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80
LLY
2016
In most international markets, we operate in an environment of government-mandated cost-containment programs, which may include price controls, international reference pricing (to other countries’ prices), discounts and rebates, therapeutic reference pricing (to other, often generic, pharmaceutical choices), restrictio...
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81
LLY
2016
Globally, public and private payers are increasingly restricting access to human pharmaceuticals based on assessments of comparative effectiveness and value, including through the establishment of formal health technology assessment processes. In addition, third party organizations, including professional associations,...
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82
LLY
2016
We cannot predict the extent to which our business may be affected by these or other potential future legislative, regulatory, or payer developments. However, in general we expect that state, federal, and international legislative and regulatory developments could have further negative effects on pricing and reimbursem...
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83
LLY
2016
Our commitment to research and development dates back more than 140 years. We invest heavily in research and development because we believe it is critical to our long-term competitiveness. At the end of 2016, we employed approximately 9,300 people in human pharmaceutical and animal health research and development activ...
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84
LLY
2016
Our internal human pharmaceutical research focuses primarily on the areas of cancer, diabetes, neurodegeneration, immunology, and pain. We have a strong biotechnology research program, with more than half of our clinical-stage pipeline currently consisting of biologics. In addition to discovering and developing NMEs, w...
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85
LLY
2016
To supplement our internal efforts, we collaborate with others, including academic institutions and research-based pharmaceutical and biotechnology companies. We use the services of physicians, hospitals, medical schools, and other research organizations worldwide to conduct clinical trials to establish the safety and ...
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86
LLY
2016
Our Elanco animal health innovation strategy is focused on identifying and developing promising technologies and potential products from internal and external sources to meet unmet veterinary needs. Our animal health scientists also leverage discoveries from our human health laboratories to develop products to enhance ...
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87
LLY
2016
Human pharmaceutical development is time-consuming, expensive, and risky. On average, only one out of many thousands of molecules discovered by researchers ultimately becomes an approved medicine. The process from discovery to regulatory approval can take over a decade. Drug candidates can fail at any stage of the proc...
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88
LLY
2016
The earliest phase of new drug research and development, the discovery phase, can take many years. Scientists identify, design, and synthesize promising molecules, screening tens of thousands of molecules for their effect on biological targets that appear to play an important role in one or more diseases. Targets can b...
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89
LLY
2016
The early development phase involves refining candidate molecules, understanding how to manufacture them efficiently, and completing initial testing for safety and efficacy. Safety testing is done first in laboratory tests and animals as necessary, to identify toxicity and other potential safety issues that would precl...
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90
LLY
2016
initial signs of efficacy in treating the targeted disease, or biomarkers of the disease, and to continue to assess safety. In parallel, scientists work to identify safe, effective, and economical manufacturing processes. Long-term animal studies continue to test for potential safety issues. Of the molecules that enter...
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91
LLY
2016
Product phase (Phase III) molecules have already demonstrated safety and, typically, shown initial evidence of efficacy. As a result, these molecules generally have a higher likelihood of success. The molecules are tested in much larger patient populations to demonstrate efficacy to a predetermined level of statistical...
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92
LLY
2016
Once a molecule is submitted to regulatory agencies, the time to final marketing approval can vary from several months to several years, depending on variables such as the disease state, the strength and complexity of the data presented, the novelty of the target or compound, and the time required for the agency(ies) t...
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93
LLY
2016
We believe our investments in research, both internally and in collaboration with others, have been rewarded by the large number of new molecules and new indications for existing molecules that we have in all stages of development. We currently have approximately 45 drug candidates across all stages of human testing an...
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94
LLY
2016
Most of the principal materials we use in our manufacturing operations are available from more than one source. However, we obtain certain raw materials primarily from only one source. In the event one of these suppliers was unable to provide the materials or product, we generally seek to maintain sufficient inventory ...
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95
LLY
2016
The majority of our revenue comes from products produced in our own facilities. Our principal active ingredient manufacturing occurs at sites we own in the U.S., Ireland, Puerto Rico, and the U.K. Finishing operations, including formulation, filling, assembling, delivery device manufacturing, and packaging, take place ...
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96
LLY
2016
We manage our supply chain (including our own facilities, contracted arrangements, and inventory) in a way that should allow us to meet all expected product demand while maintaining flexibility to reallocate manufacturing capacity to improve efficiency and respond to changes in supply and demand. To maintain a stable s...
