Lilly Reports Solid Fourth-Quarter and Full-Year 2021 Financial Results, Recent Late-Stage Pipeline Successes Set Up Next Wave of Innovative Medicines for Patients Eli Lilly and Company (NYSE: LLY) announced financial results for the fourth quarter and full year of 2021 today. Lilly had a remarkable year of...

INDIANAPOLIS , Feb. 3, 2022 /PRNewswire/ -- Eli Lilly and Company (NYSE: LLY ) announced financial results for the fourth quarter and full year of 2021 today.

"Lilly had a remarkable year of growth and pipeline success in 2021, despite the continued hardships from the pandemic," said David A. Ricks , Lilly's chair and CEO. "We have tremendous momentum moving into 2022 and beyond with strong revenue expectations, limited patent exposure, and an exciting pipeline of potential new medicines, which we hope will give us the opportunity to positively impact millions more lives in meaningful ways. Lilly is committed to continuing to innovate as the primary way to create value for patients and shareholders alike."

Certain financial information for 2021 and 2020 is presented on both a reported and a non-GAAP basis. Some numbers in this press release may not add due to rounding. Reported results were prepared in accordance with U.S. generally accepted accounting principles (GAAP) and include all revenue and expenses recognized during the periods. Non-GAAP measures reflect adjustments for the items described in the reconciliation tables later in the release. The company's 2022 financial guidance is being provided on both a reported and a non-GAAP basis. The non-GAAP measures are presented to provide additional insights into the underlying trends in the company's business.

Key Events Over the Last Three Months

Business Development/Other Developments

"Lilly closed 2021 with another solid quarter. Throughout the year we delivered strong top- and bottom-line growth, with volume-driven growth across key brands," said Anat Ashkenazi, Lilly's senior vice president and chief financial officer. " We continue to advance promising R&D opportunities and invest in potential launches that would bring needed therapies to patients worldwide. We expect to deliver top-tier revenue growth throughout the decade."

Fourth-Quarter Reported Results

In the fourth quarter of 2021, worldwide revenue was $8.000 billion , an increase of 8 percent compared with the fourth quarter of 2020, driven by an 11 percent increase in volume, partially offset by a 3 percent decrease due to lower realized prices. Key growth products, consisting of Trulicity ® , Taltz ® , Verzenio ® , Jardiance, Olumiant, Emgality ® , Retevmo ® , Cyramza ® and Tyvyt ® , contributed 14 percentage points of revenue growth and represented 61 percent of total revenue for the fourth quarter of 2021, excluding COVID-19 antibodies. The company recognized worldwide revenue of $1.063 billion from COVID-19 antibodies during the quarter compared with $871.2 million in the fourth quarter of 2020. Excluding revenue from COVID-19 antibodies, worldwide revenue increased by 6 percent in the fourth quarter.

Revenue in the U.S. increased 13 percent, to $5.176 billion , driven by a 14 percent increase in volume, partially offset by a 2 percent decrease due to lower realized prices. The company recognized U.S. revenue from COVID-19 antibodies of $1.029 billion in the fourth quarter of 2021 compared to $850.0 million in the fourth quarter of 2020. Excluding COVID-19 antibodies, revenue in the U.S. increased by 11 percent. The increase in U.S. volume was driven by certain key growth products, including Trulicity, Taltz, Jardiance, Verzenio and Olumiant.

Revenue outside the U.S. decreased 1 percent, to $2.824 billion , as a 7 percent increase in volume was more than offset by a 6 percent decrease due to lower realized prices and a 1 percent decrease due to the unfavorable impact of foreign exchange rates. The increase in volume outside the U.S. was primarily driven by increased volume for all key growth products, partially offset by decreased volume for Alimta ® , Cymbalta ® and Forteo ® resulting from the entry of generic competition due to loss of exclusivity in certain major markets. The lower realized prices were primarily driven by the impact of the updated National Reimbursement Drug List (NRDL) formulary for certain products, largely Tyvyt, in China .

