Morningstar Rating

Stock Research and Analysis

by Damien Conover, CFA

Bulls Say

Alzheimer's drug solanezumab could become a major blockbuster drug if a follow-up Phase III trial supports previous clinical work.
Lilly's animal health business should post strong growth during the next decade, offsetting the major patent losses in the human drug business.
Lilly is focusing its development efforts on several unmet medical indications in neurology and oncology. The strategy should improve the success rate at the Food and Drug Administration, which has become exceedingly risk-sensitive to new drugs in well-treated areas such as cardiology. Read more 

Bears Say

While Lilly will likely generate adequate cash flow to cover its dividend payments and capital expenditures for the next couple years, by 2015 the company's pipeline needs to be successful to continue supporting the dividend payments.
Lilly has been steadily losing share in the insulin market because of Novo Nordisk's more effective marketing and the success of its long-acting and rapid-acting insulin analogs.
The patent loss on antidepression drug Cymbalta will have an amplified impact on the company's bottom line because of the drug's high margins. Read more 

Management

We view Lilly's stewardship as relatively standard. While we feel that Lilly's use of $6.5 billion to acquire ImClone in 2008 will likely not generate good returns, the company's partnership with Boehringer Ingelheim greatly improved the strategic outlook   Read more 

Profile

Eli Lilly is a pharmaceutical company with a focus on neuroscience, endocrinology, oncology, and immunology. Lilly's key products include antipsychotic Zyprexa; Cymbalta   Read more 

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