Analysts’ expectations exceed company’s ability to compensate for patent cliff at Lilly

When Eli Lilly’s patent protection for their antipsychotic drug Zyprexa expired last Fall, analysts sought information on how Lilly would make up for the loss of $3B in related revenues. They were comfortable in forecasting 2011 earnings per share of $3.67. In addition, most companies facing the patent cliff force significant reductions in sales expenses and overheads, and it was anticipated Lilly would follow suit.

Eli Lilly disappointed on both fronts, as Lilly is now predicting an EPS of no more than $3.20, and Derica Rice, Lilly’s CFO, stated sales and overhead expenses “will remain unchanged.” Investors reacted by taking Lilly down over 2% in early trading yesterday.

IPBlog continues to cover how organizations manage the revenue and profit squeezes that accompany a blockbuster coming off patent protection. You can collect previous blog items here.