Lilly Profit Tops Street View, but Shares Fall

NEW YORK (Reuters) - Eli Lilly and Co posted third-quarter profit well above Wall Street expectations on Wednesday on strong performance of its major prescription drugs and lower taxes, but it said an inventory benefit that helped results might reverse in the fourth quarter.

Shares fell nearly 3 percent as the drugmaker failed to assuage persistent doubts about its ability to fill a revenue hole once its Zyprexa schizophrenia drug and other products face widespread generic competition in the next two years.

"People are getting more and more concerned about the patent cliff approaching for Lilly," Morningstar analyst Damien Conover said. "While the current quarter was good, I think there is growing concern about future growth."

Quarterly sales of lung cancer treatment Alimta, anti-depressant Cymbalta, Humalog insulin and schizophrenia drug Zyprexa all topped analysts' forecasts. The drugmaker also raised its full-year earnings forecast, but by less than it beat expectations in the third quarter.

For the quarter, net income was $941.8 million, or 86 cents per share, compared with a net loss of $465.6 million, or 43 cents per share, a year earlier, when Lilly took big charges related to a marketing probe of Zyprexa.

The Indianapolis-based drugmaker took charges totaling $549.8 million in the latest quarter, including asset impairment and restructuring charges for the sale of a manufacturing plant and a charge tied to a legal settlement.

Excluding those charges, Lilly posted earnings of $1.20 per share. On that basis, analysts' average forecast was $1.02, according to Thomson Reuters I/B/E/S.

Revenue rose 7 percent to $5.56 billion. Analysts were looking for $5.41 billion.

Volume increases drove revenue up 8 percent and price increases boosted it 2 percent, while the stronger dollar weakened the value of overseas sales, resulting in an overall negative effect of 3 percent.