MAKE IT BETTER AND BETTER
`
`ELI LILLY AND COMPANY 2015 ANNUAL REPORT AND PROXY STATEMENT
`
`Y E A R S O F S E R V I C E
`
`AstraZeneca Exhibit 2143
`Mylan v. AstraZeneca
`IPR2015-01340
`
`Page 1 of 186
`
`

`

`Lilly is introducing an integrated report for 2015, combining two traditional
`publications: our annual report, covering our business and fi nancial results,
`and our corporate responsibility report, focused on our broad-based social and
`environmental goals, activities, and impacts. Our fi rst integrated report, covering
`our performance in 2015, will be posted online in May 2016 at www.lilly.com.
`
`We are making this change to better capture all of the ways that Lilly’s business
`performance and research progress, coupled with our corporate responsibility
`activities, create value for our investors and other stakeholders over time. We
`believe this approach will streamline our reporting, while providing a richer picture
`of our company and how we operate.
`
`Y E A R S O F S E R V I C E
`
`Page 2 of 186
`
`

`

`John C. Lechleiter, Ph.D., Lilly’s chairman, president, and chief executive offi cer, and Jan Lundberg, Ph.D., president of Lilly Research
`Laboratories, join with employees of the Lilly Cambridge Innovation Center in Cambridge, Massachusetts, at the center’s opening.
`
`To Our Lilly Shareholders:
`
`May 10, 2016, marks the 140th anniversary of the founding of
`Eli Lilly and Company, a milestone that very few U.S. companies
`our size have ever reached. We’ve done it by staying true to our
`values—integrity, excellence, and respect for people—and to
`our mission of discovering and developing new medicines that
`make life better for people around the world.
`
`In 2015, our commitment to innovation bore fruit in a
`truly extraordinary year for Lilly. Even as we turned
`the corner in our business results and began to grow
`again after a prolonged period of patent expirations, we
`achieved unprecedented progress across our research
`and development efforts. Through it all, we honored our
`commitments to those who have a stake in our business—
`including patients, customers, physicians, the communities
`where we operate, our shareholders, and our employees
`who make it all possible.
`
`2015 Business Results and Pipeline Progress
`In 2015, despite unprecedented and substantial currency
`headwinds brought on by the strengthening U.S. dollar, we
`returned to revenue growth, led by Cyramza® and Trulicity®
`following their strong launches, with signifi cant contributions
`from our enlarged Elanco animal health business. Revenue
`increased 2 percent to $19.96 billion, as six of our products
`and Elanco exceeded $1 billion in annual sales.
`
`At the same time, as a result of lower expenses and higher
`other income, earnings per share increased 13 percent to
`$3.43 on a non-GAAP basis, which excludes adjustments
`totaling $1.17 per share. Reported earnings per share
`were $2.26. (For information on the items that were
`adjusted for purposes of non-GAAP fi nancial measures,
`please see the 2015 Financial Highlights on the inside
`front cover of the accompanying Financial Report.)
`
`This progress occurred in the face of some serious challenges,
`including a still-sluggish global economy, a signifi cant
`slowdown in China, and continued pricing pressures in the
`United States and other established markets.
`
`In 2015, Lilly achieved signifi cant advances in our pipeline
`of molecules in clinical development. Highlights include:
`in diabetes, positive cardiovascular outcomes data for
`Jardiance®; in immunology, four positive Phase III studies
`on baricitinib and strong Phase III data on ixekizumab;
`and in oncology, Breakthrough Therapy Designation for
`
`Page 3 of 186
`
`

