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What Drove Eli Lilly’s Oncology Franchise in 1Q16?

Mike Benson

What Drove Eli Lilly's 1Q16 Revenue Growth?

(Continued from Prior Part)

Oncology franchise

Eli Lilly’s (LLY) human pharmaceuticals segment also consists of its oncology franchise. The oncology franchise contributed ~18.4% of total revenues during 1Q16. Key drugs in this segment include Alimta, Erbitux, and Cyramza. A new drug, Portrazza, was launched in the US markets in December 2015.

Alimta

Alimta is a chemotherapy drug used in the treatment of patients with advanced non-small cell lung cancer (or NSCLC). Alimta sales fell by ~1.5% to $564 million during 1Q16, as compared to $573 million for 1Q15. This included an increase of 4% in the US markets and a decrease of ~6% in international sales. The sales in US markets were driven by changes in wholesaler buying patterns while the sales in international markets were negatively impacted by lower realized prices and foreign exchange.  Allergan (ACT) has a drug that competes with  Alimta.

Erbitux

Erbitux is a drug used in the treatment of metastatic colorectal cancer, and head and neck cancer. Erbitux sales increased by over 90% to $168 million in 1Q16, as compared to ~$88.2 million in 1Q15. Lilly took back the commercialization rights for Erbitux in North America from Bristol-Myers Squibb (BMY) on October 1, 2015. This drove the US revenues and a 12% increase in international revenues further added to the reported revenues for Erbitux. Erbitux competes with Roche’s (RHHBY) Avastin and Amgen’s (AMGN) Vectibix.

Other drugs in the oncology franchise

Other drugs in the oncology franchise include Cyramza, Gemzar, and Portrazza. Cyramza revenues rose by 94% during 1Q16 following strong uptake in Japan as well as its launch in European markets. Gemzar revenues declined by over 2% during 1Q16 over 1Q15. Portrazza is a new drug that launched in December 2015 and reported revenues of ~$1.7 million in 1Q16.

Investors can consider ETFs like the PowerShares Dynamic Large Growth ETF (PWB), which invests 3.6% of its portfolio in Eli Lilly and the iShares Core S&P 500 ETF (IVV), which holds ~0.5% of its total assets in Eli Lilly.

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