Erectile dysfunction medicine.

NEW YORK (Reuters) -
Eli Lilly and Co (LLY.N) on Tuesday
said profit rose on lower taxes and
better-than-expected sales of its medicines, including newer
treatments for depression, diabetes and cancer.

Lilly's shares rose 1.8 percent, amid slight declines for
the drug sector.

“Lilly had top-line strength across its portfolio, with
each major segment above our outlook,” Bear Stearns
analyst John Boris said. He noted the company's tax rate of
20.4 percent was less than his 22 percent forecast.

The Indianapolis drugmaker earned $854 million, or 78 cents
per share, compared with $132 million, or 12 cents per share,
in the year-ago period, when Lilly took a big charge for a
settlement with patients who claimed to have been harmed by its
Zyprexa schizophrenia drug.

Excluding special items, earnings rose 6 percent to 90
cents per share. Analysts on average had expected 89 cents per
share, according to Reuters Estimates. The company took two
charges, totaling 12 cents per share, related largely to
restructuring and acquisitions.

Company global sales jumped 22 percent in the quarter to
$5.19 billion, ahead of the Reuters Estimates forecast of $4.81
billion. Sales would have increased 18 percent if not for the
weak dollar, which boosts the value of overseas sales.

Despite the strong results, analysts cautioned that Lilly's
earnings prospects may deteriorate by 2011, when Zyprexa faces
generic competition.

Lilly late last month asked the U.S. Food and Drug
Administration to approve its prasugrel blood-clot preventer
and was counting on it to offset the expected sharp sales for
Zyprexa.

“But we are cautious as we think the FDA process will be
extremely drawn out,” Natixis analyst Jon LeCroy
said in a research note, due to concerns about bleeding risks
linked to prasugrel in clinical trials. He predicted it will
not be introduced for another three years.

Quarterly sales of Zyprexa rose 10 percent to $1.27
billion, in a continuing rebound from earlier declines that had
been sparked by concerns that the drug causes weight gain,
which raises diabetes risk.

Revenue from impotence treatment Cialis, which works far
longer than Pfizer Inc's (PFE.N) Viagra and was recently
approved in a new low-dose daily formulation, jumped 29 percent
to $346 million.

Sales of Alimta, used to treat tumors caused by exposure to
asbestos, soared 42 percent to $244 million, helped by its
other approved use against lung cancer. Sales of Gemzar, an
older lung cancer drug, rose 15 percent to $426 million.

Injectable diabetes drug Byetta, sold in partnership with
Amylin Inc (AMLN.O), gained ground from its
wide use alongside oral treatments and its ability to help
patients lose weight. Its global sales soared 34 percent to
$184 million.

Humalog, a rapid-acting insulin used at mealtimes, was also
a top performer during the quarter. Its sales jumped 18 percent
to $414 million, helped by price increases and sizzling growth
in overseas markets.

Lilly said it is on track to meet its 2008 earnings target,
excluding special items, of $3.85 to $4 per share — driven by
growing demand for Cymbalta, Cialis, Byetta, Alimta and
Humalog. That would reflect profit growth of 9 percent to 13
percent from 2007 results.

Lilly's shares were up 94 cents at $52.34 in afternoon
trading on the New York Stock Exchange.

(Editing by Derek Caney and Maureen Bavdek)