Eli Lilly 2004 Annual Report Download - page 26

FINANCIALS
24
York for consolidated and coordinated pretrial proceed-
ings. Two cases requesting certifi cation of nationwide
class actions on behalf of those who allegedly suffered
injuries from the administration of Zyprexa were fi led
in the Federal District Court for the Eastern District of
New York on April 16, 2004, and May 19, 2004, respec-
tively. The cases seek damages for alleged personal
injuries and also seek compensation for medical moni-
toring of individuals who have taken Zyprexa. A lawsuit
was also fi led that requests a class action on behalf
of Iowa residents who took Zyprexa, and that case has
been transferred to the federal court in New York. In
addition, we have entered into agreements with various
plaintiffs’ counsel halting the running of the statutes
of limitation (tolling agreements) with respect to more
than 3,050 individuals who do not have lawsuits on fi le
and may or may not eventually fi le suits. This provides
counsel additional time to evaluate the potential claims.
In exchange, the individuals have agreed not to fi le suits
in state courts, and the Plaintiffs Steering Commit-
tee agreed to dismiss the personal injury claims in the
two pending nationwide class actions. The class action
claims seeking medical monitoring for Zyprexa patients
are not affected by this agreement.
In December 2004, we were served with two law-
suits brought in state court in Louisiana on behalf of the
Louisiana Department of Health and Hospitals, alleging
that Zyprexa caused or contributed to diabetes or high
blood-glucose levels and that we improperly promoted
the drug. In these actions, which we have removed to
federal court, the Department of Health and Hospitals
seeks to recover the costs it paid for Zyprexa through
Medicaid and other drug benefi t programs and the costs
the department alleges it has incurred and will incur to
treat Zyprexa-related illnesses.
In early 2005, we were served with four lawsuits
seeking class action status in Canada on behalf of
patients who took Zyprexa. The allegations in these
suits are similar to those in the litigation pending in the
United States.
The number of product liability lawsuits and tolled
claims relating to Zyprexa continues to increase, and
we cannot predict at this time the additional number
of lawsuits and claims that may be asserted. As noted,
we are vigorously defending this litigation. However,
product litigation of this type is inherently unpredict-
able, with the risk of excessive verdicts not justifi ed by
the evidence. Accordingly, it is possible that the ultimate
resolution of the Zyprexa product liability litigation could
have a material adverse impact on our consolidated
results of operations, liquidity, and fi nancial position.
In Germany, Egis-Gyogyszergyar, a generic phar-
maceutical manufacturer, has challenged the validity
of our Zyprexa compound and method of use patents
(expiring in 2011) in that country. We currently anticipate
a decision from the German Patent Court in 2006. In
addition to our patents, we have data package exclusivity
in Germany through September 2006. We are vigorously
contesting the legal challenge to this patent. We cannot
predict or determine the outcome of this litigation.
We have been named as a defendant in numer-
ous other product liability lawsuits, involving primarily
diethylstilbestrol (DES) and thimerosal. See Note 13 to
the consolidated fi nancial statements for further infor-
mation on those matters.
While it is not possible to predict or determine the
outcome of the patent, product liability, or other legal
actions brought against us, we believe that, except as
noted previously with respect to the U.S. Zyprexa and
Evista patent litigation, the Zyprexa, Prozac, and Prozac
Weekly marketing and promotional practices investi-
gation, and the Zyprexa product liability litigation, the
resolution of all such matters will not have a material
adverse effect on our consolidated fi nancial position or
liquidity but could possibly be material to the consoli-
dated results of operations in any one accounting period.
PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995—A CAUTION CONCERNING FORWARD-LOOKING
STATEMENTS
Under the safe harbor provisions of the Private Securi-
ties Litigation Reform Act of 1995, we caution investors
that any forward-looking statements or projections
made by us, including those made in this document, are
based on management’s expectations at the time they
are made, but they are subject to risks and uncertain-
ties that may cause actual results to differ materially
from those projected. Economic, competitive, govern-
mental, technological, legal, and other factors that may
affect our operations and prospects are discussed ear-
lier in this section and in Exhibit 99 to our most recent
report on Forms 10-Q and 10-K fi led with the Securities
and Exchange Commission. We undertake no duty to
update forward-looking statements.