Eli Lilly and Company Analysis
Eli Lilly and Company Analysis
Overview of Eli Lilly:
Eli Lilly and Company is a pharmaceutical company that integrates many departments and supply-chain management. The company in itself discovers, develops, manufactures, and sells its drug. The company’s smaller segment also includes animal health business. They manufactures and distribute its products through either leased or owned facilities throughout the United States, Puerto Rico, and several other countries (25), selling in approximately 140 countries.
The principle products are neurosciences type, which its largest selling product currently is Zyprexa for the treatment of schizophrenia, “bipolar mania and bipolar maintenance.” Recently in 2004 it released Cymbalta, a major depressive disorder treatment drug projecting sales to carry the company’s growth in stead of Zyprexa. Other lesser branches of research also include oncology products such as Gemzar, and Cardiovascular agents including ReoPro.
Profitability Analysis: ROA
The return on assets increased 3.0 percentage points to 11.4% in the past fiscal year showing a positive growth due to increases in both profit margins from 13.67% to 16.47% and Asset Turnover rate of .59 to .67.
• The slight increase in Profit Margin can be attributed to the decrease in cogs/sales with a slight offset in increasing SG&A/Sales. The decrease in cogs/sales is reassuring to us because this is indicating a higher efficiency and lower cost of inventory goods. An increase in SG&A/Sales is acceptable due to the increase in advertising cost.
• The A/R turnover and inventory turnover also increase slightly from 6.7 to 6.8 and 1.66 to 1.77 respectively. The increase in A/R turnover means that they are recovering receivables faster, and an increase in inventory turnover indicates a faster pace at which inventory are sold off or leave the warehouse.
• Fixed asset turnover increased, but only slightly enough to be considered statistically
Overview of Eli Lilly:
Eli Lilly and Company is a pharmaceutical company that integrates many departments and supply-chain management. The company in itself discovers, develops, manufactures, and sells its drug. The company’s smaller segment also includes animal health business. They manufactures and distribute its products through either leased or owned facilities throughout the United States, Puerto Rico, and several other countries (25), selling in approximately 140 countries.
The principle products are neurosciences type, which its largest selling product currently is Zyprexa for the treatment of schizophrenia, “bipolar mania and bipolar maintenance.” Recently in 2004 it released Cymbalta, a major depressive disorder treatment drug projecting sales to carry the company’s growth in stead of Zyprexa. Other lesser branches of research also include oncology products such as Gemzar, and Cardiovascular agents including ReoPro.
Profitability Analysis: ROA
The return on assets increased 3.0 percentage points to 11.4% in the past fiscal year showing a positive growth due to increases in both profit margins from 13.67% to 16.47% and Asset Turnover rate of .59 to .67.
• The slight increase in Profit Margin can be attributed to the decrease in cogs/sales with a slight offset in increasing SG&A/Sales. The decrease in cogs/sales is reassuring to us because this is indicating a higher efficiency and lower cost of inventory goods. An increase in SG&A/Sales is acceptable due to the increase in advertising cost.
• The A/R turnover and inventory turnover also increase slightly from 6.7 to 6.8 and 1.66 to 1.77 respectively. The increase in A/R turnover means that they are recovering receivables faster, and an increase in inventory turnover indicates a faster pace at which inventory are sold off or leave the warehouse.
• Fixed asset turnover increased, but only slightly enough to be considered statistically