Sales, income improve in 2Q, and Bristol-Myers, Lilly and Roche confirm or boost 2010 guidance

Q2 sales, profit improve for 3 major drugmakers

TRENTON, N.J. — Rising product sales helped three big drugmakers — Bristol-Myers Squibb Co., Roche Holding AG and Eli Lilly and Co. — post better second-quarter results on Thursday.

The three Top 20 pharmaceutical companies also confirmed or raised their 2010 profit forecasts, a move to reassure investors worried about the impact of the U.S. health care overhaul, the European economic crisis, shifting currency exchange rates and looming generic competition.

“Overall I thought it was a pretty good performance for the sector considering all the spooks we had going into the quarter,” Standard & Poor’s analyst Herman Saftlas said, citing the first three factors. “It looks like these companies really exceeded expectations, certainly Lilly in a major way.”

Despite that, the three drugmakers each saw their share prices rise only 1 percent or less, less than the broader U.S. markets.

—Indianapolis-based Lilly’s net income soared 16 percent to $1.35 billion, or $1.22 per share, or $1.24 excluding one-time items. That beat Wall Street expectations by 14 cents.

Revenue rose 9 percent to $5.75 billion on sales growth from three of the four key drugs that face patent expirations by 2013. Sales of antipsychotic drug Zyprexa rose 5 percent to $1.26 billion, and sales of antidepressant Cymbalta climbed 17 percent to $867.7 million.

—Switzerland’s Roche posted an even more impressive 37 percent rise in six-month net profit — it doesn’t report quarterly profits — as sales jumped 5 percent to 24.6 billion Swiss francs, or $22.8 billion. In addition, costs related to its $46.8 billion takeover of U.S.-based Genentech in March 2009 were much lower this quarter.

Sales of MabThera, known in the U.S. and Canada as Rituxan, rose 9 percent to $3.05 billion. Sales of Herceptin, another oncology drug, climbed 8 percent to $2.6 billion.

—New York-based Bristol-Myers reported net income was down nearly 6 percent at $927 million, or 53 cents per share, due to the loss of income from its former Mead Johnson infant formula business, spun off late last year. Otherwise, it would have been up about 5 percent.

Revenue rose about 2 percent to $4.77 billion, led by Plavix, which was up 6 percent at $1.63 billion, and psychiatric drug Abilify, at $633 million.

“Numbers have come in pretty much as expected or better than expected,” said Edward Jones analyst Linda Bannister. “These companies are delivering this quarter, no question about it.”

Leerink Swann analyst Seamus Fernandez said the companies “have actually done a pretty good job of weathering the preliminary storm” over the impact of the U.S. health care overhaul and pressure to cut prices from European Union governments enacting austerity plans.

“International price pressure is going to intensify a little bit in the back half of this year, as will some of the health care reform headwinds,” he predicted.

Executives of the companies told analysts much the same thing, and said they see the trends worsening next year.

Still, Bristol-Myers confirmed its profit forecasts of $2.10 to $2.20 excluding one-time items this year and a minimum of $1.95 per share, excluding one-time items, in 2013, when revenue will start hemorrhaging from generic competition.

Lilly raised its 2010 earnings guidance 10 cents — three months after lowering it — and now expects $4.50 to $4.65 per share, excluding items.

Roche confirmed its full-year outlook of double-digit growth for core earnings per share, as operating profit rose 10 percent.

Lilly and Bristol-Myers both repeated their praise of experimental drugs in development that they say will make up for lost revenue from expired patents down the road.

“We have more confidence that Bristol will be successful than Lilly, just because Bristol has more in its pipeline,” said Les Funtleyder, an analyst and portfolio manager at Miller Tabak & Co.

In New York trading, Bristol-Myers shares rose 18 cents to $24.93, while Lilly shares increased 20 cents, two $35.15.

In Zurich trading, Roche shares rose 1 percent to close at 138.40 francs ($133.08).

AP Business Writer Tom Murphy in Indianapolis contributed to this report.