`

`olaratumab and abemaciclib, several important business
`development deals in immuno-oncology, and the
`approval of PortrazzaTM for the treatment of metastatic
`squamous non-small cell lung cancer late in the year.
`
`Our strong pipeline portends a lot of good news for
`patients—the ultimate measure of our success. As of
`early 2016, we had nine molecules in Phase III testing
`or regulatory review, including potential medicines that
`hold the promise of signifi cant advances in the treatment
`of immunological disorders, Alzheimer’s disease, and
`various pain conditions.
`
`Investors have taken note of how we’ve performed
`and how we’ve kept our promises despite the challenges.
`Our stock price was up 22 percent for the year, leading
`to a 25 percent total shareholder return—once again
`outperforming most of our peers.
`
`The bottom line is pretty simple. We have emerged from
`the so-called “YZ” years of patent expirations as a
`better, stronger company. And a very promising future
`is unfolding by the day!
`
`Looking Ahead to More Growth in 2016
`I could not be more excited about what lies ahead in
`2016 as we look forward to additional launches and
`some important pipeline milestones.
`
`While recognizing the challenging environment ahead of
`us, we continue to believe that Lilly’s growth opportunities
`will depend largely on our own performance. This
`includes realizing continued strong uptake of Cyramza,
`Trulicity, and Jardiance, and good launches of Portrazza
`and the other products, such as ixekizumab, that we
`hope will emerge from our pipeline in the months ahead.
`
`I’m confi dent that we’ve put the necessary investments
`behind these recent and upcoming launches. At the
`same time, we will continue to depend on strong sales of
`Alimta®, Forteo®, Cialis®, and our insulins—despite the
`necessary shift of some resources to the launch side.
`
`Our Ongoing Commitment to Corporate Responsibility
`In 2015, we also demonstrated our dedication to corporate
`responsibility—a legacy dating back to our founder,
`Colonel Eli Lilly.
`
`Our greatest contribution to society will always be
`making medicines that make life better.
`
`Yet we fi rmly believe that we have a further role to
`play by collaborating with select partners to address
`serious health challenges and to enhance access to
`high-quality care for people around the world. In 2015,
`we continued support of our two signature global health
`programs—the Lilly NCD Partnership and the Lilly MDR-
`TB Partnership—focused on the growing challenge of
`non-communicable diseases, such as diabetes, and the
`
`stubborn scourge of multidrug-resistant tuberculosis.
`Elanco continued its important work to address the key
`link between nutrition and health through its partnership
`with Heifer International and through HATCHTM for
`Hunger, a community partnership to provide eggs to
`undernourished people in the Midwest.
`
`Over the past year, Lilly employees have added to our
`strong track record of volunteerism to strengthen
`communities. In the fi rst fi ve years of our Connecting
`Hearts Abroad program, 1,000 Lilly employees have
`worked a combined 64,000 hours during two-week
`assignments in impoverished communities across Africa,
`Asia, Eastern Europe, and Latin America. In addition, our
`employees worldwide have volunteered 825,000 hours
`since 2008 through our annual Global Day of Service. And
`in 2015, we built on our legacy of support for United Way
`by initiating a partnership approach that includes pairing
`Lilly teams with United Way agencies.
`
`Lastly, we continue to demonstrate a fi rm commitment
`to operating responsibly in all areas of our business—
`from being recognized year after year around the world
`as a great place to work, to continually striving to reduce
`our environmental footprint. This commitment extends
`to our support for the United Nations Global Compact
`and its principles related to human rights, labor, the
`environment, and anti-corruption.
`
`Faithful to Our Mission, Confi dent in Our Future
`Our company has been through some real challenges
`these past few years. But we confronted them head
`on, fi gured out a strategy to handle what we faced, and
`executed that strategy with grit and determination.
`We never wavered. And in 2015, we got sure signs that
`it’s working.
`
`As we continue to honor Colonel Lilly’s instruction to
`his son, to “take what you fi nd here and make it better
`and better,” I believe uncertainty will once again give
`way to confi dence in what an enterprise such as ours—
`dedicated for 140 years to making lives better for people
`all over the world—is able to accomplish.
`
`I am honored to be a part of this work and grateful to
`you for your support.
`
`For the Board of Directors,
`
`John C. Lechleiter, Ph.D.
`Chairman, President, and Chief Executive Offi cer
`
`Page 4 of 186
`
`