Gross margin increased 4 percent, to $5.950 billion , in the fourth quarter of 2021 compared with the fourth quarter of 2020. Gross margin as a percent of revenue was 74.4 percent, a decrease of 2.5 percentage points compared to the fourth quarter of 2020. The decrease in gross margin percent was driven by higher sales of COVID-19 antibodies.

Total operating expenses in the fourth quarter of 2021, increased 5 percent to $3.551 billion compared with the fourth quarter of 2020. Research and development expenses increased 7 percent to $1.959 billion , or 25 percent of revenue, primarily driven by higher development expenses for late-stage assets, partially offset by lower development expenses for COVID-19 therapies. Research and development expenses for COVID-19 therapies were approximately $40 million in the fourth quarter of 2021. Marketing, selling and administrative expenses increased 2 percent to $1.592 billion .

In the fourth quarter of 2021, the company recognized acquired in-process research and development charges of $376.6 million related to business development transactions with Foghorn Therapeutics Inc., Entos Pharmaceuticals Inc., and QILU Regor Therapeutics Inc. In the fourth quarter of 2020, the company recognized acquired in-process research and development charges of $366.3 million related to business development transactions with Innovent Biologics, Inc., Disarm Therapeutics, Inc., and Fochon Pharmaceuticals, Ltd.

Operating income in the fourth quarter of 2021 was $1.917 billion , compared to$1.992 billion in the fourth quarter of 2020. The decrease in operating income was driven by higher operating expenses, as well as higher asset impairment, restructuring and other special charges, largely offset by higher gross margin. Operating margin percent, defined as operating income as a percent of revenue, was 24.0 percent.

Other income (expense) was expense of $77.3 million in the fourth quarter of 2021, compared with income of $477.0 million in the fourth quarter of 2020. The reduction in other income (expense) was primarily driven by net losses on investments in equity securities in the fourth quarter of 2021 compared with net gains on investments in equity securities in the fourth quarter of 2020.

The effective tax rate was 6.2 percent in the fourth quarter of 2021, compared with 14.3 percent in the fourth quarter of 2020. The lower effective tax rate in the fourth quarter of 2021 was primarily driven by net discrete tax items in both periods, as well as the tax benefit related to net losses on investments in equity securities compared with higher tax expense related to net gains on investments in equity securities in the fourth quarter of 2020.

In the fourth quarter of 2021, net income and EPS both decreased 18 percent, to $1 .726 billion and $1.90 , compared with $2 .117 billion and $2.32 , respectively, in the fourth quarter of 2020. Net income and EPS in the fourth quarter of 2021 decreased compared to the same period in 2020 driven by a reduction in other income (expense) and, to a lesser extent, lower operating income, partially offset by lower income tax expense.

Fourth-Quarter Non-GAAP Measures

On a non-GAAP basis, fourth quarter of 2021 gross margin increased 4 percent, to $6.087 billion compared with the fourth quarter of 2020. Gross margin as a percent of revenue was 76.1 percent, a decrease of 2.5 percentage points. The decrease in gross margin percent was driven by higher sales of COVID-19 antibodies.

Operating income on a non-GAAP basis increased $80.1 million , or 3 percent, to $2.536 billion in the fourth quarter of 2021 compared with the fourth quarter of 2020, due to higher gross margin, partially offset by higher operating expenses. Operating margin was 31.7 percent on a non-GAAP basis.

Other income (expense) on a non-GAAP basis was expense of $6.7 million in the fourth quarter of 2021, compared with expense of $31.0 million in the fourth quarter of 2020.

The effective tax rate on a non-GAAP basis was 10.3 percent in the fourth quarter of 2021, compared with 13.1 percent in the fourth quarter of 2020. The lower effective tax rate was primarily driven by net discrete tax items in both quarters.

On a non-GAAP basis, in the fourth quarter of 2021 net income and EPS both increased 8 percent, to $2.268 billion and $2.49 , compared with $2.108 billion and $2.31 , respectively, in the fourth quarter of 2020. The increases in net income and EPS were primarily driven by higher operating income.

For further detail on non-GAAP measures, see the reconciliation below as well as the "Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information" table later in this press release.

