Majestic Research Initiates Coverage on Eli Lilly & Co. (LLY); Report Underscores Need for Specialty/Diagnosis Market Growth To Offset Mature Drug Declines; Majestic is Only Firm to Employ Diagnoses-Based Factoring Methodology.

NEW YORK -- Research Draws on Written and Dispensed Prescription Data

Majestic Research Corp., a leading, data-driven independent equity research firm, announced today that it has initiated coverage of Eli Lilly & Co. (NYSE: LLY). Majestic's coverage draws on ground-breaking analysis that no other research firm provides: Diagnosis-based Factoring based on combining written and dispensed prescription data from two unique data sets - prescriptions made by a panel of over 3,500 high-prescribing doctors; and prescriptions dispensed at over 36,000 pharmacies nationwide.

According to the report by Senior Healthcare Analyst Darien Kadens, Ph.D., the key prognostic indicators for Eli Lilly in 2006 will be how well the company can reverse the diagnosis market share slide for its mature drugs like Zyprexa (for schizophrenia & bipolar disorders) within specific physician specialties/diagnoses, and how much additional growth it can obtain in specialty/diagnosis markets for its newest drugs Cymbalta and Byetta.

"There is no easy cure for Eli Lilly's woes," said Kadens. "It's critical that the company stop the bleeding with its mature drugs and flex its muscles on its newer ones, although it will be tougher to reverse slides in specialty/diagnosis markets that are declining."

"The working assumption that we have about the value of our proprietary methodology is that better insights can be obtained when analyzing drugs competing across multiple indications and/or competing against drugs having multiple indications," said Kadens.

Many of Eli Lilly's drugs are prescribed for more than one disease indication. For example, Eli Lilly's antipsychotic drug Zyprexa competes against drugs like Bristol-Myers Squibb's (BMY) Abilify, Pfizer's (PFE) Geodon, AstraZeneca's (AZN) Seroquel and other antipsychotic drugs across multiple indications such as schizophrenia and bipolar disorders.

"We can provide accurate estimates of Zyprexa's share position within each of those diagnosis markets" said Kadens.

Zyprexa is an atypical antipsychotic for the treatment of schizophrenia and bipolar disorders. In 2004, U.S. Zyprexa sales of $2.4 billion accounted for 55% of U.S. sales for Eli Lilly.

Among psychiatrists, Zyprexa's market share for schizophrenia ended 2005 at 8.5%, down 190 basis points from the end of 2004. For primary care physicians, Zyprexa's market share for schizophrenia ended 2005 at 12.2%, down 340 basis points from a year ago. In contrast, Abilify's primary care physician market share for schizophrenia grew by 190 basis points in the same time frame, closing at 6.6% at the end of 2005. Total schizophrenia drug prescription volume declined by 3% and 2% during that time for psychiatrists and primary care physicians, respectively.

Zyprexa's market share for bipolar disorders among psychiatrists ended 2005 at 3.5%, down 90 basis points from its share at the end of 2004. For primary care physicians, Zyprexa's market share for bipolar disorders ended 2005 at 7.5%, down 230 basis points compared to 2004. In comparison, Seroquel's primary care physician market share for bipolar disorders gained 30 basis points to close at 9.4% at the end of 2005. Total prescription volume for bipolar disorder drugs was flat during the year for psychiatrists and grew by only 1% for primary care physicians during that time.

One major contributor to the decline in the use of antipsychotics has been a number of safety warnings issued by the Food and Drug Administration (FDA) regarding their use over the last 2 years. FDA safety warnings affecting the atypical antipsychotic drug class that Zyprexa is a member of have put the brakes on expanded use of those drugs.

On the positive side, Eli Lilly has introduced new drugs into the market in the last two years that have made promising gains within the two large diagnosis markets of depression (Cymbalta) and diabetes (Byetta).

Cymbalta was launched in the U.S. in August 2004 for the treatment of major depressive disorder. Among primary care physicians, Cymbalta's market share for depressive disorders ended 2005 at 3.2%, up 150 basis points from 2004. Primary care physician prescription volume for depressive disorder drugs increased by 2% in the last year. However, Cymbalta's prescription volume among primary care physicians increased 58% in the year.

Byetta (co-marketed with Amylin Pharmaceuticals; AMLN) was launched in the U.S. in June 2005 for the treatment of type II diabetes. Among endocrinologists, Byetta's market share for type II diabetes rose to a promising 8.8% share at the end of 2005. Even more promising is the fact that endocrinologist prescription volume for type II diabetes drugs increased by 12.2% during 2005 in the U.S.

In the long term, Eli Lilly owns a robust late-stage drug pipeline including Arxxant for diabetic retinopathy and Prasugrel, a platelet aggregation inhibitor in the same mechanistic class as Plavix (Bristol-Myers Squibb;BMY/Sanofi-Aventis;SNY) for cardiovascular disease.

Proprietary Methodology

Diagnosis-based Factoring allows Majestic to combine written and dispensed prescription data for the LLY drugs to quantify and track prescription volume and share growth within specific physician specialties and diagnosis-markets within those specialties. This specific kind of analysis of prescription data provides investors with physician specialty- and diagnosis-specific estimates of the sizes of the prescription markets for key LLY drugs and for the magnitude of prescription growth within those markets relative to drugs that compete against the LLY drugs.

About Majestic Research

Majestic Research is an independent financial research firm that is revolutionizing equity research by gathering and analyzing massive amounts of proprietary industry data to provide unique, real-time, and highly accurate insights into how a sector or company is performing. Majestic produces syndicated and custom research in the following sectors: ecommerce, auto, casinos, homebuilders, and pharma. New York City-based Majestic, founded in 2002 and headed by former Instinet CEO Doug Atkin, uses technology to aggregate and analyze data encompassing millions of bits of information - such as behavioral and transactional data on more than 50 million Web pages - and produce insights that move stock prices. Majestic's clients include more than 100 mutual fund companies, hedge funds, and private equity firms. For more information, please visit: www.majesticresearch.com.

To read the full research report, please visit: http://www.majesticresearch.com/LLYInitiation.html.