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Lilly profit beats Wall Street estimates, helped by cost cuts

By Ransdell Pierson

(Reuters) - Eli Lilly and Co on Wednesday reported higher-than-expected quarterly earnings, helped by cost cuts and a big price increase for top-selling antidepressant Cymbalta, which begins facing generic competition in December.

The Indianapolis drugmaker said it had earned $1.20 billion, or $1.11 per share, in the third quarter, compared with $1.33 billion, or $1.18 per share, a year earlier, when it took special charges for a partnership agreement.

The profit handily topped the analysts' average forecast of $1.04 per share, according to Thomson Reuters I/B/E/S.

Analysts expect the company's earnings to plunge perhaps 25 percent in 2014, as generic versions of Cymbalta and osteoporosis drug Evista flood the market and batter sales of the two blockbuster brands.

Even so, Atlantic Equities analyst Richard Purkiss said investors would probably be rewarded after 2015, when harm from the patent expirations subsides and profits rebound from growing sales of other drugs and the introduction of new Lilly treatments for cancer and other diseases.

"Lilly is likely to be the fastest-growing big-cap pharmaceutical company from 2015 to 2017, once the generic hit from Cymbalta and Evista is over, with double-digit earnings growth," Purkiss said. In the meantime, he said investors can count on a continuation of Lilly's generous dividend.

Shares of Lilly were down 0.1 percent at $50.09 in morning trading.

One of the company's most closely watched experimental drugs is ramucirumab, which when used by itself prolonged survival of patients with stomach cancer in late-stage trials. Some analysts believe its annual sales could exceed $1.5 billion by 2020 if it is approved for the hard-to-treat condition, and other forms of cancer.

Lilly said on Wednesday that U.S. regulators had assigned a priority review to ramucirumab and might decide by the second quarter of 2014 whether to approve it.

The company's sales rose 6 percent to $5.78 billion in the third quarter, slightly above Wall Street expectations of $5.76 billion, with most of the growth coming from price increases on its medicines. Global revenue would have risen 8 percent, if not for the weaker dollar, which lowers the value of sales in overseas markets.

The company squeezed 11 percent growth for Cymbalta by raising prices, bringing those sales to $1.38 billion. But the number of prescriptions filled for Lilly's flagship product declined.

Sales of lung cancer drug Alimta rose 7 percent to $691 million, while anti-impotence treatment Cialis jumped 9 percent to $527 million. Sales of Evista, which loses patent protection early next year, were up 3 percent at $256 million.

Lilly's marketing, selling and administrative expenses shrank by 6 percent in the quarter.

The company raised the low end of its full-year earnings forecast, excluding special items, to $4.10 a share from $4.05 while keeping the top end at $4.15.

(Reporting by Ransdell Pierson; Editing by Jeffrey Benkoe and Lisa Von Ahn)

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