NEW YORK (Reuters) -
Eli Lilly and Co. (LLY.N) on Tuesday
posted better-than-expected quarterly earnings and raised its
2007 forecast, helped by surging sales of its prescription
drugs, including depression treatment Cymbalta.

Lilly posted strong revenue gains from Cymbalta and Zyprexa
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, which rose 67 percent and 9 percent,
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, and helped the company beat revenue expectations
by about $250 million.

“Together these two products accounted for almost two
thirds of the revenue beat,” JPMorgan analyst Roberto Cuca
wrote in a research note. “This should boost sentiment among
those investors who had been concerned about the health of
Lilly's (central nervous system) franchise.”

The second-quarter results also signaled Lilly's
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of Icos in January is paying off, accounting for
about a third of the 20 percent jump in quarterly sales to
$4.63 billion. Through that deal, Lilly gained full ownership
of the widely used Cialis impotence pill, which posted a 26
percent rise in sales to $293 billion.

Lilly shares rose 2 percent in opening trade.

Excluding charges related to acquisitions of Hypnion Inc.
and Ivy Animal Health in the period, Lilly earned 90 cents per
share, which was 8 cents better than analysts had expected,
according to Reuters Estimates.

On a net basis after those charges, the Indianapolis-based
drug maker earned $664 million, or 61 cents per share, from
$822 million, or 76 cents per share, a year earlier.

Lilly forecast 2007 earnings per share, excluding special
items, of $3.40 to $3.50 per share, up from its previous
forecast of $3.29 to $3.39 per share. It expects sales to grow
in the “mid-teens” percentage range.

Cymbalta's revenue rise to $520 million in the second
quarter was helped by its new use against generalized anxiety
disorder approved by U.S. regulators in February.

Meanwhile Zyprexa, the company's biggest product, rebounded
with a 9 percent rise to $1.21 billion after earlier sales
declines prompted by concerns over its tendency to cause weight
gains.

Lilly said higher overseas sales of Zyprexa, along with
higher U.S. prices, outstripped lower U.S. demand for the
medicine. The company projected “modest” worldwide sales growth
of Zyprexa for the full year.

Gemzar, used to treat lung and pancreatic cancer, grew 15
percent to $396 million, while lung cancer treatment Alimta
jumped 35 percent to $207 million.

Sales of Strattera, used to treat attention deficit
vardenafil disorder, slipped one percent to $142 million,
amid concerns that such drugs pose heart risks and cause
tadalafil soft tablet
problems, such as hallucinations.

Eli Lilly shares rose $1.12 to $58.29 in opening trade on
the New York Stock Exchange. They are up 12 percent in 2007,
outpacing a 2 percent rise for the American Stock Exchange
Pharmaceutical index. (.DRG)

(Reporting by Ransdell Pierson and Lewis Krauskopf)