Full Year Reported Results

For the full year of 2021, worldwide revenue increased 15 percent to $28.318 billion , compared with $24.540 billion in the same period in 2020. The increase in revenue was driven by a 16 percent increase in volume and, to a lesser extent, a 1 percent increase due to the favorable impact of foreign exchange rates, partially offset by a 2 percent decrease due to lower realized prices. The company recognized worldwide revenue of $2.239 billion from COVID-19 antibodies for the full year of 2021 compared with $871.2 million in 2020. Excluding revenue from COVID-19 antibodies, worldwide revenue increased by 10 percent.

Revenue in the U.S. increased 18 percent to $16.811 billion , driven by a 19 percent increase in volume, partially offset by a 1 percent decrease due to lower realized prices. The company recognized U.S. revenue of $1.978 billion from COVID-19 antibodies for the full year of 2021 compared to $850.0 million in 2020. Excluding revenue from COVID-19 antibodies, revenue in the U.S. increased by 11 percent. The increase in U.S. volume was driven by certain key growth products, including Trulicity, Taltz, Verzenio, Jardiance, Olumiant, Retevmo and Emgality.

Revenue outside the U.S. increased 12 percent to $11.507 billion , driven by a 13 percent increase in volume and, to a lesser extent, a 3 percent increase due to the favorable impact of foreign exchange rates, partially offset by a 4 percent decrease due to lower realized prices. The increase in volume outside of the U.S. was primarily driven by increased volume for all key growth products. The lower realized prices were primarily driven by the price impacts of certain products on the NRDL formulary in China .

Gross margin increased 10 percent to $21.006 billion in 2021. Gross margin as a percent of revenue was 74.2 percent, a decrease of 3.5 percentage points compared with 2020. The decrease in gross margin percent was driven by higher sales of COVID-19 antibodies.

Total operating expenses increased 10 percent to $13.457 billion in 2021. Research and development expenses increased 15 percent to $7.026 billion , or 24.8 percent of revenue. The increase was primarily driven by higher development expenses for late-stage assets. Marketing, selling and administrative expenses increased 5 percent to $6.432 billion , primarily due to increased marketing costs to continue to drive growth for key products, investment in preparation for new launches, and lower marketing activities in 2020 as a result of pandemic-related spending reductions.

In 2021, the company recognized acquired in-process research and development charges of $874.9 million resulting from business development transactions compared with $660.4 million in 2020.

In 2021, the company recognized asset impairment, restructuring and other special charges of $316.1 million . The charges were primarily related to an intangible asset impairment resulting from the sale of the rights to Qbrexza ® , impairment of an intangible asset from Lilly's acquisition of Loxo Oncology, as well as acquisition and integration costs associated with the acquisition of Prevail Therapeutics Inc. In 2020, the company recognized asset impairment, restructuring and other special charges of $131.2 million . The charges were primarily related to severance costs incurred as a result of actions taken worldwide to reduce our cost structure.

Operating income in 2021 increased 5 percent compared with 2020 to $6.357 billion , as higher gross margin was partially offset by higher operating expenses, higher acquired in-process research and development charges, and higher asset impairment, restructuring and other special charges. Operating margin was 22.4 percent.

Other income (expense) was expense of $201.6 million in 2021 compared with income of $1.172 billion in 2020. The decrease was primarily driven by lower net gains on investments in equity securities and a charge of $405.2 million related to the repurchase of higher-cost debt.

For the full year of 2021, the effective tax rate was 9.3 percent, compared with an effective tax rate of 14.3 percent for the full year of 2020. The lower effective tax rate in 2021 was driven primarily by the tax impacts of acquired in-process research and development charges, lower net gains on investments in equity securities, as well as a net discrete tax benefit.

For the full year of 2021, net income and EPS both decreased 10 percent, to $5.582 billion and $6.12 , compared with $6.194 billion and $6.79 , respectively, in 2020. The decreases in net income and EPS were driven by a reduction in other income (expense), partially offset by lower income taxes and higher operating income.

