Zyprexa

It cited doubts that the company's candidate for diabetic retinopathy, Arxxant, will be approved this August by the FDA.

At its current price, Merrill said, Lilly trades at 17.3 times its 2007 earnings estimate of $3.39 a share, compared with an average industry multiple of about 15.3.

"Although we believe Lilly's profile justifies a premium to the group, we do not anticipate much multiple expansion unless there is surprising good news or the market has a big upside move." Lilly fell $1.28, or 2.2%, to $57.39 Tuesday morning.

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Wilderbeek said he hoped to provide investors with some data on pivotal Phase III clinical studies of the medicine later in the year.

Shares in Akzo Nobel were 2.2 percent lower at 44.30 euros by 1345 GMT, after hitting their highest level in nearly four years on Friday, helped by M&A activity in the European sector after Bayer (BAYG.DE: Quote, Profile, Research) agreed to buy Schering (SCHG.DE: Quote, Profile, Research).

"There's nothing new on Akzo's filing plans.

Also, shares were up last week on news about Bayer and Schering.

There may be some profit taking today," one trader in Amsterdam said.

Among other products, Akzo is currently awaiting U.S.

approval for its contraceptive drug Implanon and hormone therapy drug Livial, and expects to submit sugammadex used in anaesthesia next year.

Continued ...

© Reuters 2006.

All Rights Reserved.

1 Careers Reuters journalists are subject to the Reuters Editorial Handbook which requires fair presentation and disclosure of relevant interests.

...

As new Lilly drugs experience higher sales, Napodano estimates that earnings will increase more than 10% a year over the next four years.

That's after years of mostly single-digit earnings growth.

Analysts surveyed by Zacks expect the company to earn $3.15 per share this year and $3.41 next year.

That gives the stock, recently $59, a price-earnings ratio of 19 on this year's earnings estimate.

It yields an above-average 2.7%.

-Steven Goldberg E-mail to a friend All contents © 2006 The Kiplinger Washington Editors, Inc.

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