Consider Lilly: why the gloomy guidance?

Greater pessimism over generic erosion of Zyprexa sales and higher spending on SG&A are the principal reasons that Lilly's financial guidance for 2012, issued on 5 January, falls short of analyst expectations. This was the explanation given by the firm's CFO, Derica Rice, who declared that the company had already done most of its cost-cutting, having begun early (in 2004, since when net headcount has been cut by 16%) to prepare for its patent cliff moment, which it terms the 'YZ period'. This period covers the patent expiry of its top-selling antipsychotic drug Zyprexa (olanzapine) in late 2011 through to the expiry of its antidepressant drug Cymbalta (duloxetine) in the US at the end of 2013.