`

`“ Diversity fosters creativity.
`Creativity drives innovation.
`And innovation, ultimately,
`leads to business success.”
`
`— John C. Lechleiter, Ph.D., Chairman, President, and Chief Executive Officer
`
`Operating Responsibly
`
`Improving Global Health
`
`At Lilly, we hold steadfast to our long-standing values of integrity, excellence,
`and respect for people. We strive to create a culture that fosters engagement
`and teamwork, rewards diligence and ethical action, and inspires creativity.
`We’re proud to be recognized as a company that works hard to support our
`employees, both inside and outside of work. We also recognize that how we
`do business is as important as what we do. We demonstrate our values
`through responsible business practices that reflect our commitments to
`strong governance principles. This sharpens our efforts in, and dedication to,
`promoting ethics and transparency throughout the company, instilling
`responsible supply chain management, tackling the problem of counterfeit
`medicines, ensuring the ethical care and use of animals in research, and
`fostering environmental stewardship.
`
`At Lilly, we share the vision of a world where everyone is able to access basic
`health care. Even as we develop strategies to bring medicines to more people
`around the world, our signature global health programs—the Lilly NCD
`Partnership and the Lilly MDR-TB Partnership—are helping to improve health
`outcomes and expand access to medicines for people in need today. We also
`help providers, patients, and their families navigate the complexity of
`healthcare challenges through a variety of offerings, including providing Lilly
`medicines for people in the United States who otherwise couldn’t afford them.
`And Elanco, our animal health business, is focused on the important link
`between hunger and human health and is working to break the cycle of hunger
`in 100 communities around the world by 2020.
`
`Advancing Medical Science
`
`Our greatest contribution to society is making life better by making medicines
`that help people live longer, healthier, more active lives. Throughout our
`company’s history, we’ve brought new and better medicines to people who
`need them—commercializing the first insulin, introducing important classes
`of antibiotics, revolutionizing the treatment of mental illness, making
`critical contributions in the treatment of cancer, and more. Today, we
`remain committed to pursuing medicines for scourges such as diabetes
`and Alzheimer’s disease. All along the way, we advance medical science by
`learning more about disease pathways and human biology. We’re committed
`to advancing the global body of scientific knowledge, working within a strong
`framework of bioethics, with a commitment to patient safety and excellence.
`
`QUALITY ACROSS THE MEDICATION LIFE CYCLE
`
`DESIGN
`
`DELIVER
`
`MONITOR
`
`Clinical Development
`
`Safety & Efficacy Data
`
`Safety
`
`Product Development
`
`Manufacturing &
`Distribution
`
`Product Complaints
`
`Market Research
`
`Product Information
`
`Patient Experience
`
`“ Take what you
`find here and
`make it better
`and better.”
`
`— Colonel Eli Lilly, 1882
`
`This is a snapshot representing key scientific breakthroughs, product launches,
`and moments of caring throughout Lilly’s 140 year history. It is not intended to
`be a comprehensive account of every innovation or activity.
`
`Strengthening Communities
`
`Our company vision calls on us to give back to the world around us. We give
`of our financial resources and our time to make a meaningful, measurable,
`and sustainable difference in the communities where we operate. In the late
`1800s, Colonel Lilly took an active leadership role in efforts to improve life in
`Indianapolis, home to our global headquarters. Ever since, Lilly people have built
`upon and continued this legacy. You can see this commitment in Lilly’s Global
`Day of Service, which ranks among the largest single-day volunteer events of
`any global enterprise; in our Connecting Hearts Abroad program, which places
`Lilly volunteers in communities around the world; and in our ongoing work to
`empower teachers, inspire students, and advocate to ensure that every student
`has access to a great education.
`
`800,000+
`
`VIALS OF INSULIN DONATED
`AS OF 2015 TO THE INTERNATIONAL
`DIABETES FEDERATION’S
`LIFE FOR A CHILD PROGRAM
`
`$500M
`
`DONATED IN PRODUCTS
`IN 2015 THROUGH OUR PATIENT
`ASSISTANCE PROGRAMS
`
`100,000
`
`EMPLOYEES HOURS
`VOLUNTEERED
`DURING 2015
`GLOBAL DAY OF SERVICE
`
`70
`
`COUNTRIES
`HOSTED VOLUNTEER SITES FOR
`2015 GLOBAL DAY OF SERVICE
`
`$13.2M
`
`DONATED
`TO UNITED WAY IN 2015
`
`BUILDING OUR
`
`FUTURE
`LEGACY
`
`CELEBRATING 140 YEARS OF SERVICE
`
`Page 5 of 186
`
`

