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UPDATE 2-Lilly beats forecasts, vows to remain independent

(Corrects 10th paragraph to show Pfizer bought Warner Lambert, Pharmacia and Wyeth (not Pfizer)

By Ransdell Pierson

July 24 (Reuters) - Eli Lilly and Co's quarterly revenue plunged due to generic competition for its Cymbalta depression drug and its Evista osteoporosis treatment, but cost controls helped earnings beat forecasts.

Lilly on Thursday said it had earned 68 cents per share in the second quarter, above the analysts' average forecast of 65 cents, according to Thomson Reuters I/B/E/S.

Sales of Cymbalta, which lost U.S. patent protection in December, tumbled 73 percent to $401 million. Evista, which began facing cheaper generics in March, had a sales drop of 61 percent to $108 million.

The Indianapolis drugmaker's sales and earnings have been badly hurt since late 2011, when its top-selling Zyprexa schizophrenia drug lost U.S. patent protection and faced competition from cheaper generics.

The expiration of patents and resulting decline in revenue have been a problem for most U.S. drugmakers and are among the reasons for a surge in mergers and acquisitions in the sector.

But rather than attempt to merge with another big drugmaker, Lilly has vowed to remain independent and rely on its own product lineup to get back on track.

Chief Executive Officer John Lechleiter told CNBC on Thursday that he planned to stick with that strategy and selectively make small or mid-size acquisitions to bolster Lilly's drug pipeline.

By contrast, Pfizer Inc, which faces looming patent expirations on several big drugs and has developed few top sellers in recent years, has tried several times since November to buy AstraZeneca Plc. It officially abandoned that quest in May, but under British takeover law could make renewed overtures to its smaller rival in November.

Pfizer has said it would lower its tax rate considerably by buying AstraZeneca and domiciling the combined company in the United Kingdom, a maneuver known as a tax inversion. Other healthcare companies are pursuing similar deals.

Pfizer, in seeking mega-mergers in the past, has focused on big U.S. rivals, having bought Warner Lambert, Pharmacia and Wyeth since 2000. These deals provided huge cost cuts that have propped up its earnings.

Lechleiter, in the television interview, said Lilly had not been approached by Pfizer and did not "intend to be anyone's target."

But he said high U.S. corporate taxes put U.S. companies at a disadvantage. "Companies doing inversions are simply trying to level the playing field," he added.

Lilly said it had earned $734 million, or 68 cents per share, in the second quarter. That compared with $1.21 billion, or $1.11 per share, a year earlier, when the company took charges for closing a distribution center and other costs.

Although revenue fell 17 percent to $4.94 billion, it topped Wall Street expectations of $4.90 billion.

Lilly said it still expected earnings this year of $2.72 to $2.80 per share, excluding special items.

Shares of Lilly were down 2 cents at $64.23 in early trading.

(Reporting by Ransdell Pierson, Editing by Franklin Paul and Lisa Von Ahn)