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97
LLY
2016
However, human pharmaceutical and animal health production processes are complex, highly regulated, and vary widely from product to product. Shifting or adding manufacturing capacity can be a very lengthy process requiring significant capital expenditures, process modifications, and regulatory approvals. Accordingly, i...
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98
LLY
2016
or extraordinary unplanned increases in demand, we could experience an interruption in supply of certain products or product shortages until production could be resumed or expanded.
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99
LLY
2016
Our success depends in great measure upon customer confidence in the quality of our products and in the integrity of the data that support their safety and effectiveness. Product quality arises from a total commitment to quality in all parts of our operations, including research and development, purchasing, facilities ...
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100
LLY
2016
Quality of production processes involves strict control of ingredients, equipment, facilities, manufacturing methods, packaging materials, and labeling. We perform tests at various stages of production processes and on the final product to assure that the product meets all regulatory requirements and Lilly internal sta...
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101
LLY
2016
The following table sets forth certain information regarding our executive officers. Except as otherwise noted, all executive officers have been employed by the company in management or executive positions during the last five years.
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102
LLY
2016
The term of office for each executive officer expires on the date of the annual meeting of the Board of Directors, to be held on May 1, 2017, or on the date his or her successor is chosen and qualified. No director or executive officer has a “family relationship” with any other director or executive officer of the comp...
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103
LLY
2016
At the end of 2016, we employed approximately 41,975 people, including approximately 23,115 employees outside the U.S. A substantial number of our employees have long records of continuous service.
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104
LLY
2016
You can find financial information relating to our business segments and classes of products in Item 8, "Financial Statements and Supplementary Data—Note 18, Segment Information." That information is incorporated here by reference.
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105
LLY
2016
The relative contribution of any particular product to our consolidated revenue changes from year to year. This is due to several factors, including the introduction of new products by us and by other manufacturers and the introduction of generic pharmaceuticals upon patent expirations. Our product revenues are general...
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106
LLY
2016
You can find financial information relating to foreign and domestic operations in Item 8, “Financial Statements and Supplementary Data—Note 18, Segment Information.” That information is incorporated here by reference. To date, our overall operations abroad have not been significantly deterred by local restrictions on t...
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107
LLY
2016
Our company website is https://www.lilly.com. None of the information accessible on or through our website is incorporated into this Form 10-K. We make available through the website, free of charge, our company filings with the Securities and Exchange Commission (SEC) as soon as reasonably practicable after we electron...
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108
LLY
2016
In addition, the Corporate Governance portion of our website includes our corporate governance guidelines, board and committee information (including committee charters), and our articles of incorporation and by-laws. The link to our corporate governance information is https://www.lilly.com/about/corporate-governance/P...
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109
LLY
2016
We will provide paper copies of our SEC filings free of charge upon request to the company’s secretary at the address listed on the front of this Form 10-K.
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110
LLY
2016
In addition to the other information contained in this Form 10-K, the following risk factors should be considered carefully in evaluating our company. It is possible that our business, financial condition, liquidity, or results of operations could be materially adversely affected by any of these risks. Certain of these...
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111
LLY
2016
•Pharmaceutical research and development is very costly and highly uncertain; we may not succeed in developing or acquiring commercially successful products sufficient in number or value to replace revenues of products that have lost or will soon lose intellectual property protection.
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112
LLY
2016
There are many difficulties and uncertainties inherent in human pharmaceutical research and development and the introduction of new products. There is a high rate of failure inherent in new drug discovery and development. To bring a drug from the discovery phase to market can take over a decade and often costs in exces...
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113
LLY
2016
agencies are establishing increasingly high hurdles for the efficacy and safety of new products; delays and uncertainties in drug approval processes can result in delays in product launches and lost market opportunity. In addition, it can be very difficult to predict revenue growth rates of new products.
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114
LLY
2016
We cannot state with certainty when or whether our products now under development will be approved or launched; whether, if initially granted, such approval will be maintained; whether we will be able to develop, license, or otherwise acquire additional product candidates or products; or whether our products, once laun...
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115
LLY
2016
•We depend on products with intellectual property protection for most of our revenues, cash flows, and earnings; we have lost or will lose effective intellectual property protection for many of those products in the next several years, which has resulted and is likely to continue to result in rapid and severe declines ...
[-0.01778014749288559, -0.03452610224485397, 0.02325606159865856, -0.02264615334570408, 0.007272491697221994, 0.011893208138644695, -0.011893208138644695, 0.008266907185316086, 0.005359899252653122, -0.015618951991200447, 0.02726024203002453, 0.03166218847036362, 0.010487767867743969, -0.0011800396023318172, -0.0213998...