`

`1876
`
`FOUNDING
`Eli Lilly founded his company on May 10, 1876, in Indianapolis, Indiana. He
`was among those first in the business to rely on pharmaceutical chemistry.
`His purpose was to produce quality medicines to be given with a doctor’s
`prescription—a new concept in a time of untested elixirs and potions peddled
`by questionable characters. More than a century later, Lilly, the company,
`remains recognized for its quality and values—integrity, excellence, and
`respect for people.
`
`1923
`
`INSULIN
`Our researchers collaborated with Frederick Banting and Charles Best of the
`University of Toronto to isolate and purify insulin for the treatment of diabetes, a
`fatal disease with no effective treatment options at the time. In 1923, their work
`resulted in Lilly’s introduction of the world’s first commercially available insulin
`product. Lilly would go on to focus on innovations in diabetes treatment that
`continue to the present day.
`
`1943PENICILLIN-G
`
`Lilly was among the first companies to develop a method to mass-produce
`penicillin, the world’s first antibiotic, marking the beginning of a sustained effort
`to fight infectious diseases. Penicillin was especially critical during World War II
`in helping to reduce the number of deaths and amputations caused by infected
`battle wounds. Lilly’s antibiotics work would continue in the coming decades,
`including the launch of a powerful antibiotic that today remains the last line of
`defense against serious hospital infections.
`
`1955POLIO VACCINE
`
`From 1940 to the mid-1950s, polio struck 400,000 American children and millions
`more worldwide. In 1954, Lilly was approached by the National Foundation
`for Infantile Paralysis to produce a vaccine based on Dr. Jonas Salk’s method.
`Ultimately, more than half of all the Salk vaccine used in the United States bore
`the Lilly label. Today, polio is 99% eradicated around the world, with only three
`countries reporting instances of the disease.
`
`1988PROZAC®
`
`With the introduction of Prozac in the United States, Lilly launched the first in a
`new class of drugs used to treat clinical depression. Called selective serotonin
`reuptake inhibitors, or SSRIs, the medicines are thought to affect the way that
`serotonin acts—and neural pathways operate—inside the brain.
`
`1886
`Lilly hires first chemist,
`Ernest Eberhardt.
`
`1906
`Lilly sends freight car of emergency
`medical supplies to San Francisco
`following earthquake.
`
`1917
`Partnering with the American Red Cross,
`Lilly sets up a medical field hospital in
`France, staffed by Indiana personnel, to
`treat wounded soldiers of all
`nationalities during World War I.
`
`1923
`ILETIN®
`Lilly introduces
`animal-source
`insulin, the
`world’s first
`commercially
`available insulin
`product, for the
`treatment of
`diabetes.
`
`1958
`VANCOCIN®
`Lilly introduces vancomycin hydrochloride,
`an antibiotic for infections associated
`with certain types of resistant bacteria.
`
`1928
`Lilly establishes first
`distribution branch
`outside of the United
`States, in Shanghai.
`
`1937
`Lilly family creates the Lilly
`Endowment, which has given
`away more than $8.5 billion to
`charitable organizations since
`its founding.
`
`1957
`Lilly leaders become co-chair
`and honorary chair of the
`first United Fund Drive, an
`antecedent to the modern-day
`United Way of Central Indiana.
`
`1961
`VELBAN®
`Lilly introduces
`vinblastine sulfate,
`the company’s first
`oncology drug, for
`treatment of several
`types of cancer.
`
`1979
`CECLOR®
`Lilly introduces
`cefaclor, a member
`of the cephalosporin
`family, which
`eventually becomes
`the world’s top-selling
`oral antibiotic.
`
`1982
`HUMULIN®
`Lilly introduces human
`insulin (rDNA origin),
`insulin identical to that
`produced by the human
`body, and the world’s
`first human healthcare
`product created using
`recombinant DNA
`technology.
`
`1996
`ZYPREXA®
`Lilly introduces olanzapine
`for the treatment of
`schizophrenia.
`
`GEMZAR®
`Lilly introduces gemcitabine
`hydrochloride, a drug for the
`treatment of pancreatic and
`non-small cell lung cancer.
`
`FUTURE
`ONCOLOGY
`We are committed to developing a
`broad portfolio of therapies, including
`those tailored to patients, and meaning-
`ful support solutions that accelerate
`the pace and progress of cancer care.
`
`PAIN
`It is estimated that nearly one in five
`adults suffers from chronic pain.
`Lilly is developing molecules to treat
`cluster headaches, migraines, and
`chronic pain caused by osteoarthritis
`and cancer.
`
`NEURODEGENERATION
`Neurodegeneration is a key therapeutic
`area for Lilly, given our strong legacy
`and expertise in neuroscience. Our
`discovery efforts are focused on the
`areas of Alzheimer’s disease, dementia,
`and schizophrenia.
`
`DIABETES
`Lilly is committed to meeting the
`needs of people with diabetes by
`offering a comprehensive and
`complementary portfolio of medicines.
`We help people with diabetes achieve
`their treatment goals.
`
`IMMUNOLOGY
`Significant unmet medical need exists
`for many prevalent immunologic
`and autoimmune diseases, such
`as rheumatoid arthritis, psoriasis,
`and lupus. Several molecules in our
`pipeline explore how to address
`these diseases.
`
`2003
`Launch of the Lilly
`MDR-TB Partnership,
`providing critically
`needed medicines for
`multidrug-resistant
`tuberculosis.
`
`2011
`Lilly launches Connecting
`Hearts Abroad, an employee
`volunteer program that sends
`dozens of employees annually
`to countries in Africa, Asia,
`and Latin America.
`
`1870
`
`1880
`
`1890
`
`1900
`
`1910
`
`1920
`
`1930
`
`1940
`
`1950
`
`1960
`
`1970
`
`1980
`
`1990
`
`2000
`
`2010
`
`2020
`
`Page 6 of 186
`
`