Full Year Non-GAAP Measures

On a non-GAAP basis for the full year of 2021, gross m argin increased 13 percent, to$21.914 billioncompared with the full year of 2020. Gross margin as a percent of revenue for the full year of 2021 was 77.4 percent, compared with 79.3 percent for the full year of 2020. The decrease in gross margin percent was driven by higher sales of COVID-19 antibodies.

Operating income on a non-GAAP basis increased 16 percent to $8.457 billiondriven by higher gross margin, partially offset by higher operating expenses. Operating margin was 29.9 percent.

Other income (expense) on a non-GAAP basis was income of $25.6 million for the full year of 2021, compared with expense of $150.8 million for the full year of 2020. The increase in other income (expense) was primarily driven by income from patent settlements in Europe for Alimta in 2021.

The effective tax rate on a non-GAAP basis was 12.3 percent for the full year of 2021, compared with 13.0 percent for the full year of 2020, driven primarily by a net discrete tax benefit in 2021.

On a non-GAAP basis, net incom e and EPS increased 20 percent to $7.437 billion and $8.16 , respectively. The increases in net income and EPS were driven by higher operating income.

For further detail on non-GAAP measures, see the reconciliation below as well as the "Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information" table later in this press release.

Selected Revenue Highlights

For the fourth quarter of 2021, worldwide Trulicity revenue was $1.884 billion , an increase of 25 percent compared with the fourth quarter of 2020. U.S. revenue increased 25 percent, to $1.449 billion , primarily driven by increased demand. Revenue outside the U.S. was $435.1 million , an increase of 28 percent, driven by increased volume, partially offset by lower realized prices.

For the full year of 2021, worldwide Trulicity revenue was $6.472 billion , an increase of 28 percent compared with the full year of 2020. U.S. revenue increased 28 percent, to $4.914 billion , driven by increased demand. Revenue outside the U.S. increased 26 percent, to $1.558 billion , driven by increased volume and, to a lesser extent, the favorable impact of foreign exchange rates, partially offset by lower realized prices.

For the fourth quarter of 2021, worldwide Humalog revenue decreased 16 percent compared with the fourth quarter of 2020, to $601.7 million . Revenue in the U.S. decreased 25 percent, to $311.7 million , driven by lower realized prices resulting from changes to estimates for rebates and discounts in both periods. Revenue outside the U.S. decreased 4 percent, to $290.0 million , driven by decreased volume and lower realized prices.

For the full year of 2021, worldwide Humalog revenue decreased 7 percent, to $2.453 billion compared with the full year 2020. U.S. Humalog revenue for 2021 was $1.321 billion , an 11 percent decrease, primarily driven by lower realized prices. Humalog revenue outside the U.S. was $1.132 billion , a 1 percent decrease, driven by decreased volume and, to a lesser extent, lower realized prices, largely offset by the favorable impact of foreign exchange rates.

Due to competitive pressures, the company expects a continued price decline for Humalog in the U.S.

For the fourth quarter of 2021, worldwide Taltz revenue increased 31 percent compared with the fourth quarter of 2020, to $647 .4 million. U.S. revenue increased 36 percent, to $470 .8 million, driven primarily by increased demand. Revenue outside the U.S. increased 18 percent , to $176.6 million , driven by increased volume, partially offset by lower realized prices.

For the full year of 2021, Taltz generated worldwide revenue of $2.213 billion , an increase of 24 percent compared with the full year of 2020. U.S. revenue was $1.542 billion , an increase of 20 percent, driven by increased demand, partially offset by increased rebates to gain commercial access which resulted in lower realized prices. Revenue outside the U.S. was $670.4 million , an increase of 34 percent, primarily driven by increased volume.

For the fourth quarter of 2021, worldwide Alimta revenue decreased 33 percent compared with the fourth quarter of 2020, to $434.9 million . U.S. revenue decreased 3 percent, to $322 .0 million, driven primarily by customer buying patterns. Revenue outside the U.S. decreased 65 percent, to $112.8 million , primarily driven by decreased volume due to entry of generic competition in certain markets and, to a lesser extent, lower realized prices.

