* Says tax changes allow use of $9 bln in overseas cash
* Diabetes treatment Trulicity beats sales estimates
* Incurs charges related to tax, cost cutting
* Shares fall 4 pct (Updates with details about diabetes drugs, animal health unit, analyst quote)
By Michael Erman and Tamara Mathias
Jan 31 (Reuters) - Eli Lilly and Co posted better than expected fourth-quarter results, but its shares fell 4 percent on Wednesday due to investor concerns about pricing pressure for its diabetes products and weak sales from its animal health unit.
The drugmaker also raised its 2018 earnings forecast and said that following U.S. tax law changes it would deploy around $9 billion in cash stashed around the world this year and next.
Revenue growth in the fourth quarter basically came from the company's newer drug offerings, including diabetes drugs Trulicity and Jardiance.
"That's a very important pillar for growth - Lilly has a very long history and legacy in diabetes," said SunTrust Robinson Humphrey analyst John Boris. "But the problem is discounting and rebating" from competitors, he said.
The company said it was seeing continued pricing pressure on all its diabetes products.
Sales in Lilly's Elanco animal health business fell around 6 percent in the quarter. The company is considering a sale or spinoff of the unit and said on Wednesday that the process is still ongoing.
Lilly's shares fell 4 percent to $82.52 in midday trading.
Lilly said it plans to pay down about $2 billion of debt, return cash to shareholders and bolster its growth prospects through deals and partnerships as it brings home its $9 billion cash pile over the next two years.
It also said it expects an effective 2018 tax rate of 18 percent, down from its previous expectation of 21.5 percent.
Chief Executive David Ricks said that it would be reasonable to expect oncology to be a particular area of focus for business development this year.
"Historically, Lilly has not been one of those companies that have done a lot of large deals like a Pfizer, or Merck or J&J," Credit Suisse analyst Vamil Divan said. "But you've got a very new management team ... and maybe they'll get a little more aggressive."
A possible sale of the animal health business and the windfall from new tax laws could provide the drugmaker with cash for its biggest M&A deal yet, Divan said.
The company posted a net loss of $1.66 billion, or $1.58 per share, for the three months ended Dec. 31, mostly due to a $1.9 billion charge due to the U.S. tax legislation. That compares with a year-ago profit of $771.8 million, or 73 cents per share.
Excluding items, it earned $1.14 per share. Revenue rose nearly 7 percent to $6.16 billion.
On average, analysts had expected a profit of $1.07 per share and revenue of $5.94 billion, according to Thomson Reuters I/B/E/S.
Sales of the recently launched Trulicity nearly doubled to $649 million in the fourth quarter, beating consensus estimates of $580 million, according to Barclays. Psoriasis drug Taltz also showed strong growth.
Indianapolis-based Lilly raised its 2018 adjusted earnings per share guidance to $4.81 to $4.91, just over a month after forecasting a range of $4.60-$4.70. (Reporting by Michael Erman in New York and Tamara Mathias in Bengaluru; Editing by Sriraj Kalluvila and Frances Kerry)