(Reuters) – Eli Lilly and Co (LLY.N) raised the top-end of its 2020 profit forecast on Thursday and reported better-than-expected quarterly results, as customers stocking up medicines such as diabetes drug Trulicity during the coronavirus pandemic boosted sales.
First-quarter revenue got a nearly $250 million boost from stockpiling of Lilly’s insulin products, Trulicity and psoriasis drug Taltz. However, this benefit would largely be reversed over the course of 2020, the company said.
Lilly raised the top end of its full-year adjusted profit forecast by 10 cents, citing increased demand for its newer drugs, and now expects to earn $6.70 to $6.90 per share.
It said it expects clinical trials delayed by the pandemic to resume in the second half of the year.
The company also noted that staggeringly high U.S. unemployment rates could force more Americans to shift from commercial health insurance to federal programs or become uninsured. Some 26.5 million Americans have sought unemployment benefits over the last five weeks as efforts to curb the spread of the virus shuttered businesses and schools across the country.
As patients shift to Medicaid – the federal and states-run plan for low-income individuals – Lilly could see lower payments for its drugs, Chief Executive Officer David Ricks told Reuters, adding that the hit would be more pronounced in 2021.
The company said 10% of its customers were on Medicaid, while 40% were commercially insured.
Long-term unemployment rates would lower Medicaid reimbursement for Lilly’s key drugs, said Citi analyst Andrew Baum, adding that there are cheaper alternatives to Trulicity and Taltz.
“We’re looking at everything we can do to ensure that people can stay on our medications and have access to them, and believe that some of these impacts will be temporary,” Chief Financial Officer Joshua Smiley said.
Earlier this month, Lilly capped out-of-pocket costs for insulin products, including widely-used Humalog, at $35 per month.
Lilly is also working on potential treatments for the coronavirus. It has begun testing its new rheumatoid arthritis drug Olumiant for COVID-19, the illness caused by the virus. It is also conducting trials on an experimental biotech drug in pneumonia patients, among other efforts. The virus attacks the lungs and causes pneumonia in severe cases.
Trulicity sales jumped 40% to $1.23 billion, helping drive a 15% rise in total quarterly revenue to $5.86 billion. That topped Wall Street estimates of $5.51 billion.
Excluding items, Lilly earned $1.75 per share, beating analysts’ average estimates by 27 cents, according to Refinitiv data.
Eli Lilly shares were up 2% at $159.84.