For the full year of 2021, worldwide Alimta revenue decreased 12 percent, to $2.061 billion compared with the full year of 2020. U.S. Alimta revenue for 2021 was $1.234 billion , a 2 percent decrease, driven by decreased volume, partially offset by higher realized prices. Alimta revenue outside the U.S. was $827.5 million , a 22 percent decrease, primarily driven by decreased volume due to entry of generic competition in certain markets and, to a lesser extent, lower realized prices, partially offset by the favorable impact of foreign exchange rates.

The company expects continued volume decline for Alimta as a result of the entry of generic competition due to the loss of patent exclusivity in Japan and major European markets. The company expects generic entrants in the U.S. beginning in the first quarter of 2022.

The company's worldwide Jardiance revenue during the fourth quarter of 2021 was $431.9 million , an increase of 38 percent compared with the fourth quarter of 2020. U.S. revenue increased 43 percent, to $240.5 million , primarily driven by increased demand. Revenue outside the U.S. was $191.4 million , an increase of 31 percent, driven by increased volume.

For the full year of 2021, the company's worldwide Jardiance revenue was $1.491 billion , an increase of 29 percent compared with the full year of 2020. U.S. revenue increased 30 percent, to $807.3 million , primarily driven by increased demand. Revenue outside the U.S. increased 28 percent, to $683.5 million , primarily driven by increased volume.

Jardiance is part of the company's alliance with Boehringer Ingelheim. Lilly reports as revenue royalties received on net sales of Jardiance.

For the fourth quarter of 2021, worldwide Verzenio revenue increased 43 percent compared with the fourth quarter of 2020, to $404.1 million . U.S. revenue was $252.8 million , an increase of 34 percent, driven by increased demand, partially offset by lower realized prices. Revenue outside the U.S. was $151.3 million , an increase of 62 percent, driven by increased volume, partially offset by the unfavorable impact of foreign exchange rates and lower realized prices.

For the full year of 2021, Verzenio generated worldwide revenue of $1.350 billion , an increase of 48 percent compared with the full year of 2020. U.S. revenue increased 35 percent to $834.9 million , driven by increased demand. Revenue outside of the U.S. increased 75 percent to $515.0 million , driven by increased volume.

For the fourth quarter of 2021, worldwide Humulin revenue decreased 8 percent compared with the fourth quarter of 2020, to $298.8 million . U.S. revenue decreased 11 percent, to $199.4 million , driven by decreased demand and, to a lesser extent, lower realized prices. Revenue outside the U.S. decreased 1 percent, to $99.4 million , due to decreased volume, largely offset by higher realized prices.

For the full year of 2021, Humulin generated worldwide revenue of $1.223 billion , a decrease of 3 percent compared with the full year of 2020. U.S. revenue was $832.9 million , a 4 percent decrease, primarily driven by decreased demand and, to a lesser extent, lower realized prices. Revenue outside the U.S. was $389.6 million , a 1 percent decrease, due to decreased volume, largely offset by higher realized prices and the favorable impact of foreign exchange rates.

For the fourth quarter of 2021, worldwide Olumiant revenue increased 59 percent compared with the fourth quarter of 2020, to $306.0 million . U.S. revenue was $87.7 million , representing growth of $62.8 million compared with the fourth quarter of 2020. Revenue outside the U.S. was $218.3 million , an increase of 30 percent, driven by increased volume, partially offset by lower realized prices. Increased volume worldwide was partially driven by utilization of Olumiant for the treatment of hospitalized patients with COVID-19.

For the full year of 2021, Olumiant generated worldwide revenue of $1.115 billion , an increase of 75 percent compared with the full year of 2020. U.S. revenue was $324.1 million , an increase of $260.3 million . Revenue outside of the U.S. increased 38 percent, to $791.0 million , driven by increased volume and, to a lesser extent, the favorable impact of foreign exchange rates, partially offset by lower realized prices. Increased volume worldwide was partially driven by utilization of Olumiant for the treatment of hospitalized patients with COVID-19.