116
LLY
2016
A number of our top-selling human pharmaceutical products have recently lost, or will lose in the next several years, significant patent protection and/or data protection in the U.S. as well as key countries outside the U.S., as illustrated in the tables below:
[-0.0086513701826334, -0.022999005392193794, 0.02848132513463497, -0.021126993000507355, 0.0015260240761563182, 0.02342689409852028, -0.011004756204783916, 0.011165214702486992, -0.013184313662350178, -0.0025539593771100044, 0.014227291569113731, 0.02377455309033394, -0.008684799075126648, 0.004349085036665201, -0.0049...
117
LLY
2016
Certain other significant products no longer have effective exclusivity through patent protection or data protection. For non-biologic products, loss of exclusivity (whether by expiration or as a consequence of litigation) typically results in the entry of one or more generic competitors, leading to a rapid and severe ...
[-0.009626743383705616, -0.019579818472266197, 0.01832888461649418, -0.01363108865916729, -0.011278791353106499, 0.014752849005162716, 0.0023387004621326923, -0.00016815782873891294, -0.02047722600400448, -0.03932280093431473, 0.013780656270682812, 0.02556253969669342, -0.01579982601106167, -0.009823901578783989, -0.00...
118
LLY
2016
Analysis—Executive Overview—Other Matters,” and Item 1, "Business—Patents, Trademarks, and Other Intellectual Property Rights," for more details.
[-0.009786802344024181, -0.015282271429896355, -0.0001818412565626204, -0.05036872625350952, -0.01895872689783573, 0.013194249011576176, 0.011042177677154541, -0.012765116058290005, -0.01233598217368126, -0.010536184534430504, 0.005947019439190626, 0.026567837223410606, -0.01656326651573181, -0.0035419513005763292, 0.0...
119
LLY
2016
•Our long-term success depends on intellectual property protection; if our intellectual property rights are invalidated, circumvented, or weakened, our business will be adversely affected.
[-0.007577121257781982, -0.028982967138290405, 0.014631683006882668, -0.039561621844768524, -0.019589630886912346, 0.019831793382763863, -0.0027322883252054453, 0.005423154216259718, 0.02131025493144989, 0.002792828716337681, 0.013369890861213207, 0.01855725608766079, 0.016403289511799812, -0.010094331577420235, -0.016...
120
LLY
2016
Our long-term success depends on our ability to continually discover, develop, and commercialize innovative new pharmaceutical products. Without strong intellectual property protection, we would be unable to generate the returns necessary to support the enormous investments in research and development and capital as we...
[0.001980113098397851, -0.007216412108391523, 0.016127735376358032, -0.04208596050739288, -0.023454969748854637, 0.02714466117322445, 0.005228150635957718, 0.017431514337658882, 0.0026678561698645353, 0.006258135195821524, 0.02361142262816429, 0.018800482153892517, 0.013187716715037823, 0.0031192891765385866, -0.029100...
121
LLY
2016
Intellectual property protection varies throughout the world and is subject to change over time. In the U.S., the Hatch-Waxman Act provides generic companies powerful incentives to seek to invalidate our human pharmaceutical patents; as a result, we expect that our U.S. patents on major pharmaceutical products will con...
[-0.009908384643495083, -0.017543360590934753, 0.012799425981938839, -0.02252383530139923, -0.008765109814703465, 0.02052638866007328, 0.005581679753959179, -0.007267025299370289, -0.007352442014962435, -0.03461364284157753, -0.0010553941829130054, 0.0022898355964571238, 0.0040113190189003944, -0.0053549958392977715, -...
122
LLY
2016
•Our human pharmaceutical business is subject to increasing government price controls and other public and private restrictions on pricing, reimbursement, and access for our drugs, which could have a material adverse effect on our business.
[-0.008426551707088947, -0.027138736099004745, -0.01095004566013813, -0.018859121948480606, -0.010592284612357616, 0.013390487059950829, 0.002116220770403743, 0.01664866879582405, -0.008036848157644272, 0.010886159725487232, -0.01304550375789404, 0.013288269750773907, 0.016929766163229942, -0.008912084624171257, -0.000...
123
LLY
2016
Public and private payers are taking increasingly aggressive steps to control their expenditures for human pharmaceuticals by placing restrictions on pricing and reimbursement for, and patient access to, our medications. These pressures could negatively affect our future revenues and net income.
