the year-earlier first quarter.

Excluding special items, Lilly earned 92 cents per share. Analysts on average expected 96 cents per share, according to Reuters Estimates.

Special items included a benefit, amounting to 19 cents per share, from resolution of a federal tax audit, and charges totaling 14 cents per share related to restructuring charges and acquisitions.

Company revenue grew 14 percent to $4.81 billion, in line with the Reuters Estimates forecast. Sales would have risen only 9 percent if not for favorable foreign exchange factors.

The gross profit margin fell 1.3 percentage points to 76.9 percent, primarily due to the impact of foreign exchange rates.

Global sales of Byetta, a newer injectable diabetes drug that is one of Lilly's biggest products and engines of growth, rose 15 percent to $169 million. Byetta is sold in partnership with Amylin.

Amylin, in its own release, said Byetta sales were lower than expected in the quarter as wholesalers cut back on purchases.

"We remain confident that we are taking the right steps to build sustainable Byetta growth over time," Amylin Chief Executive Daniel Bradbury said.

Excluding special items, Lilly continues to expect full-year earnings of $3.85 to $4 per share. That would reflect growth of as much as 13 percent from last year.

Sales of Lilly insulin drug Humalog jumped 20 percent to $407 million, while the company's other blockbuster insulin drug Humulin rose 14 percent to $258 million.

Revenue from Zyprexa, Lilly's top-selling treatment for schizophrenia, edged up 1 percent to $1.12 billion, held back by competition from newer products and concerns that it causes weight gains, which can increase risk of diabetes.

Sales of impotence pill Cialis, which Lilly now owns outright after buying its partner Icos last year, rose 74 percent to $337 million.

Depression treatment Cymbalta posted sales of $605 million, surging 37 percent. The medicine, like Wyeth's Effexor, works by maximizing the presence of two brain messenger chemicals.

Alimta also continued to experience gangbuster growth. Its sales jumped 32 percent to $247 million. The drug was initially approved to treat tumors caused by exposure to asbestos, but was recently also cleared for use against lung cancer.

Sales of Evista, for osteoporosis, slipped 1 percent to $261 million.

Shares of Lilly were trading at $50.30 in pre-market electronic trading, from their closing share price on Friday of $52.07.

--CNBC.com contributed to this report.

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