Lilly (LLY) Makes Leadership Changes To Executive Positions

Eli Lilly and Company (NYSE:LLY) announced a number of leadership changes in order to focus on bringing newer drugs to the market. In this regard, the company promoted Josh Smiley to the post of Chief Financial Officer (CFO) effective Jan 1, 2018. In June 2017, the company announced that its current CFO, Derica Rice, would retire at year-end.

The company also promoted Dan Skovronsky to senior vice president for the Science And Technology and President of Lilly Research Labs. The change will be effective June 1, 2018.

Also, Myles O'Neill has been promoted to Senior Vice President and President of Manufacturing Operations while Aarti Shah, who is a Senior Vice President and Chief Information Officer, has been offered the post of an executive officer.

All four of them will become a part of Lilly's executive committee. In addition to these appointments, the company also announced two retirements of Maria Crowe, President of Manufacturing Operations, who will retire in December after 35 years of service. Jan Lundberg, Vice President for Science and Technology and President of Lilly Research Labs, will retire at the end of May 2018 after eight years with Lilly.

So far this year, Lilly’s share price has increased 16.3% compared with the industry’s gain of 16.4%.

We note that the company has made these changes in order to focus on new medicines in diabetes, cancer, immunology, neurodegeneration and pain. Last month, the company also announced some restructuring initiatives in order to streamline its operations so that it can focus on developing new medicines and improve its cost structure. It announced plans to reduce its global workforce by approximately 3,500 positions. These initiatives are expected to amass annualized savings of approximately $500 million, beginning 2018.

Furthermore, it is also closing down several sites, a plant in Iowa, a R&D office in New Jersey and a R&D center in China to save costs.

However, the company faces its share of challenges. Several key drugs in its portfolio like Zyprexa and Cymbalta are facing generic competition due to loss of exclusivity. Meanwhile, blockbuster drug, Alimta’s U.S. sales are also being affected by the entry of immuno-oncology agents in the market while outside the United States sales are already being hurt due to loss of exclusivity in several countries.

Other headwinds include competition from immuno-oncology agents as well as recent high-profile pipeline setbacks. Also, Lilly’s Animal Health segment did not do too well in the first half due to worldwide competitive pressure.

Eli Lilly and Company Price

Eli Lilly and Company Price | Eli Lilly and Company Quote

Zacks Rank & Stocks to Consider

Lilly carries a Zacks Rank #3 (Hold). Some better-ranked stocks in health care sector include Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) , Biogen Inc. (NASDAQ:BIIB) and Aduro BioTech, Inc. (NASDAQ:ADRO) . While Regeneron sports a Zacks Rank #1 (Strong Buy), Biogen and Aduro carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Regeneron’s earnings per share estimates have increased from $13.84 to $14.99 for 2017 and from $15.79 to $16.65 for 2018 over the last 60 days. The company pulled off positive earnings surprises in two of the trailing four quarters, with an average beat of 10.11%. The share price of the company has increased 21.8% year to date.

Biogen’s earnings per share estimates have moved up $21.37 to $21.42 for 2017 and from $23.11 to $23.23 for 2017 over the last 60 days. The company delivered positive earnings surprises in all the trailing four quarters, with an average beat of 6.41%. The share price of the company has increased 10.3% year to date.

Aduro’s loss estimates per share have narrowed from $1.36 to $1.29 for 2017 over last 60 days. The company came up with positive earnings surprises in two of the trailing four quarters, with an average beat of 2.53%.

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