`

`ELI LILLY AND COMPANY
`2015 FINANCIAL REPORT
`NOTICE OF 2016 ANNUAL MEETING
`PROXY STATEMENT
`
`Page 7 of 186
`
`

`

`Year Ended December 31
`
`2015
`
`2014
`
`$19,958.7
`
`$19,615.6
`
`4,796.4
`
`24.0%
`
`4,733.6
`
`24.1%
`
`$2,408.4
`
`$2,390.5
`
`2015 Financial Highlights
`
`ELI LILLY AND COMPANY AND SUBSIDIARIES
`(Dollars in millions, except per-share data)
`
`Revenue
`
`Research and development
`
`Research and development as a percent of revenue
`
`Net income
`
`Earnings per share—diluted
`
`Reconciling items1:
`
`Novartis Animal Health 2014 results
`
`Novartis Animal Health inventory step-up
`
`Amortization of intangible assets
`
`U.S. Branded Prescription Drug Fee
`
`Acquired in-process research and development (IPR&D)
`
`Asset impairment, restructuring, and other special charges
`
`Net charge related to repurchase of debt
`
`Income related to the transfer to Boehringer Ingelheim of rights to co-promote
`linagliptin and empagliflozin in certain countries
`
`Non-GAAP earnings per share—diluted2
`
`2.26
`
`—
`
`0.10
`
`0.39
`
`—
`
`0.33
`
`0.25
`
`0.09
`
`—
`
`3.43
`
`Change
`%
`
`2
`
`1
`
`1
`
`1
`
`2.23
`
`(0.07)
`
`—
`
`0.32
`
`0.11
`
`0.12
`
`0.38
`
`—
`
`(0.06)
`
`3.03
`
`13
`
`Dividends paid per share
`
`Capital expenditures
`
`Employees3
`
`2.00
`
`1,066.2
`
`41,275
`
`1.96
`
`1,162.6
`
`39,135
`
`(8)
`
`5
`
`1 For more information on these reconciling items, with the exception of the Novartis Animal Health 2014 results, see the Financial Results section of the Executive Overview on page F23 of
`the Financial Report. For more information on the Novartis Animal Health 2014 results reconciling item, see Note 3 to the consolidated financial statements.
`2 Numbers may not add due to rounding.
`3 The 2015 employment total reflects additions from the acquisition of Novartis Animal Health on January 1, 2015.
`
`Return on Assets and Shareholders’ Equity
`
`Total Shareholder Return
`
`24.0%
`
`24.9%
`
`7.2%
`
`16.3%
`
`2.1%
`
`29.5%
`
`27.8%
`
`31.4%
`
`16.1%
`
`13.7%
`
`6.8%
`
`6.8%
`
`14.1%
`
`12.5%
`
`13.5%
`
`25.4%
`
`13.7%
`
`39.8%
`
`32.4%
`
`1.4%
`
`2015
`
`2012
`2011
`Return on Assets (ROA)
`
`2015
`2014
`2013
`Return on Shareholders’ Equity (ROE)
`
`2011
`
`2012
`
`2013
`Lilly
`
`2014
`S&P 500
`
`ROE increased in 2015 as a result of a decrease in
`shareholders’ equity driven by the strengthening of the
`US dollar against other currencies compared to prior year.
`Net income remained flat, driven by strong operating
`performance, offset by the impact of foreign exchange rates.
`
`Over the past five years, Lilly’s annualized total
`shareholder return has averaged 24 percent, compared
`to 13 percent for the S&P benchmark, due to the
`increase in the stock price and steady dividend stream.
`
`Revenue Growth Across Therapeutic Areas
`($ millions, percent growth)
`
`$227.7
`-21%
`
`$3,181.0
`+36%
`
`$3,068.0
`0%
`
`$7,036.8
`+1%
`
`$3,509.8
`+3%
`
`$2,935.4
`-18%
`
`Endocrinology
`Cardiovascular
`
`Neuroscience
`Animal Health
`
`Oncology
`Other Pharmaceutical
`
`Revenue in Endocrinology increased 1 percent driven by
`growth of Trulicity, Humalog, and Jardiance. Revenue in
`Neuroscience decreased 18 percent due to the loss of
`Cymbalta patent protection in the U.S. in December 2013.
`Animal Health grew 36 percent, reflecting the acquisition of
`Novartis Animal Health in the first quarter of 2015.
`
`Page 8 of 186
`
`

