Eli Lilly 2008 Annual Report Download - page 19

FINANCIALS
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prices. Sales outside the U.S. increased 24 percent,
driven by increased demand and, to a lesser extent, the
favorable impact of foreign exchange rates.
Sales of Gemzar, a product approved to fi ght vari-
ous cancers, increased 10 percent in the U.S., driven by
increased demand and higher prices. Sales outside the
U.S. increased 7 percent, driven primarily by the favor-
able impact of foreign exchange rates and, to a lesser
extent, increased demand, partially offset by lower
prices. We will likely face increased generic competition
in certain markets outside the U.S. in 2009.
Our sales of Cialis, a treatment for erectile dys-
function, increased 27 percent in the U.S., driven by
increased demand and higher prices. Sales outside the
U.S. increased 26 percent, driven by increased demand
and, to a lesser extent, the favorable impact of foreign
exchange rates and higher prices. Total worldwide sales
of Cialis increased 19 percent to $1.44 billion in 2008 as
compared to $1.22 billion in 2007. This includes $72.7
million of sales in the Lilly ICOS joint-venture territories
for the 2007 period prior to the acquisition of ICOS.
Sales of Alimta, a treatment for various cancers,
increased 25 percent in the U.S., driven by increased
demand and, to a lesser extent, higher prices. Sales
outside the U.S. increased 46 percent, driven by
increased demand and, to a lesser extent, the favorable
impact of foreign exchange rates.
Sales of Evista, a product for the prevention and
treatment of osteoporosis in postmenopausal women
and for risk reduction of invasive breast cancer in post-
menopausal women with osteoporosis and postmeno-
pausal women at high risk for invasive breast cancer,
decreased 1 percent in the U.S., driven by decreased
demand, partially offset by higher prices. Sales out-
side the U.S. decreased 2 percent, driven by lower
demand and lower prices, partially offset by the favor-
able impact of foreign exchange rates. As described
in Legal and Regulatory Matters, Evista is the subject
of a Hatch-Waxman patent challenge by Teva Pharma-
ceuticals USA, Inc. (Teva), which has received tenta-
tive approval of its Abbreviated New Drug Application
(ANDA) from the FDA. Unless the current stay on Teva’s
approved ANDA remains in force or Teva is preliminarily
enjoined from markets if the stay is lifted, it is possible
that Teva could choose to launch before the current
action against Teva is concluded. Such a launch could
have a material adverse impact on our future consoli-
dated results of operations.
Sales of Humulin, an injectable human insulin for
the treatment of diabetes, increased 4 percent in the
U.S., driven by higher prices. Sales outside the U.S.
increased 10 percent, driven by the favorable impact of
foreign exchange rates and increased demand.
Sales of Forteo, an injectable treatment for osteo-
porosis in postmenopausal women and men at high risk
for fracture, decreased 1 percent in the U.S., driven by
decreased demand, partially offset by higher prices.
Sales outside the U.S. increased 34 percent, driven by
increased demand and, to a lesser extent, the favorable
impact of foreign exchange rates.
Sales of Strattera, a treatment for attention-
defi cit hyperactivity disorder in children, adolescents,
and adults, decreased 6 percent in the U.S., driven by
decreased demand, partially offset by higher prices.
Sales outside the U.S. increased 35 percent, driven
primarily by increased demand.
Worldwide sales of Byetta, an injectable product
for the treatment of type 2 diabetes that we market with
Amylin, increased 16 percent to $751.4 million dur-
ing 2008. We report as revenue our 50 percent share
of Byetta’s gross margin in the U.S., 100 percent of
Byetta sales outside the U.S., and our sales of Byetta
pen delivery devices to Amylin. Our revenues increased
20 percent to $396.1 million in 2008.
Animal health product sales in the U.S. increased
12 percent, driven by the inclusion of U.S. Posilac
sales since the date of acquisition. Sales outside the
U.S. increased 8 percent, driven by increased demand
and, to a lesser extent, the favorable impact of foreign
exchange rates.
Gross Margin, Costs, and Expenses
The 2008 gross margin increased to 78.5 percent
of sales compared with 77.2 percent for 2007. This
increase was primarily due to the favorable impact of
foreign exchange rates.
Marketing, selling, and administrative expenses
increased 9 percent in 2008, to $6.63 billion. This
increase was due to increased marketing and selling
expenses, including prelaunch expenses for prasugrel
and marketing costs associated with Cymbalta and
Evista; the impact of foreign exchange rates; and
increased litigation-related expenses. Investment in
research and development increased 10 percent, to
$3.84 billion, due to increased late-stage clinical trial
and discovery research costs.
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10
20
30
40
50
60
70
80
Gross Margin
(percent of net sales)
Gross margin as a percent of net sales increased
by 1.3 percentage points to 78.5 percent in 2008,
due primarily to the favorable impact of foreign
exchange rates.
04 05 06 07 08
77.2%
77.4%
76.7%
76.3%
78.5%