The Affect Of Cymbalta’s Patent Expiration

Cymbalta is widely prescribed as an antidepressant. It is also used for chronic pain from fybromyalgia, diabetic neuropathy and musculoskeletal pain. Cymbalta’s patent is held by Eli Lilly which is one of the top five holdings of Renaissance Technologies.

Cymbalta 60mg Eli & Lilly

Cymbalta 60mg Eli & Lilly (Photo credit: Wikipedia)

Jim Simons founded Renaissance Technologies in 1982. He currently serves as a non-executive Chairman. Renaissance Technologies has come to be considered as one of the largest and most successful American hedge funds. It has had annual returns of 30% or more in each of the previous two years. Renaissance Technologies’ success is due to computer-based models that identify opportunities created by market inefficiencies. The models also predict future price fluctuations.

Renaissance Technologies’ second-largest holding is Eli Lilly. It has a value of nearly $432 million. This pharmaceutical company has a market capitalization of $51-billion. Current dividends of 4.3% are paid out at a 53% ratio on its stock. Eli Lilly and many other pharmaceutical companies are expecting reduced revenues because of expiring patents. Cymbalta is one of the many patents due to expire. Eli Lilly’s predicted earnings per share is expected to shrink over the coming five years at nearly 5% each year. The company still shows a healthy balance sheet mainly because of a low debt ratio. The company is also developing many new promising drugs. Solanezumab is one of these drugs. It is being developed for use in treating the devastating disease of Alzheimer’s. Another promising drug being developed by Eli Lilly is Ramucirumab. This drug has recently had positive Phase III trial results and will be used to treat metastatic gastric cancer.

Jim Simons’ investment tract record with Renaissance Technologies is impressive. Eli Lilly is still a sound pharmaceutical investment choice even with the loss of its Cymbalta patent because of its stable financial position and its promising product lines under development.

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