Here's Where Eli Lilly's Finding Its Growth
In today's world, most companies span several regions and sell across the world. As Foolish colleague Morgan Housel notes, 10 years ago, less than a third of S&P 500 revenue growth came from abroad. Today, that area makes up half of the S&P 500's growth.
And that number is growing. The truth is, investors regularly underestimate how much demand comes from abroad. More importantly, for large, multinational corporations that have already established a presence in their home markets, much of their future growth comes from abroad.
With that in mind, today we're looking at Eli Lilly (NAS: LLY) . We'll examine not only where its sales and earnings come from, but how its sales abroad have changed over time.
Where Eli Lilly's sales were three years ago
Three fiscal years ago, Eli Lilly saw 54% of its sales in the United States, but a fairly robust 26% of sales were generated within Europe.
Source: S&P Capital IQ.
Where Eli Lilly's sales are today
Today, Eli Lilly continues getting the lion's share of its sales from the United States, but sales in Europe aren't keeping up with the rest of the company. While Japan and other Asia markets boom and are the real growth story behind the company's past few years, Eli Lilly has actually seen sales shrink in Europe.
Source: S&P Capital IQ.
3-Year Revenue Growth
|Other Foreign Countries|
Acquisitions surely play a part in this. The United States region benefited from Eli Lilly's $7 billion takeover of ImClone, a company with sales concentrated in the U.S., but it is apparent that Europe is becoming an anchor on the company.
Eli's not alone in this trend -- Bristol-Myers Squibb (NYS: BMY) also saw sales to Europe shrink across the past three years. Merck (NYS: MRK) can thank its $50.7 billion acquisition of Schering-Plough for its continued growth in the region in the past few years, while Johnson & Johnson (NYS: JNJ) has only experienced 2% growth in Europe since 2008. Still, that surpasses J&J's U.S. business, which actually fell about 11% during that time.
The point? The only reliable growth markets in pharma right now seem to be Japan, the rest of Asia-Pacific, and scattered emerging markets. Pharma can be a tough space to profit from global growth, as laws in many countries seeing the highest growth don't adequately protect their IP, but therein lays the continuing plight that will shape the industry across the next decade.
Keep searching for global opportunities
There's a reason companies are seeing outsized growth around the world; in the past decade, emerging market consumer spending grew 250%, leaving the growth rates of the U.S. and Europe in the dust. If you're an investor scanning the world for opportunities, look no further than our new report "3 Companies Set to Dominate the World." In the report, Fool analysts select three companies who have an international growth opportunity that's simply stunning. The report is free, but it won't be available forever, so get your copy by clicking here today!
At the time this article was published Eric Bleeker owns shares of no companies listed above. The Motley Fool owns shares of Johnson & Johnson. Motley Fool newsletter services have recommended buying shares of Johnson & Johnson. Motley Fool newsletter services have recommended creating a diagonal call position in Johnson & Johnson. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.