Eli Lilly and Co.

Eli Lilly and Co. is a pharmaceutical company that was founded in 1876 by Colonel Eli Lilly.4 Its first major breakthrough was the development of gelatin coating for pills, which later turned into the gelatin capsules. Since 1876 Eli Lilly and Co. has been a pioneer in the pharmaceutical industry.5 The main focus of Lilly is the research and development of neuroscience and endocrinology drugs. They have expanded their operations over time into over 60 nations worldwide. The pharmaceutical sector brings in sales of $1 trillion every year.10

Products

While Eli Lilly makes and sells numerous drugs their 5 biggest sellers are Zyprexa, Gemzar, Humalog, Evista, and Humulin, in that order. These five drugs account for 60% of Lilly’s net sales for 2005. Zyprexa is a drug for schizophrenia and bipolar disorder. Gemzar is a cancer drug useful in the treatment of many different forms of the disease. Evista is an osteoporosis drug. Finally, Humalog and Humulin are insulin products used by diabetics. Two other drugs produced by Lilly that are well know are: Cialis, an erectile dysfunction drug, and Prozac, the first drug of its kind to treat clinical depression. These drugs are well known by the general public but only account for about 4% of Lilly’s total net sales for 2005. 3

All Eli Lilly Products

Cancer Growth Disorders

Alimta Humatrope

Gemzar Osteoporosis

Diabetes Evista

Actos Sepsis

Byetta Xigris

Humulin Neuroscience

Humalog Cymbalta

Humalog Mix 75/25 Prozac

Humalog Mix 50/50 Strattera

Humulin Pen Symbyax

Humalog Pen Zyprexa

Erectile Dysfunction

Cialis

http://www.lilly.com/products/index.html1

Financial

Eli Lilly’s worldwide sales for 2005 increased 6 percent, to $14.65 billion, due to the sales growth of Cymbalta, Alimta, Forteo, and Gemzar. As a result Lilly’s restructuring of arrangements with U.S. wholesalers in 2005, wholesaler inventory levels for certain products decreased (primarily Strattera, Prozac, and Gemzar) reducing sales by approximately $170 million. Another factor in sales growth was decreased U.S. demand for Zyprexa, Strattera, and Prozac. Even considering these two factors U.S. sales increased to $7.8 billion, up 2 percent, due to sales increases of Cymbalta and Alimta. Outside the U.S. sales increased 11 percent, $6.85 billion, due to increased sales of Zyprexa, Alimta, and Gemzar. This represents a 3 percent volume increase in worldwide sales, partially due to global selling prices and partially due to changing exchange rate.3

In 2005 gross margins decreased 0.4 percent to 76.3 percent of sales. This decrease is due to higher manufacturing expenses. Operating expenses increased 8 percent. Research and development expenses increased 12 percent, to $3.03 billion. The R&D increase represents about 21 percent of total sales, which is a leader in the industry. Marketing and administrative expenses increased 5 percent, to $4.5 billion because of stock options, increased benefits, and incentive compensation.3

Net income in 2005 was up $89.4 million, total $419.4 million. Eli Lilly employed 42,600 people full time in 2005.3

Current News

Solomon Steiner, owner of Biodel Inc. in Danbury, Ct. is in the last phase of clinical testing of new injectable insulin. Steiner says that this new insulin has performed faster and better than any other insulin on the market today. His goal with this new insulin is to market it through a larger partner, such as Johnson and Johnson or Bristol-Myer Squibb, and severely cut into Eli Lilly’s 80% market share of mealtime insulin.6

Lilly Endowment Inc. has indicated its intent to reduce its stock in Eli Lilly and Co. by $2 Billion. The endowment is the largest shareholder in Eli Lilly. The sell off is intended to diversify the endowments assets and decrease the risk to its assets. This sell off adversely affects Eli Lilly’s main anti-takeover provision. The endowment stake in Eli Lilly will decrease to 10.6% after the sell off.7

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