WRAPUP 2-Pharma fails to impress as patent problems loom

* AstraZeneca warns 2010 earnings to fall, cuts jobs

* Bristol-Myers, Eli Lilly 2010 forecasts in line

* Astra, Lilly shares fall, Bristol-Myers up
(Adds analyst, Lilly comment, updates shares)

By Bill Berkrot

NEW YORK, Jan 28 (BestGrowthStock) – U.S. drugmakers Bristol-Myers
Squibb Co and Eli Lilly and Co said on Thursday they expect
2010 earnings growth in line with Wall Street estimates, but
Britain-based AstraZeneca signaled tough sledding ahead as all
three gird for patent protection losses of important drugs.

AstraZeneca (AZN.L: ) will feel the pain almost immediately,
announcing it will slash an additional 8,000 jobs in a further
cost-cutting move as it faces expected generic competition in
the United States this year for its breast cancer drug Arimidex
and asthma medicine Pulmicort Respules [ID:nLDE60Q0K3].

Bristol-Myers (BMY.N: ) and Eli Lilly (LLY.N: ), which will not
be hit by key patent losses before next year, posted generally
solid fourth-quarter earnings, with Bristol beating Wall Street
per share estimates and Lilly missing by just a penny. Bristol
shares were up 1 percent, while Lilly slipped 2 percent.

Astra said it expects earnings per share for 2010 in a
range of $5.75 to $6.15, down from $6.32 in 2009, and a decline
in sales of up to the “mid-single-digit,” sending its shares
more than 4 percent lower.

“EPS growth will enter negative territory in 2010 and that
will turn sharply negative from 2011 to 2015, leaving the
company with what is one of the steepest patent cliffs,” said
Sanford Bernstein analyst Tim Anderson in a research note.

Bristol-Myers forecast full-year earnings of $2.15 to $2.25
per share, excluding items, reflecting growth of about 16 to 22
percent. That was roughly in line with Wall Street expectations
of $2.19 per share, according to Thomson Reuters I/B/E/S.
[ID:nN27138093]

Bristol is staring down the barrel of generic competition
for the blood clot preventer Plavix, one of the world’s
top-selling drugs, as early as November 2011.

Lilly said it continues to expect profit growth this year
of about 5 to 10 percent with earnings of $4.65 to $4.85 per
share, excluding special items. That too was in line with
analysts’ expectations of $4.73 per share [ID:nN27212519].

But investors are expecting Lilly’s sales and profits to be
hit hard by late 2011, when its $5 billion-a-year schizophrenia
drug Zyprexa could begin facing competition from cheaper
generics.

“Lilly clearly is in a pickle, about to lose Zyprexa, and
losing Cymbalta in 2013,” said Jon LeCroy, an analyst with
Hapoalim Securities. Cymbalta is a $3.2 billion-a-year
treatment for depression, anxiety and fibromyalgia.

PIPELINE PRESSURE

Lilly’s fourth-quarter earnings per share missed Wall
Street estimates by a penny, while sales topped expectations.

The Indianapolis-based drugmaker had net earnings of $915
million, or 83 cents per share. That compared with a loss of
$3.63 billion, or $3.31 per share, a year earlier, when it took
hefty charges related to its purchase of Imclone Systems.

JP Morgan analyst Chris Schott said the quarter reflected
solid near-term growth and cost management. “Unfortunately,
much of this sales growth is being driven by assets with
limited remaining patent life, placing increased pressure on
the company’s pipeline,” he said.

Analysts also expressed concern that Lilly’s new blood clot
preventer Effient will fail to live up to lofty expectations
for eventual annual sales of up to $1 billion, and said foreign
exchange rates, which have helped the company in past quarters,
had a negative impact this time.

Lilly CEO John Lechleiter told analysts he remains
enthusiastic about Effient’s prospects and said it was too
early to reconsider strong sales forecasts for the drug it
began selling just last summer.

Bristol posted fourth-quarter earnings that topped
analysts’ expectations by 6 cents per share.

It had net profit of of $8.03 billion, or $4.06 per share,
including a $7.2 billion after-tax gain from the split-off of
its Mead Johnson nutritionals business late last year.

Some tension between Bristol and Lilly eased as they
settled a dispute over a promising experimental lung-cancer
drug that Lilly acquired through its purchase of ImClone.

The two will now co-develop the drug. Bristol had a
longterm relationship with ImClone through their shared cancer
drug Erbitux and Bristol contended it also had rights to the
lung drug necitumumab.

Astra said its core pretax profit, which excludes certain
restructuring costs and charges, rose 10 percent in the fourth
quarter. But its earnings per share of $1.42 missed analysts’
expectations by 15 cents.

Its one bright spot was sales of the cholesterol fighter
Crestor, which rose 20 percent to $1.26 billion, topping
forecasts.

“The next five years will be challenging for the industry
and for the company, as its revenue base transitions through a
period of exclusivity losses and new product launches,” Astra
said in a statement.

Bristol-Myers shares were up 45 cents, or 1.9 percent, to
$24.75, while Eli Lilly shares fell 86 cents, or 2.4 percent,
to $35.53, both in late morning trade on the New York Stock
Exchange. AstraZeneca shares were off 4.7 percent in London.

Money
(Reporting by Ransdell Pierson in New York and Kate Kelland in
London; writing by Bill Berkrot, editing by Dave Zimmerman)

WRAPUP 2-Pharma fails to impress as patent problems loom