`

`YEAR IN REVIEW
`
`2015 Financial Highlights
`
`Table of Contents
`
`YEAR IN REVIEW
`2015 Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Inside front cover
`Pipeline of Molecules in Clinical Development. . . . . . . . . . . . . . . . . . . Inside back cover
`
`FINANCIAL REPORT
`Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F1
`Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F2
`Risk Factors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F15
`Management’s Discussion and Analysis of Results of Operations and Financial Condition . .F22
`Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F45
`Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . .F46
`Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F47
`Consolidated Statements of Shareholder’s Equity . . . . . . . . . . . . . . . . . . . . . . . . .F48
`Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F49
`Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . .F50
`Management’s Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F95
`Reports of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . .F97
`Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F100
`Trademarks Used in this Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F102
`
`PROXY
`Notice of Annual Meeting of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P1
`Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P8
`Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P27
`Audit Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P53
`Shareholder Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P56
`Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P57
`Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P61
`Annual Meeting Admission Ticket . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P65
`Executive Committee and Senior Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . P67
`Corporate Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P68
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`2015 Financial Report
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`FINANCIAL REPORT
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`Table of Contents
`Forward-Looking Statements
`Business
`Risk Factors
`Management’s Discussion and Analysis of Results of Operations and Financial Condition
`Consolidated Statements of Operations
`Consolidated Statements of Comprehensive Income
`Consolidated Balance Sheets
`Consolidated Statements of Shareholder’s Equity
`Consolidated Statements of Cash Flows
`Notes to Consolidated Financial Statements
`Management’s Reports
`Reports of Independent Registered Public Accounting Firm
`Selected Financial Data
`Trademarks Used in this Report
`
`F1
`F2
`F15
`F22
`F45
`F46
`F47
`F48
`F49
`F50
`F95
`F97
`F100
`F102
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`FINANCIAL REPORT
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`FINANCIAL REPORT
`
`Forward-Looking Statements
`
`Forward-Looking Statements
`This Annual Report includes forward-looking statements within the meaning of Section 27A of the Securities
`Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (Exchange Act). Forward-looking
`statements include all statements that do not relate solely to historical or current facts, and can generally be
`identified by the use of words such as “may,” “believe,” “will,” “expect,” “project,” “estimate,” “intend,”
`“anticipate,” “plan,” “continue,” or similar expressions.
`In particular, information appearing under “Business,” “Risk Factors” and “Management's Discussion and
`Analysis of Financial Condition and Results of Operations” includes forward-looking statements. Forward-
`looking statements inherently involve many risks and uncertainties that could cause actual results to differ
`materially from those projected in these statements. Where, in any forward-looking statement, we express an
`expectation or belief as to future results or events, it is based on management's current plans and
`expectations, expressed in good faith and believed to have a reasonable basis. However, we can give no
`assurance that any such expectation or belief will result or will be achieved or accomplished. The following
`include some but not all of the factors that could cause actual results or events to differ materially from those
`anticipated:
`(cid:127)
`the timing of anticipated regulatory approvals and launches of new products;
`(cid:127) market uptake of recently launched products;
`(cid:127)
`competitive developments affecting current products;
`(cid:127)
`the expiration of intellectual property protection for certain of our products;
`(cid:127)
`our ability to protect and enforce patents and other intellectual property;
`(cid:127)
`the impact of actions of governmental and private payers affecting pricing of, reimbursement for, and
`access to pharmaceuticals;
`regulatory compliance problems or government investigations;
`regulatory actions regarding currently marketed products;
