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Lilly Reports Solid Second-Quarter 2009 Results, Raises EPS Guidance
Date:7/22/2009

uarter Reported Results

In the second quarter of 2009, worldwide total revenue was $5.293 billion, an increase of 3 percent compared with the second quarter of 2008. This 3 percent revenue growth was comprised of a 6 percent increase due to higher volume and a 3 percent increase due to higher prices, partially offset by a 7 percent decline due to the impact of foreign exchange rates (numbers do not add due to rounding). Worldwide total revenue of $5.293 billion was comprised of product sales of $5.113 billion, an increase of 2 percent, and collaboration and other revenue of $179.5 million, an increase of 54 percent, primarily due to the inclusion of Erbitux revenue as a result of the ImClone acquisition. U.S. total revenue increased 12 percent to $3.015 billion. Total revenue outside the U.S. decreased 8 percent to $2.278 billion due to the negative impact of foreign exchange rates.

Gross margin as a percent of total revenue increased by 5.4 percentage points, to 82.1 percent. This increase was due to the impact of the decline in foreign currencies compared to the U.S. dollar on international inventories sold during the quarter, resulting in a benefit to cost of sales as compared to the second quarter of 2008, and the inclusion in cost of sales of $57.1 million in expenses in the second quarter 2008 related to asset impairments at certain manufacturing facilities.

Marketing, selling and administrative expenses were essentially flat at $1.708 billion. These results were impacted favorably by the movement of foreign exchange rates and a reduction in advertising expenses in the U.S., offset by the impact of the ImClone acquisition and increased Effient pre-launch activities. Research and development expenses were $1.040 billion, or 20 percent of total revenue. Compared with the second quarter of 2008, research and development expenses grew 9 percent due primarily to the ImClone acquisition and increased late-stag
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