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124
LLY
2016
We expect pricing, reimbursement, and access pressures from both governments and private payers inside and outside the U.S. to become more severe. For more details, see Item 1, “Business—Regulations and Private Payer Actions Affecting Human Pharmaceutical Pricing, Reimbursement, and Access,” and Item 7, “Management’s D...
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125
LLY
2016
•We face intense competition from multinational pharmaceutical companies, biotechnology companies, and lower-cost generic and biosimilar manufacturers, and such competition could have a material adverse effect on our business.
[-0.027448713779449463, -0.010793501511216164, 0.0006810071063227952, -0.013685877434909344, -0.008311573415994644, 0.03740207850933075, -0.012961179949343204, 0.017225991934537888, -0.004739392548799515, 0.0013291463255882263, -0.0024450519122183323, 0.04325096681714058, 0.008292333222925663, -0.029911402612924576, 0....
126
LLY
2016
We compete with a large number of multinational pharmaceutical companies, biotechnology companies, and generic pharmaceutical companies. To compete successfully, we must continue to deliver to the market innovative, cost-effective products that meet important medical needs. Our product revenues can be adversely affecte...
[-0.020375395193696022, -0.020722780376672745, 0.002637110650539398, -0.0004663794534280896, 0.004442504141479731, 0.0314248725771904, -0.0019390027737244964, 0.013454441912472248, -0.019747432321310043, -0.018932417035102844, -0.003248372580856085, 0.02498491108417511, 0.0026387807447463274, -0.024250060319900513, -0....
127
LLY
2016
•Changes in foreign currency rates or devaluation of a foreign currency can materially affect our revenue, cost of sales, and operating expenses.
[-0.011767900548875332, -0.024328719824552536, 0.009414320811629295, -0.020754298195242882, -0.0016487647080793977, 0.007054447662085295, -0.014599748887121677, -0.008048741146922112, 0.018665023148059845, -0.005663695745170116, -0.008885709568858147, 0.056032828986644745, 0.018979674205183983, -0.0004578153893817216, ...
128
LLY
2016
As a global company with substantial operations outside the U.S., we face foreign currency risk exposure from fluctuating currency exchange rates. While we manage a portion of these exposures through hedging and other risk management techniques, significant fluctuations in currency rates can have a material impact, eit...
[-0.007197292987257242, -0.024622997269034386, 0.0002626028435770422, -0.011563393287360668, -0.00547213526442647, 0.013453004881739616, -0.019592631608247757, 0.001094749546609819, 0.020688991993665695, -0.015490948222577572, -0.019128289073705673, 0.028660187497735023, 0.011569841764867306, 0.005456012673676014, 0.00...
129
LLY
2016
•Unanticipated changes in our tax rates or exposure to additional tax liabilities could increase our income taxes and decrease our net income.
[-0.009451829828321934, -0.04356224089860916, 0.00842595286667347, -0.03285308554768562, -0.002514649648219347, 0.0016232626512646675, -0.014875216409564018, -0.013936914503574371, 0.0020611369982361794, 0.007281224709004164, 0.03455454111099243, 0.014650024473667145, 0.020705200731754303, 0.018578382208943367, 0.00844...
130
LLY
2016
We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Changes in the relevant tax laws, regulations, administrative practices, principles, and interpretations could adversely affect our future effective tax rates. The U.S. and a number of other countries are actively considering or enacting cha...
[-0.019955279305577278, -0.03345148265361786, 0.0046683792024850845, -0.05659860000014305, -0.0003544088394846767, -0.0012731229653581977, -0.01536858081817627, -0.0032452461309731007, 0.007081108167767525, -0.012415501289069653, 0.00919224601238966, 0.009738880209624767, 0.014966459944844246, 0.010379761457443237, -0....
131
LLY
2016
•Failure, inadequacy, or breach of our information technology systems, infrastructure, and business information could result in material harm to our business and reputation.
[-0.017785394564270973, -0.021558834239840508, 0.004813389386981726, -0.0359056331217289, -0.012582425959408283, 0.01482330821454525, -0.01777251623570919, 0.0003185449750162661, 0.03920256346464157, -0.008557852357625961, -0.002290787175297737, 0.030161762610077858, 0.0091438302770257, 0.004842366557568312, 0.01563466...
