Wall Street was expecting an announcement on Elanco to come this quarter. Lilly first said it was exploring options to either hold an IPO, sale or merger of the business in October 2017. By the end of the year Lilly plans to hold an IPO for a less than 20% stake in Elanco, which had $3.1 billion in annual sales last year, down 2% from the previous year. A part of Lilly since 1954, Elanco is estimated to be worth some $13 billion, according to a note from investment bank BMO Capital Markets.
During the quarter, Lilly reported net income was a loss of $260 million, or 25 cent per share. But after removing business development transactions, net income for the quarter was $1.5 billion, or $1.50 per share. Wall Street analysts were looking for $1.30 per share. Revenue rose 9% from a year earlier to $6.4 billion, beating analyst estimates of $6.05 billion.
Lilly’s diabetes segment was a large growth driver in the second quarter, propelled by Basaglar, which saw sales grow 133% compared to the same quarter last year, and Trulicity, which saw sales grow 62% from last year’s second quarter. Sales of cancer drug Lartruvo was also a significant growth driver, with sales up 69% compared to last year.
Lilly chief executive David Ricks also addressed Health and Human Services secretary Alex Azar’s blueprint to lower drug prices on the call. (Azar is a former Eli Lilly executive.) In the earnings release Ricks said, “We have not taken a list price increase on any of our medicines since the president’s blueprint was announced, as we remain focused on driving revenue growth through volume, not price.”He added, “As the responses to the blueprint are considered, we are hopeful that progress will be made on implementing proposals that lower the out-of-pocket cost of medicines for patients.”
Lilly increased its guidance for the rest of the year for reported earnings per share of $3.19 to $3.29 and adjusted earnings per share of $5.40 to $5.50.
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