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... Dow Jones News UPDATE:Lilly 3Q Net Up On Sales Of Higher-Margin New Drugs Close UPDATE:Lilly 3Q Net Up On Sales Of Higher-Margin New Drugs By Frank Byrt Of DOW JONES NEWSWIRES Eli Lilly & Co.

(LLY) reported a better-than-expected 5% increase in third-quarter earnings Thursday as sales of more profitable drugs made up a larger portion of the Indianapolis drug maker's revenue.

Lilly said its newer products contributed $651.6 million to third-quarter sales and accounted for 18% of total sales, up from 12% a year ago.

Those new products included cancer drug "We are pleased that the products in our pipeline continue to progress through development, while at the same time our newer products grow as a percentage of our total sales," Lilly Chairman and Chief Executive Sidney Taurel said.

Overall revenue rose 10% in the quarter to $3.6 billion, slightly below the average analyst estimate of $3.62 billion.

"They came in about what we were expecting in revenue," Natexis Bleichroeder Inc.

analyst Dr.

Jon LeCroy said.

"So all in all, a neutral quarter for them." Lilly's third-quarter net income rose 5% from a year ago to $794.4 million, or 73 cents a share, beating the average analyst estimate of 71 cents a share.

Gross margins rose 1.2 percentage points to 76.5% thanks to the favorable product...

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