132
LLY
2016
A great deal of confidential information owned by both us and our alliances is stored in our information systems, networks, and facilities or those of third parties. This includes valuable trade secrets and intellectual property, corporate strategic plans, marketing plans, customer information, and personally identifia...
[0.005521789193153381, -0.0012919362634420395, 0.018904007971286774, -0.057946305721998215, -0.0024701887741684914, 0.028765274211764336, -0.008646472357213497, -0.0016890178667381406, 0.015344077721238136, -0.020904844626784325, 0.014304682612419128, 0.023633258417248726, -0.003943207208067179, -0.002726789563894272, ...
133
LLY
2016
IT systems are potentially vulnerable to system inadequacies, operating failures, service interruptions or failures, security breaches, malicious intrusions, or cyber-attacks from a variety of sources. Cyber- attacks are growing in their frequency, sophistication, and intensity, and are becoming increasingly difficult ...
[-0.006116189062595367, -0.014439482241868973, 0.007316261529922485, -0.03186466917395592, -0.0281582772731781, 0.032791268080472946, -0.0112156942486763, -0.023962847888469696, 0.005971407983452082, -0.028389926999807358, 0.02772071771323681, 0.01607389748096466, -0.012058640830218792, -0.005389066878706217, 0.0098579...
134
LLY
2016
The failure or inadequacy of our IT systems or the loss, theft, destruction, or unauthorized disclosure or use of confidential information could impair our ability to secure and maintain intellectual property rights, damage our operations, customer relationships, and reputation, and cause us to lose trade secrets or ot...
[-0.007848779670894146, -0.019988052546977997, 0.017932726070284843, -0.0465017706155777, -0.010186713188886642, 0.036045294255018234, -0.016506843268871307, -0.0007803819025866687, 0.02941686473786831, -0.012376921251416206, 0.013128399848937988, 0.02224891260266304, 0.00023102355771698058, 0.004785057622939348, -0.00...
135
LLY
2016
To date, system inadequacies, operating failures, service interruptions or failures, security breaches, malicious intrusions, cyber-attacks, and the loss, theft, destruction, or unauthorized disclosure or use of confidential information have not had a material impact on our consolidated results of operations. We have i...
[-0.027174673974514008, -0.024332964792847633, 0.009053818881511688, -0.023698536679148674, -0.008703561499714851, 0.026923546567559242, -0.01525271125137806, -0.0167594775557518, 0.005782548803836107, -0.01944258064031601, 0.014433241449296474, 0.026606332510709763, -0.007395053748041391, 0.0003605832171160728, 0.0044...
136
LLY
2016
•Significant economic downturns could adversely affect our business and operating results.
[-0.029792534187436104, -0.03190441057085991, 0.03029536083340645, -0.03203011676669121, -0.014770559966564178, 0.016103053465485573, -0.012614686973392963, 0.00688245240598917, 0.01890631578862667, -0.010081692598760128, 0.005763661116361618, 0.04744178056716919, -0.0032778072636574507, 0.005763661116361618, -0.001747...
137
LLY
2016
While human pharmaceuticals and companion animal health products have not generally been sensitive to overall economic cycles, prolonged economic slowdowns could lead to decreased utilization of our products, affecting our sales volume. Our food animal business may be affected by depressed prices for our customers’ end...
[-0.015234557911753654, -0.03322698175907135, 0.002993212779983878, -0.01736925169825554, -0.01650741882622242, 0.01907965913414955, 0.006679206620901823, -0.0027412923518568277, -0.0190531425178051, -0.014120804145932198, 0.008339893072843552, 0.023242976516485214, 0.0046174367889761925, 0.001208223751746118, -0.00478...
138
LLY
2016
•Pharmaceutical products can develop unexpected safety or efficacy concerns, which could have a material adverse effect on revenues and income.
[-0.0005947307799942791, -0.028321586549282074, 0.015243146568536758, -0.020397210493683815, -0.00394930224865675, 0.01568124257028103, -0.0020873963367193937, -0.0035949600860476494, -0.006133337039500475, 0.005965829826891422, 0.022845391184091568, 0.01660897396504879, 0.003417789237573743, 0.01756247505545616, -0.00...
139
LLY
2016
Human pharmaceutical products receive regulatory approval based on data obtained in controlled clinical trials of limited duration. After approval, the products are used for longer periods of time by much larger numbers of patients; we and others (including regulatory agencies and private payers) collect extensive info...
