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Eli Lilly is on the Right Track

June 25, 2014 | About:

Eli Lilly (NYSE:LLY) and Company discovers, develops, manufactures, and sells products, in one business segment, pharmaceutical products. Its products are sold in approximately 130 countries. It is one of the globe's largest drug companies. It's a major player in providing diabetes treatments and is often included in dividend investor's portfolios.

Lilly is a global healthcare leader that unites caring with discovery to make life better for people around the world.

Declaring Third-Quarter Dividend

The board of directors of Eli Lilly have declared a dividend for the third quarter of 2014 of $0.49 per share on outstanding common stock. The dividend is payable September 10, 2014 to shareholders of record at the close of business on August 15, 2014.

Recent Performance

LLY's debt-to-equity ratio is very low at 0.29 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.35, which illustrates the ability to avoid short-term cash problems.

The gross profit margin is currently very high, coming in at 81.34%. The average volume for Eli Lilly and has been 4.7 million shares per day over the past 30 days. Eli Lilly and has a market cap of $67.2 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.28 and a short float of 2.2% with 7.25 days to cover.

Focusing on Diabetes and Cancer Drugs

Eli Lilly is betting new oncology and diabetes drugs will propel its top line over the next few decades. The drug giant’s chief executive, John Lechleiter, said that the Indianapolis-based company hopes to bring a number of late-stage diabetes drugs to the market soon. Lilly presented a series of diabetes data, including from drug candidates like empagliflozin and dulaglutide, at the 74th American Diabetes Association Scientific Sessions.

Cancer, immune deficiencies such as Lupus and Alzheimer's Disease are also expected to be main areas of focus for the drug behemoth in coming years.

Lilly said it was optimistic over the potential of its expanding oncology pipeline, as well as new autoimmune drugs currently in late-stage testing.

Its Alzheimer’s antibody is currently in late-stage testing over whether it can slow down the progression of the disease, but results aren’t expected for at least another year.

Market Size is on the Rise

Presently, as per the American Diabetes Association approximately 10% of the entire U.S. population is affected by diabetes with over 25% being senior citizens. Every year nearly 1.9 milliom cases are diagnosed. According to estimates, as many as 1 in 3 American adults are projected to have diabetes in 2050 if prevailing trends continue. Although this may be a major health concern for the public, it shows a ballooning market for the company's upcoming easy-to-use pen solution and is likely to prove accretive to Eli Lilly's bottom line.

Eli Lilly aims to be among top 20 pharma companies in India by 2020

Eli Lilly and Co India is looking to introduce more innovation-based products across five therapeutic segments, including diabetes, over the next six years as it aims to become one of the top 20 pharmaceutical companies in the country.

The company, which launched an insulin delivery pen -- Humapen Savvio -- currently holds around 47th position in terms of revenues among pharma companies in India. The company lays maximum emphasis on its diabetes portfolio and would be introducing new products to cater to over 60 million patients in the country. As part of enhancing its diabetes product portfolio, the company launched an insulin delivery pen, which the company plans to provide free to physicians while it will be available in pharmacies for Rs 1,000 per piece. The pen, which can be used for six years to deliver insulin, will be co-promoted by Lilly-Boehringer Ingelheim alliance in India.

To End

The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, increase in stock price during the past year and expanding profit margins.

The ability to discover and market innovative drugs serves as the fuel for drug manufacturing industry vehicles. Large companies have the advantage of large scale and thus, comparatively lower costs of research, manufacturing, and marketing. For this very reason, the US drug manufacturing industry is highly concentrated, with the 50 largest companies accounting for more than 80 percent of total industry revenue. Eli Lilly, one of the big names in this industry, has been constantly on the move striving to launch breakthrough drugs. It is expected to create shareholder returns.

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