Eli Lilly and Company (NYSE:LLY) Q4 2017 Earnings Conference Call - Preliminary Transcript
Jan 31, 2018 • 09:00 am ET
Elanco is proceeding well. We're on track to communicate our decision on our Q2 earnings call in July. This quarter, we've included a few additional back-up slides on Elanco where you'll see that recent product launches delivered $40 million of revenue in Q4 and $144 million for the year. We are proud that in January a leading industry publication announced that Galliprant, a first-in-class anti-inflammatory treatment for canine osteoarthritis pain was named 2017's Best Companion Animal Product.
And Clynav, a DNA vaccine for Atlantic salmon took the top honors as the Best Food Animal Product. New product launch momentum continued as Elanco's R&D organization achieved important milestones in January with Galliprant receiving EU marketing authorization and Credelio, which protects dogs against fleas and ticks, receiving approval in the United States as well as Canada. We continue to execute on our Elanco business model changes in Q4, including exploring options for the RBST business, exiting select US distribution agreements and taking steps to reduce our manufacturing footprint.
Finally, the biggest news affecting Lilly since our last call was US tax reform. We're pleased that Congress and the administration enacted tax reform that places US-based companies on a more level playing field with our foreign-based competitors, this reform will allow US companies like Lilly to be more competitive in the global race for innovation. For US headquartered multinational companies, this reform does come with an entry cost through the one-time repatriation toll tax, but it's a net positive as it will enable us to access our global cash and will lower our 2018 effective tax rates.
Now I'll turn the call over to Josh to discuss the impact and implications of US tax reform, review our Q4 and full-year results, and provide an update on our financial guidance for 2018.
Thanks Dave. On Slide six, we outline the financial impact to Lilly, and as stated in our press release, we recognized an estimated charge of $1.9 billion in the fourth quarter related to US tax reform. This charge is comprised of the toll tax assessed on overseas cash and earnings, which totaled approximately $3.6 billion, partially offset by the changes in deferred taxes resulting from the transition to a US territorial pact system, including the re-measurement of deferred taxes from 35% to 21%.
The other financial impact to Lilly is the effect on our ongoing tax rate, based on our initial assessment, we expect U.S. tax reform to lower our 2018 effective tax rate by roughly 350 basis points from our prior guidance of approximately 21.5% to about 18%. The effective tax rate for 2018 reflects the benefits of the lower US corporate income tax rate partially offset by other provisions of the new tax law. Our revised 2018 tax rate guidance is subject to change as we further interpret the new law and as subsequent regulations and guidance are issued.
In total, across both our US and international operations, we estimate that we may now utilize more than $9 billion of