[0.007502858992666006, -0.017515476793050766, -0.003424500348046422, -0.02414652518928051, -0.024780569598078728, 0.026907259598374367, 0.005207750014960766, 0.023670991882681847, -0.024542802944779396, -0.005131796933710575, 0.00814350787550211, -0.009979594498872757, -0.008955877274274826, 0.0010270198108628392, -0.0...
140
LLY
2016
•We face many product liability claims and are self-insured; we could face large numbers of claims in the future, which could adversely affect our business.
[-0.0014266874641180038, -0.018437691032886505, -0.00284851947799325, -0.025429511442780495, -0.01979721151292324, 0.019538255408406258, -0.006784655619412661, 0.029650498181581497, 0.01610708236694336, 0.003631862346082926, -0.0037160231731832027, 0.025584883987903595, 0.0035703603643924, -0.008066489361226559, 0.0121...
141
LLY
2016
We are subject to a substantial number of product liability claims involving Actos®, Axiron, Byetta®, Cialis, Cymbalta, and Prozac among other products. See Item 8, “Financial Statements and Supplementary Data—Note 15, Contingencies,” and Item 3, “Legal Proceedings,” for more information on our current product liabilit...
[-0.0027965358458459377, -0.023102106526494026, 0.0076033929362893105, -0.020434947684407234, -0.01221452560275793, 0.028794698417186737, -0.017927022650837898, 0.025357911363244057, -0.0020998897962272167, -0.010914119891822338, 0.009965354576706886, 0.02998894825577736, -0.016122376546263695, 0.012174717150628567, 0....
142
LLY
2016
•Regulatory compliance problems could be damaging to the company.
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143
LLY
2016
The marketing, promotional, and pricing practices of human pharmaceutical manufacturers, as well as the manner in which manufacturers interact with purchasers, prescribers, and patients, are subject to extensive regulation. Many companies, including us, have been subject to claims related to these practices asserted by...
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144
LLY
2016
•Manufacturing difficulties or disruptions could lead to product supply problems.
[-0.008633793331682682, -0.021819237619638443, -0.009051136672496796, -0.010192310437560081, -0.01484177727252245, 0.0076034762896597385, -0.017476258799433708, 0.014580938033759594, -0.014463559724390507, -0.021101929247379303, 0.0004980407538823783, 0.03748266026377678, 0.004375585354864597, -0.007016587071120739, -0...
145
LLY
2016
Pharmaceutical and animal health manufacturing is complex and highly regulated. Manufacturing difficulties at our facilities or contracted facilities, or the failure or refusal of a contract manufacturer to supply contracted quantities, could result in product shortages, leading to lost revenue. Such difficulties or di...
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146
LLY
2016
•Reliance on third-party relationships and outsourcing arrangements could adversely affect our business.
[-0.008365415968000889, -0.025135895237326622, 0.007995381951332092, -0.018290262669324875, -0.0143520412966609, 0.03280089050531387, -0.008524002507328987, 0.0034988056868314743, 0.023550033569335938, -0.009297109209001064, 0.013222115114331245, 0.027223944664001465, 0.004133149981498718, -0.011153887957334518, -0.000...
147
LLY
2016
We utilize third parties, including suppliers, distributors, alliances with other pharmaceutical and biotechnology companies, and third-party service providers, for selected aspects of product development, manufacture, commercialization, support for information technology systems, product distribution, and certain fina...
[0.004382898099720478, -0.0009876372059807181, -0.003848237218335271, -0.013010078109800816, -0.014297224581241608, 0.04744619131088257, 0.006607350893318653, 0.01302327960729599, 0.014746075496077538, -0.0032393180299550295, 0.005679945461452007, 0.023036617785692215, -0.0013251005439087749, -0.005382911767810583, 0.0...
148
LLY
2016
•Our animal health segment faces risks related to increased generic competition, food and animal safety concerns, factors affecting global agricultural markets, and other risks.
[0.007232865318655968, -0.02786761336028576, 0.0064382231794297695, -0.013246198184788227, -0.021744003519415855, 0.018760042265057564, -0.0049202945083379745, 0.007116101682186127, 0.002863955218344927, -0.008335634134709835, -0.010917410254478455, 0.028723882511258125, -0.005786292254924774, -0.02719298005104065, 0.0...
149
LLY
2016
The animal health operating segment may be impacted by, among other things, increased sales of companion animal products by non-veterinarian retail outlets; emerging restrictions and bans on the use of antibacterials in food-producing animals; perceived adverse effects on human health linked to the consumption of food ...
