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Lilly Should Survive Patent Loss on Blockbuster Drug Zyprexa

However, investors might have to stick through a couple lean years

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Ten years ago, some industry observers wondered if Eli Lilly (NYSE:LLY) could survive as an independent company when it lost patent protection on Prozac. At the time, they pointed to the fact that the anti-depressant accounted for more than one-third of company sales.

But the Indianapolis-based pharma giant survived that blow and avoided being driven into the arms of a waiting suitor. The question today is: Can Lilly do it again?

That’s because in less than two weeks — Oct. 23, to be exact — the company will wave goodbye to the U.S. patent on the best-selling drug in its 135-year history, Zyprexa. Beginning that day, competitors can start cranking out cheaper generic versions of the powerful antipsychotic drug that millions of patients have taken to control hallucinations, delusions, confused thought and manic-depression.

For the past 15 years, Zyprexa has generated billions of dollars in sales and profits for Lilly. In 2010 alone, the company booked more than $5 billion in Zyprexa sales — more than 20% of its total revenue.

Losing exclusivity on Zyprexa is bad enough. But it’s hardly the only unpleasant news facing Lilly. In the next several years, the company also will lose patent protection on its other blockbusters, including the antidepressant Cymbalta, the erectile-dysfunction drug Cialis and diabetes drugs Humalog and Byetta.

Despite these punches to Lilly’s gut, many industry observers think the company can get up off the canvas and not only live to fight another day, but be a force in the industry. Investors who back the Big Pharma underdog might be rewarded down the line if they’re willing to ride out what appears to be a few lean years.

Article printed from InvestorPlace Media,

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