`unexpected safety or efficacy concerns associated with our products;
`issues with product supply stemming from manufacturing difficulties or disruptions;
`regulatory changes or other developments;
`changes in patent law or regulations related to data-package exclusivity;
`litigation involving past, current or future products as we are largely self-insured;
`unauthorized disclosure or misappropriation of trade secrets or other confidential data stored in our
`information systems, networks, and facilities, or those of third parties with whom we share our data;
`changes in tax law;
`changes in foreign currency exchange rates, interest rates, and inflation;
`asset impairments and restructuring charges;
`changes in accounting standards promulgated by the Financial Accounting Standards Board and the
`Securities and Exchange Commission;
`acquisitions and business development transactions and related integration costs;
`information technology system inadequacies or operating failures;
`reliance on third-party relationships and outsourcing arrangements; and
`the impact of global macroeconomic conditions.
`
`(cid:127)
`(cid:127)
`(cid:127)
`(cid:127)
`(cid:127)
`(cid:127)
`(cid:127)
`(cid:127)
`
`(cid:127)
`(cid:127)
`(cid:127)
`(cid:127)
`
`(cid:127)
`(cid:127)
`(cid:127)
`(cid:127)
`
`Investors should not place undue reliance on forward-looking statements. You should carefully read the
`factors described in the “Risk Factors” section of this Annual Report for a description of certain risks that
`could, among other things, cause our actual results to differ from these forward-looking statements.
`All forward-looking statements speak only as of the date of this report and are expressly qualified in their
`entirety by the cautionary statements included in this report. Except as is required by law, we expressly
`disclaim any obligation to publicly release any revisions to forward-looking statements to reflect events after
`the date of this report.
`
`F11
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`FINANCIAL REPORT
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`Business
`
`Business
`Eli Lilly and Company (the “company” or “registrant” or "Lilly") was incorporated in 1901 in Indiana to succeed
`to the drug manufacturing business founded in Indianapolis, Indiana, in 1876 by Colonel Eli Lilly. We discover,
`develop, manufacture, and market products in two business segments—human pharmaceutical products and
`animal health products.
`The mission of our human pharmaceutical business is to make medicines that help people live longer,
`healthier, more active lives. Our vision is to make a significant contribution to humanity by improving global
`health in the 21st century. Most of the products we sell today were discovered or developed by our own
`scientists, and our success depends to a great extent on our ability to continue to discover, develop, and bring
`to market innovative new medicines.
`Our animal health business, operating through our Elanco division, develops, manufactures, and markets
`products for both food animals and companion animals. Elanco food animal products help the food industry
`produce an abundant supply of safe, nutritious and affordable food. Elanco companion animal products help
`pets live longer, healthier, happier lives.
`We manufacture and distribute our products through facilities in the United States (U.S.), Puerto Rico, and 14
`other countries. Our products are sold in approximately 125 countries.
`
`Human Pharmaceutical Products
`Our human pharmaceutical products include:
`Endocrinology products, including:
`(cid:127) Humalog®, Humalog Mix 75/25™, and Humalog Mix 50/50™, insulin analogs for the treatment of
`diabetes
`(cid:127) Humulin®, human insulin of recombinant DNA origin for the treatment of diabetes
`(cid:127) Trajenta®, for the treatment of type 2 diabetes
`Jentadueto®, a combination tablet of linagliptin (Trajenta) and metformin hydrochloride for use in the
`(cid:127)
`treatment of type 2 diabetes
`Jardiance®, for the treatment of type 2 diabetes (approved in the U.S., Europe, and Japan in 2014)
`(cid:127)
`(cid:127) Trulicity®, for the treatment of type 2 diabetes (approved in the U.S. and Europe in 2014 and Japan in
`2015)
`(cid:127) Glyxambi®, a combination tablet of linagliptin and empagliflozin (Jardiance) for the treatment of type 2
`diabetes (approved in the U.S. in 2015)
`(cid:127) Synjardy®, a combination tablet of empagliflozin and metformin hydrochloride for the treatment of type
`2 diabetes (approved in the U.S. and Europe in 2015)
`(cid:127) Basaglar® (insulin glargine injection), a long-acting human insulin analog for the treatment of diabetes
`(launched in Japan in 2015 and in Europe in 2015 under the trade name Abasaglar®). Basaglar was
`also approved in the U.S. in 2015; under an agreement settling patent litigation with Sanofi-Aventis
`U.S. LLC (Sanofi) regarding Sanofi's insulin glargine product, we will have the ability to launch
`Basaglar in the U.S. on December 15, 2016. Under