Eli Lilly 2012 Annual Report Download - page 26

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phase of development or awaiting regulatory approval are potential therapies for diabetes, various cancers,
Alzheimer’s disease, high-risk vascular disease, rheumatoid arthritis, lupus, psoriasis, depression, and
exocrine pancreatic insufficiency. We are studying many other drug candidates in the earlier stages of
development, including molecules targeting various cancers, diabetes, Alzheimer’s disease, depression,
migraine, anemia, cardiovascular disease, musculoskeletal disorders, renal diseases, osteoarthritis pain, and
bipolar disorder. We are also developing new uses, formulations, or delivery methods for many of these
molecules as well as several currently marketed products, including Alimta, Axiron, Cialis, Effient, Erbitux,
and Humalog.
Raw Materials and Product Supply
Most of the principal materials we use in our manufacturing operations are available from more than one
source. However, we obtain certain raw materials principally from only one source. In the event one of these
suppliers was unable to provide the materials or product, we generally have sufficient inventory to supply the
market until an alternative source of supply can be implemented. However, in the event of an extended failure
of a supplier, it is possible that we could experience an interruption in supply until we established new
sources or, in some cases, implemented alternative processes.
Our active ingredient manufacturing occurs at four owned sites in the U.S. as well as owned sites in Ireland,
Puerto Rico, and the United Kingdom. Finishing operations, including formulation, filling, assembling, and
packaging, take place at a number of sites throughout the world. In 2010, we sold our Tippecanoe
Laboratories manufacturing site in West Lafayette, Indiana, to an affiliate of Evonik Industries AG, and entered
into a nine-year supply and services agreement whereby Evonik manufactures final and intermediate-step
active pharmaceutical ingredients for certain Lilly human pharmaceutical and animal health products.
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. However,
pharmaceutical 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, if we were to experience extended
plant shutdowns at one of our own facilities, extended failure of a contract supplier, 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.
Quality Assurance
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 planning, manufacturing, distribution, and dissemination of information about our medicines.
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 standards. These
tests may involve chemical and physical chemical analyses, microbiological testing, testing in animals, or a
combination. Additional assurance of quality is provided by a corporate quality-assurance group that audits
and monitors all aspects of quality related to human pharmaceutical and animal health manufacturing
procedures and systems in the parent company, subsidiaries and affiliates, and third-party suppliers.
Executive Officers of the Company
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.
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 6, 2013, 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 company, as