For the fourth quarter of 2021, worldwide Cyramza revenue decreased 5 percent compared with the fourth quarter of 2020, to $270 .4 million. U.S. revenue was $91 .9 million, a decrease of 12 percent, driven by decreased demand, partially offset by higher realized prices. Revenue outside the U.S. was $178 .6 million, a decrease of 1 percent, driven by the unfavorable impact of foreign exchange rates and lower realized prices, largely offset by increased volume.

For the full year of 2021, worldwide Cyramza revenue remained essentially flat compared with the full year of 2020, at $1.033 billion . U.S. revenue decreased 6 percent, to $358.1 million , driven by decreased demand, partially offset by higher realized prices. Revenue outside the U.S. increased 4 percent, to $674.8 million , due to increased volume, partially offset by lower realized prices.

For the fourth quarter of 2021, worldwide Basaglar revenue was $242.4 million , a decrease of 14 percent compared with the fourth quarter of 2020. U.S. revenue decreased 19 percent , to $165.0 million , driven by continued competitive pressures that resulted in lower realized prices and, to a lesser extent, decreased demand. Revenue outside the U.S. decreased 1 percent, to $77 .4 million, primarily driven by lower realized prices, largely offset by increased volume.

For the full year of 2021, Basaglar generated worldwide revenue of $892.5 million , a decrease of 21 percent compared with the full year of 2020. U.S. revenue was $588.3 million , a decrease of 30 percent, driven by lower realized prices and, to a lesser extent, decreased demand. Revenue outside of the U.S. was $304.2 million , an increase of 8 percent, primarily driven by increased volume.

Due to competitive pressures, the company expects a continued price decline for Basaglar in the U.S. Basaglar is part of the company's alliance with Boehringer Ingelheim. Lilly reports as cost of sales payments made to Boehringer Ingelheim for royalties.

For the fourth quarter of 2021, worldwide Forteo revenue decreased 28 percent compared with the fourth quarter of 2020, to $184.0 million . U.S. revenue decreased 10 percent, to $111.4 million , driven by decreased demand, partially offset by higher realized prices. Revenue outside the U.S. decreased 45 percent to $72 .6 million, primarily driven by decreased volume.

For the full year of 2021, worldwide Forteo revenue decreased 23 percent to $801.9 million compared with the full year of 2020. U.S. Forteo revenue for 2021 was $441.6 million , a 13 percent decrease, driven by decreased demand, partially offset by higher realized prices. Forteo revenue outside the U.S. was $360.3 million , a 33 percent decrease, driven by decreased volume and, to a lesser extent, lower realized prices.

The company expects further volume declines for Forteo as a result of the entry of generic and biosimilar competition due to the loss of patent exclusivity in the U.S., Japan and major European markets.

For the fourth quarter of 2021, Emgality generated worldwide revenue of $161.5 million , an increase of 47 percent compared with the fourth quarter of 2020. U.S. revenue was $121.0 million , an increase of 25 percent, driven by higher realized prices and increased demand. Revenue outside the U.S. was $40.4 million , an increase of $27.1 million compared with the fourth quarter of 2020, driven by increased demand.

For the full year of 2021, worldwide Emgality revenue was $577.2 million , an increase of 59 percent compared with the full year of 2020. U.S. revenue increased 33 percent, to $434.5 million , driven by higher realized prices and increased demand. Revenue outside the U.S. was $142.7 million , an increase of $105.7 million primarily due to increased demand.

For the fourth quarter of 2021, the company's Tyvyt revenue in China was $77.8 million , a decrease of 24 percent compared with the fourth quarter of 2020, primarily driven by lower realized prices due to the impact of the updated NRDL formulary in China on Tyvyt, partially offset by increased demand.

For the full year of 2021, the company's Tyvyt revenue in China was $418.1 million , an increase of 35 percent compared with the full year of 2020. This increase was due to increased volume and, to a lesser extent, the favorable impact of foreign exchange rates, partially offset by lower realized prices.

Tyvyt is part of the company's alliance with Innovent. Lilly reports total sales of Tyvyt made by Lilly as revenue, with payments made to Innovent for its portion of the gross margin reported as cost of sales. Lilly also reports as revenue a portion of the gross margin for Tyvyt sales made by Innovent.