Eli Lilly & Co's quarterly profit dropped 27 percent after its top-selling Zyprexa schizophrenia treatment lost U.S. patent protection and saw competition from generic rivals.

The drugmaker backed its 2012 outlook that calls for a steep drop in profit this year due largely to the Zyprexa loss. It said an independent safety committee recommended continuing two late-stage clinical trials for its closely watched experimental Alzheimer's treatment.

Lilly's fourth-quarter net income fell to $858.2 million, or 77 cents per share, from $1.17 billion, or $1.05 per share, a year ago.

Excluding items, earnings of 87 cents per share were 6 cents ahead of the average estimate of analysts, according to Thomson Reuters I/B/E/S.

(Reporting by Lewis Krauskopf and Ransdell Pierson; Editing by Derek Caney)