Eli Lilly 2013 Annual Report Download - page 40

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26
liprotamase, $74.5 million related to restructuring to reduce our cost structure and global workforce, $64.0
million related to the asset impairment of a delivery device platform, and $20.0 million related to the
withdrawal of Xigris. See Note 5 to the consolidated financial statements for additional information.
Other—net, (income) expense was income of $518.9 million in 2013, compared with income of $674.0 million
in 2012. The decrease was driven primarily by lower income related to the termination of the exenatide
collaboration with Amylin of $495.4 million in 2013 compared with $787.8 million in 2012, partially offset by
milestone payments received from Boehringer Ingelheim for regulatory submissions in the U.S., Europe, and
Japan. See Notes 4 and 18 to the consolidated financial statements for additional information.
Our effective tax rate was 20.5 percent in 2013, compared with 24.4 percent in 2012. The 2012 effective tax
rate reflected the expiration of the R&D tax credit at the end of 2011 and the tax impact of the payment
received from Amylin, partially offset by the tax benefit related to the intangible asset impairment for
liprotamase. The decrease in the 2013 effective tax rate reflects the reinstatement of the R&D tax credit in the
U.S. effective January 1, 2013 as well as the one-time impact of the reinstatement of the R&D tax credit for
2012 that was recorded in the first quarter of 2013. See Note 14 to the consolidated financial statements for
additional information.
Operating Results—2012
Financial Results
Worldwide total revenue decreased 7 percent to $22.60 billion in 2012, driven by steep sales declines for
Zyprexa due to the loss of patent exclusivity in most major markets, partially offset by growth in certain other
products. Net income and EPS decreased 6 percent to $4.09 billion and $3.66, respectively, in 2012
compared with net income of $4.35 billion and EPS of $3.90 in 2011. The decreases in net income and EPS
were due to the loss of patent exclusivity for Zyprexa, partially offset by growth in certain other products and
higher other income from the early payment of the exenatide revenue-sharing obligation from Amylin.
The 2012 highlighted items are summarized in the "Executive Overview" section. The 2011 highlighted items
are summarized as follows:
Collaborations (Note 4 to the consolidated financial statements)
• We incurred acquired IPR&D charges associated with the diabetes collaboration with Boehringer
Ingelheim of $388.0 million (pretax), or $0.23 per share.
Asset Impairment, Restructuring, and Other Special Charges (Note 5 to the consolidated financial statements)
• We recognized charges of $316.4 million (pretax), or $0.24 per share, primarily related to severance
costs from strategic actions to reduce our cost structure and global workforce.
• We incurred a charge of $85.0 million (pretax), or $0.05 per share, primarily for returned product and
contractual commitments related to the withdrawal of Xigris.
Revenue
Our worldwide revenue for 2012 decreased 7 percent, to $22.60 billion, driven by the loss of patent exclusivity
for Zyprexa in most major markets, partially offset by growth in Cymbalta, Forteo, Effient, Alimta, and our
animal health portfolio. Worldwide sales volume decreased 7 percent and the unfavorable impact of foreign
exchange rates contributed 2 percent of revenue decline, partially offset by an increase of 2 percent due to
higher prices. The decrease in volume was driven by the loss of patent exclusivity for Zyprexa in most major
markets, partially offset by volume gains for certain other products. Total revenue in the U.S. decreased 5
percent, to $12.31 billion, due to the loss of patent exclusivity for Zyprexa, partially offset by higher prices and
increased demand for certain other products. Revenue outside the U.S. decreased 9 percent, to
$10.29 billion, driven by the loss of patent exclusivity for Zyprexa in markets outside of Japan, the unfavorable
effect of foreign exchange rates, and lower prices, partially offset by increased demand for certain other
products.