LOS ANGELES (AFX) -- Shares of Eli Lilly & Co. skidded Tuesday as two brokerages downgraded their views on the drug giant, citing poor prospects for the company's business.
Lilly dropped nearly 4% at the close on strong volume, weakening in the wake of the downgrades from Merrill Lynch and Friedman Billings Ramsey.
They each cited Indianapolis-based Lilly's inability to stay ahead of increasing competition.
'We are downgrading shares of Eli Lilly from market perform to underperform, as the business continues to be pressured by four major product franchises with declining growth, a lackluster late-stage pipeline and new competition in the diabetes and depression markets,' Friedman Billings' David Moskowitz said in a note to clients.
Moskowitz cited declining growth for Zyprexa, Strattera and Cymbalta. He added the one new product launch this year, Arxxant, failed in a key test during clinical trials.
'In our view, slowing growth trends do not support Lilly's premium valuation,' Moskowitz went on to say.
The stock's rallied strongly since late last year.
Separately, Merrill Lynch's David Risinger downgraded Lilly from buy to neutral, citing difficulties with Cymbalta, the company's antidepressant medication.
'The trigger for our downgrade is that Cymbalta is struggling to gain prescription share despite [the] company's new promotional efforts,' Risinger said.
Risinger went on to say that analyst projections for the company's long-term growth likely are too optimistic. This story was supplied by MarketWatch. For further information see www.marketwatch.com.