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Eli Lilly Posts Loss Due to ImClone Purchase

Drugmaker Eli Lilly said Thursday it swung to a loss in the fourth quarter on charges from buying cancer-drug maker ImClone Systems.

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Before charges for the acquisition, the company's earnings beat analyst estimates, despite basically flat sales and a 10 percent decline in revenue from Lilly's top-selling drug, the anti-psychotic Zyprexa.

Indianapolis-based Lilly lost $3.63 billion, or $3.31 per share in the quarter. That compares with earnings of $854.4 million, or 78 cents per share a year ago. Lilly said sales edged up to $5.21 billion from $5.19 billion, below analyst estimates.

Excluding one-time items, Lilly earned $1.07 per share. Analysts expected $1.05 per share on $5.42 billion in revenue.

The results include a $4.73 billion charge for the ImClone purchase.

(See the below video to hear what Eli Lilly's CEO had to say about this quarter's earnings)

Sales of Zyprexa fell to $1.15 billion due to decreased wholesale buying in the U.S. and lower foreign sales because of lower prices and less-favorable exchange rates. For the year, Zyprexa sales slipped 1 percent, to $4.7 billion.

Other key drugs fared better, as revenue from the antidepressant Cymbalta rose 15 percent to $721.2 million in the fourth quarter, and sales of Humalog insulin grew 11 percent to $457.9 million.

Sales of the cancer drug Gemzar fell 3 percent to $413.3 million, as less-favorable foreign exchange rates led to weaker results overseas. Revenue from the erectile dysfunction treatment Cialis rose 7 percent to $368.8 million.

All five drugs are expected to face generic competition by 2014. That usually leads to a sharp decline in sales.

The impending patent expirations helped push Lilly to buy ImClone. ImClone's products include Erbitux, which is approved to treat several forms of cancer.

For the year, Lilly lost $2.07 billion. Excluding the settlement and ImClone costs, along with other one-time items, its adjusted profit rose to $4.02 per share, from $3.54 per share in 2007. Revenue grew 9 percent, to $20.38 billion.

Lilly backed its profit forecast of $4 to $4.25 per share for 2009. Analysts expect $4.19 per share.

It was the second consecutive quarterly loss for Lilly. The company took a loss in the third quarter after paying almost $1.5 billion to settle criminal and civil investigations into its marketing practices for its anti-psychotic Zyprexa. Lilly was accused of marketing the drug as a treatment for dementia even though it isn't approved for that purpose.

Before that, Lilly hadn't posted a losing quarter since 2005.