The uptrend is continuing since March 2009 and the stock has doubled in the last four years. The real upswing started in the middle of 2011. Even in the last year, the stock has moved up by around 40%. The sales and net income have not shown much growth over the last few years. In fact in 2012, the revenues were $22.60 billion compared with $24.86 billion in 2011 (decline of 9%). The net income has also fallen from $4.34 billion to $4.08 billion (a decline of 5.9%). LLY which is into discovery, development, manufacturing and selling of pharma products, has remained an excellent dividend payer. This is one attribute which makes it a preferred stock for investors (institutional ownership of 73%). All along, the dividends have been flowing at the rate of $1.96 per share per year. So the overall long term returns have been decent. The company is meeting revenue guidance (which has been low) but the drugs under development are not showing great promise. Success of pharma companies is heavily dependent on their ability to develop new drugs in segments which have good potential. One such potential segment on which LLY is concentrating is Oncology. The field is having a huge market and the company has a lot of stakes in it. Other smaller companies e.g. Senesco Technologies (SNTI) which are purely into research, have taken different approaches to treatment of different aspects of myeloma. LLY is one of the top ten cancer research firms in the world but its drugs have not been doing too well. Meanwhile the recent volumes have been low and the momentum is reducing. The fact that patents of some of its major drugs are likely to expire within the next few years will make it very difficult for it to sustain the sales even at current levels.