[-0.012179050594568253, -0.025473130866885185, -0.007406986318528652, -0.013884780928492546, -0.024782873690128326, 0.020561687648296356, -0.009185724891722202, -0.007652558386325836, -0.011707817204296589, -0.0021487560588866472, -0.005077369511127472, 0.015344939194619656, -0.016791824251413345, -0.01325425785034895,...
150
LLY
2016
None.
[-0.00039173135883174837, 0.0027664112858474255, 0.03036193549633026, -0.0021589112002402544, 0.0011439616791903973, 0.015677418559789658, -0.005353185348212719, -0.032452259212732315, -0.002665161155164242, -0.026246612891554832, -0.00082959677092731, 0.012156532146036625, -0.0062513709999620914, -0.011333467438817024...
151
LLY
2016
Item 7.Management’s Discussion and Analysis of Results of Operations and Financial Condition
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152
LLY
2016
Management’s discussion and analysis of results of operations and financial condition, is intended to assist the reader in understanding and assessing significant changes and trends related to the results of operations and financial position of our consolidated company. This discussion and analysis should be read in co...
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153
LLY
2016
David A. Ricks assumed the role of president and chief executive officer effective January 1, 2017, replacing John C. Lechleiter, who retired at the end of 2016. Lechleiter will remain chairman of our board of directors through May 31, 2017, and Ricks will assume the role of chairman effective June 1, 2017. Ricks joine...
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154
LLY
2016
The remainder of this section provides an overview of our financial results, recent product and late-stage pipeline developments, and other matters affecting our company and the pharmaceutical industry. Earnings per share (EPS) data is presented on a diluted basis.
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155
LLY
2016
(1) Operating expense consists of research and development and marketing, selling, and administrative expenses.
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156
LLY
2016
Revenue and gross margin increased in 2016. The increase in operating expense in 2016 was due to an increase in research and development expense, partially offset by a decrease in marketing, selling, and administrative expense. Net income and EPS increased in 2016 as a higher gross margin and lower acquired in-process ...
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157
LLY
2016
•We recognized acquired IPR&D charges of $30.0 million (pretax), or $0.02 per share, related to upfront fees paid in connection with a collaboration agreement with AstraZeneca.
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158
LLY
2016
•We recognized charges of $382.5 million (pretax), or $0.29 per share, related to integration and severance costs related to the acquisition of Novartis Animal Health (Novartis AH), other global severance costs, and asset impairments primarily related to the closure of an animal health manufacturing facility in Ireland...
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159
LLY
2016
•We recognized charges of $203.9 million (pretax), or $0.19 per share, related to the impact of the Venezuelan financial crisis, including the significant deterioration of the bolívar.
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160
LLY
2016
•We recognized expense of $153.0 million (pretax), or $0.10 per share, related to the fair value adjustments to Novartis AH acquisition date inventory that was sold.
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161
LLY
2016
•We recognized acquired IPR&D charges of $535.0 million (pretax), or $0.33 per share, related to upfront fees paid in connection with various collaboration agreements primarily with Pfizer Inc. (Pfizer), as well as the consideration paid to acquire the worldwide rights to Locemia Solutions' (Locemia) intranasal glucago...
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162
LLY
2016
•We recognized charges of $367.7 million (pretax), or $0.25 per share, related to severance costs, integration costs, and intangible asset impairments.
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163
LLY
2016
•We recognized net charges of $152.7 million (pretax), or $0.09 per share, attributable to the debt extinguishment loss of $166.7 million from the purchase and redemption of certain fixed-rate notes, partially offset by net gains from non-hedging interest rate swaps and foreign currency transactions associated with the...
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164
LLY
2016
Our long-term success depends to a great extent on our ability to continue to discover and develop innovative pharmaceutical products and acquire or collaborate on molecules currently in development by other biotechnology or pharmaceutical companies. We currently have approximately 45 potential new drugs in human testi...
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165
LLY
2016
The following new molecular entities (NMEs) were approved by regulatory authorities in at least one of the major geographies for use in the diseases described. The quarter in which each NME initially was approved in any major geography for any indication is shown in parentheses:
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166
LLY
2016
Baricitinib (Olumiant®) (Q1 2017)—a Janus tyrosine kinase inhibitor for the treatment of moderate-to-severe active rheumatoid arthritis (in collaboration with Incyte Corporation).
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167
LLY
2016
Ixekizumab* (Taltz®) (Q1 2016)—a neutralizing monoclonal antibody to interleukin-17A for the treatment of moderate-to-severe plaque psoriasis and psoriatic arthritis.
