Lilly Eli & Co (LLY), a leading manufacturer of pharmaceutical products, has announced a 39.19 percent plunge in profit for the quarter ended Jun. 30, 2014, due to sharp drop in sales and margins.

The company earned $733.50 million or $0.68 a share in the second-quarter compared with $1206.20 million or $1.11 a share a year ago. Analysts on average had predicted net income of $0.65 a share.

Revenue during the second-quarter declined 16.76 percent to $4935.60 million from $5929.70 million in the last year period.

Gross margin contracted by 445 basis points over the last year period to 75.90 percent. Total expenses as a percentage of revenues increased to 82.04 percent from 74.65 percent in the same period last year. That has resulted in contraction of 738 basis points in operating margins to 17.96 percent.

The company posted operating income of $886.60 million, compared with operating income of $1,503 million in the previous year period.

"Lilly’s second-quarter results reflect a substantial decline in revenue and earnings resulting from recent patent expirations. At the same time, new product approvals and impending launches give us great confidence that Lilly is poised for growth in the years ahead," said John C. Lechleiter, Ph.D., Lilly's chairman, president and chief executive officer.

"We have stayed the course with our innovation-based strategy, replenishing and advancing our pipeline. We remain firm in our commitment to sustain and accelerate a flow of important new medicines that make life better for people around the world," Lilly chairman said.

Full-year 2014, the company expects earnings per share to be in the range of $2.67 to $2.75. On a non-GAAP basis, full-year 2014 earnings per share are still expected to be in the range of $2.72 to $2.80, it said.