By Ransdell Pierson
NEW YORK (Reuters) - Eli Lilly & Co
Sales of Lilly's biggest product, schizophrenia treatment Zyprexa, were flat, but several of its other big medicines posted strong gains, including depression drug Cymbalta, which jumped 17 percent to $709 million.
The inventory valuations improved the cost of sales, boosting profit margins by 6.9 percentage points to 83.8 percent.
"We don't necessarily expect that level of gross margin improvement throughout the year," company spokesman Mark Taylor said.
Earnings increased to $1.31 billion, or $1.20 per share, from $1.06 billion, or 97 cents per share, in the year-earlier period, when results benefited from the resolution of a tax audit.
Analysts on average expected 99 cents per share, according to Reuters Estimates.
Revenue rose 5 percent to $5.05 billion, matching the Reuters Estimates forecast. The company said the stronger dollar crimped sales by six percentage points, yet helped profit margins because of the inventory situation.
The Indianapolis drugmaker said it still expected full-year earnings of $4 to $4.25 per share.
Even though there is no certainty that Lilly's stronger profit margins will hold up, Deutsche Bank analyst Barbara Ryan said the company deserves credit for beating profit forecasts.
Lilly shares were up 41 cents to $34.16 in early trading on the New York Stock Exchange.
"The drug stocks have all been beaten up; they're cheap," Ryan said.
ICAHN SEEKS AMYLIN SALE TO LILLY
Lilly's global share of revenue from Byetta, a diabetes drug it sells in partnership with Amylin Pharmaceuticals Inc
Lilly and Amylin plan to seek U.S. marketing approval in the first half of the year for a once-weekly form of Byetta. They hope its greater convenience will draw more patients and fend off future competitors.
Billionaire investor Carl Icahn, who is in a proxy fight with Amylin, is pressuring the biotechnology company to sell itself to Lilly, according to a regulatory filing issued on Monday by Amylin.
Sales of Zyprexa were hurt by generic competition in Germany and Canada and concerns the pill causes weight gains that can increase the risk of diabetes.
Gemzar, a treatment for a variety of cancers, was also hurt by overseas generic competition, with sales falling 14 percent to $368 million. And osteoporosis treatment Evista fell 2 percent to $257 million.
Sales of Lilly's Humalog brand of insulin jumped 11 percent to $450 million, and sales of lung cancer treatment Alimta soared 36 percent to $335 million. Revenue from anti-impotence pill Cialis rose 6 percent to $359 million.
(Additional reporting by Lewis Krauskopf; Editing by Lisa Von Ahn and John Wallace)