[-0.01220523752272129, -0.0017492207698523998, 0.008752655237913132, -0.017518414184451103, -0.01732187159359455, 0.02184233069419861, -0.040435172617435455, -0.013508963398635387, -0.008556113578379154, -0.011609060689806938, 0.028695082291960716, -0.009538821876049042, 0.019392110407352448, 0.0019293839577585459, -0....
168
LLY
2016
Necitumumab* (Portrazza®) (Q4 2015)—an anti-epidermal growth factor receptor monoclonal antibody for the treatment of metastatic squamous non-small cell lung cancer (NSCLC).
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169
LLY
2016
Olaratumab* (Lartruvo™) (Q4 2016)—a human lgG1 monoclonal antibody for the treatment of advanced soft tissue sarcoma.
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170
LLY
2016
The following NMEs and diagnostic agent are currently in Phase III clinical trial testing for potential use in the diseases described. The quarter in which each NME and diagnostic agent initially entered Phase III for any indication is shown in parentheses:
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171
LLY
2016
Abemaciclib (Q3 2014)—a small molecule cell-cycle inhibitor, selective for cyclin-dependent kinases 4 and 6 for the treatment of metastatic breast cancer and NSCLC.
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172
LLY
2016
BACE inhibitor (Q2 2016)—an oral beta-secretase cleaving enzyme (BACE) inhibitor for the treatment of early and mild Alzheimer's disease (in collaboration with AstraZeneca).
[-0.036604028195142746, -0.00851533655077219, 0.012898814864456654, -0.008349797688424587, -0.011786391958594322, 0.032948922365903854, -0.032366227358579636, 0.015997709706425667, -0.020937398076057434, 0.006813593674451113, 0.0007548587745986879, 0.02157306857407093, 0.003986184019595385, 0.005538941826671362, 0.0122...
173
LLY
2016
Flortaucipir** (Q3 2015)—a positron emission tomography (PET) tracer intended to image tau (or neurofibrillary) tangles in the brain, which are an indicator of Alzheimer's disease.
[-0.02695753611624241, -0.004400421399623156, 0.019702788442373276, -0.016174521297216415, -0.006224019452929497, 0.020878875628113747, -0.027829691767692566, 0.014258422888815403, -0.023772846907377243, -0.006693133618682623, 0.013676985166966915, 0.031133312731981277, -0.00886030774563551, 0.030710449442267418, -0.00...
174
LLY
2016
Galcanezumab* (Q2 2015)—a once-monthly subcutaneously injected calcitonin gene-related peptide (CGRP) antibody for the treatment of cluster headache and migraine prevention.
[-0.030894791707396507, 0.012617792002856731, 0.022584067657589912, -0.0217793770134449, 0.003799188882112503, 0.007512631826102734, -0.02181895263493061, -0.013508226722478867, -0.011199692264199257, -0.002887317445129156, 0.024114295840263367, 0.012795878574252129, 0.01317843608558178, -0.007598377764225006, -0.00304...
175
LLY
2016
Nasal glucagon* (Q3 2013)—a glucagon nasal powder formulation for the treatment of severe hypoglycemia in patients with diabetes treated with insulin.
[-0.02894406206905842, -0.007393320091068745, 0.0216556116938591, -0.015599381178617477, 0.013075951486825943, 0.004257057793438435, -0.023005809634923935, -0.025575120002031326, -0.007327776402235031, 0.004787961486726999, 0.03237854689359665, 0.01074259914457798, -0.008835279382765293, -0.013030070811510086, -0.00810...
176
LLY
2016
Solanezumab* (Q2 2009)—an anti-amyloid beta monoclonal antibody for the treatment of preclinical Alzheimer’s disease. Based upon the results of our Phase III study of patients with mild dementia due to Alzheimer's disease, we will not pursue regulatory submissions for solanezumab for the treatment of mild dementia due ...
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177
LLY
2016
Tanezumab* (Q3 2008)—an anti-nerve growth factor monoclonal antibody for the treatment of osteoarthritis pain, chronic low back pain, and cancer pain (in collaboration with Pfizer).
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178
LLY
2016
*Biologic molecule subject to the United States (U.S.) Biologics Price Competition and Innovation Act
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179
LLY
2016
(1) The FDA's fast track program is designed to expedite the development and review of new therapies to treat serious conditions and address unmet medical needs.
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