Eli Lilly 2003 Annual Report Download - page 43

FINANCIALS
41
Our U.S. defi ned benefi t pension plan and retiree health plan asset allocations as of December 31 are as follows:
Percentage of Percentage of
(Percents) Pension Plan Assets Retiree Health Plan Assets
2003 2002 2003 2002
Asset Category
Equity securities and equity-like instruments . . . . . . . . . . . . 77% 86% 81% 85%
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 10 12 12
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3 1 1
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 1 6 2
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100% 100% 100% 100%
In 2004, we expect to contribute approximately $26.0 million to our defi ned benefi t pension plans to satisfy
minimum funding requirements in 2004. In addition, we expect to contribute approximately an additional $300.0
million of discretionary funding in 2004 to our defi ned benefi t plans. We also expect to contribute approximately
$125.0 million of discretionary funding to our postretirement health benefi t plans during 2004.
Note 13: Contingencies
Three generic pharmaceutical manufacturers, Zenith Goldline Pharmaceuticals, Inc. (Zenith), Dr. Reddy’s Labora-
tories, Ltd. (Reddy), and Teva Pharmaceuticals, have submitted abbreviated new drug applications (ANDAs) seek-
ing permission to market generic versions of Zyprexa in various dosage forms several years prior to the expiration
of our U.S. patents for the product, alleging that our patents are invalid or not infringed. We fi led suits against the
three companies in U.S. District Court for the Southern District of Indiana seeking a ruling that the challenges to
our compound patent (expiring in 2011) are without merit. The cases have been consolidated. A trial before a dis-
trict court judge in Indianapolis began on January 26, 2004, and is expected to conclude in February. A ruling from
the trial court is expected in the second or third quarter of 2004. Regardless of the trial court ruling, we anticipate
that appeals will follow. If we are unsuccessful at the trial court level, we cannot predict whether any of the generic
companies would launch generic versions of Zyprexa prior to a fi nal resolution of any appeals. We believe that the
generic manufacturers’ claims are without merit and we expect to prevail in this litigation. However, it is not pos-
sible to predict or determine the outcome of this litigation and, accordingly, we can provide no assurance that we
will prevail. An unfavorable outcome would have a material adverse impact on our consolidated results of opera-
tions, liquidity, and fi nancial position.
In October 2002, we were notifi ed that Barr Laboratories, Inc. (Barr), had submitted an ANDA to the U.S. FDA
seeking permission to market a generic version of Evista several years prior to the expiration of our U.S. patents
covering the product, alleging that the patents are invalid or not infringed. On November 26, 2002, we fi led suit
against Barr in federal district court in Indianapolis seeking a ruling that Barr’s challenges to our patents claiming
the method of use and pharmaceutical form (expiring from 2012 to 2017) are without merit. In June 2003, Barr add-
ed a challenge to one of our additional patents (expiring in 2017) claiming a component in the pharmaceutical form
of Evista. This patent has now been added to the lawsuit. The trial is tentatively scheduled to begin in August 2005.
While we believe that Barr’s claims are without merit and expect to prevail, it is not possible to predict or determine
the outcome of the litigation. Therefore, we can provide no assurance that we will prevail. An unfavorable outcome
could have a material adverse impact on our consolidated results of operations, liquidity, and fi nancial position.
In July 2002, we received a grand jury subpoena for documents from the Offi ce of Consumer Litigation, Depart-
ment of Justice, related to our marketing and promotional practices and physician communications with respect to
Evista. We received a second subpoena seeking additional documents in July 2003. We continue to cooperate with
the government and have provided a broad range of information concerning our U.S. marketing and promotional
practices, including documents relating to communications with physicians and the remuneration of physician
consultants and advisers. We continue to review and enhance policies and procedures designed to assure that our
marketing and promotional practices and physician communications comply with promotional laws and regula-
tions. In recent months, several pharmaceutical companies have received subpoenas from government agencies
with respect to a variety of products, including a number of neuroscience products. It is possible that other Lilly
products, including Zyprexa, could become subject to investigation. It is possible that the outcome of the above mat-
ters could include criminal charges and fi nes and/or civil penalties. We cannot predict or determine the outcome
of the above matters or reasonably estimate the amount or range of amounts of any fi nes or penalties that might
result from an adverse outcome. It is possible, however, that an adverse outcome could have a material adverse
impact on our consolidated fi nancial position, liquidity, and results of operations.