“It’s going to be a challenge for Lilly, but survivability is not a question,” said Linda Bannister, a drug analyst at Edward Jones and Co. in St. Louis, according to an article in the Indianapolis Star. Bannister, who has a “hold” rating on the stock, pointed out that the company has “some interesting things in the pipeline, and if they are successful, Lilly could be a growth company again.”
The company has about 70 experimental drugs under development, with 33 in Phase II or Phase III. They include about 10 in late-stage clinical testing for serious ailments such as Alzheimer’s disease, depression, cancer, schizophrenia and diabetes.
Furthermore, Zyprexa won’t be disappearing from the Lilly arsenal. The company expects many doctors and patients to continue with the brand-name treatment because of the reluctance to switch from a drug that has permitted people with severe mental illness to resume a normal life. Keeping just 20% of Zyprexa sales will mean $500 million in annual revenue for the company.
Just as encouraging, two years ago Lilly won approval to sell a long-lasting version of the drug, called Zyprexa Relprevv, under a new patent that won’t expire until late this decade. Some analysts are projecting $1 billion in annual sales by 2015 for that version.
Investors certainly haven’t thrown in the towel on Lilly. They might have faith in the company’s ability to overcome the obstacles lying in its path and be attracted by Lilly’s healthy dividend yield of 5.2% — at least two possible reasons the stock is up more than 8% year to date.
As of this writing, Barry Cohen was long LLY.