Drugmaker Eli Lilly and Co.'s first-quarter profit fell 15 percent because of severance costs, a diabetes drug development agreement and another hit from the U.S. health care overhaul.
Lilly's adjusted earnings topped Wall Street expectations. Lilly's stock rose 61 cents to $36.62 in premarket trading.
The Indianapolis company said Monday that it earned $1.06 billion, or 95 cents per share, in the three months that ended March 31. That's down from $1.25 billion, or $1.13 per share, in the same quarter last year. Revenue rose 6 percent to $5.84 billion.
Excluding the charges, Lilly's profit was $1.24 per share. Analysts surveyed by FactSet expected, on average, earnings of $1.17 per share on $5.71 billion in revenue.
Lilly said the health care overhaul reduced first-quarter earnings by about 10 cents per share and revenue by about $90 million. Lilly and other drugmakers will begin paying a fee this year to help fund for the overhaul and will also cover rebates to patients in the Medicare prescription drug program. The overhaul started to take effect last year and aims to eventually cover millions of people.
Lilly said the overhaul trimmed earnings by 12 cents per share in last year's first quarter.
In January, Lilly announced an agreement with German drugmaker Boehringer Ingelheim to develop diabetes treatments. The drugmaker recorded a $388 million first-quarter research and development charge tied to that deal. Lilly also recorded a $76.3 million charge tied to severance costs from a previously announced restructuring plan.
Sales for Lilly's best-selling drug, the antipsychotic Zyprexa, climbed 6 percent to $1.28 billion in the first quarter. Lilly will lose U.S. patent protection for Zyprexa in October, and the company expects sales to fall sharply for the drug after cheaper generic versions of the drug enter the market.
Revenue from Lilly's second-best seller, the antidepressant Cymbalta, rose 13 percent to $909 million.
Lilly said revenue outside the United States rose 13 percent to $2.76 billion, mainly because it sold more drugs overseas.
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