Eli Lilly 2003 Annual Report Download - page 5

CHAIRMAN’S LETTER
3
and securing solutions from scientists around the world.
It’s a groundbreaking application of one of our guiding
concepts—that of doing “research without walls.”
At the same time, we’ve greatly strengthened our
sales and marketing functions to capture the full value of
our innovative products. For example, in response to the
tremendous expansion of our product portfolio, we will
have nearly doubled the size of our U.S. selling presence
(including partners) between 1999 and 2004. By the end
of this year, our sales force outside the U.S. will be about
50 percent larger than it was four years ago. However, our
main focus has not been on getting bigger but on becom-
ing more responsive to our customers and better able to
address their needs.
In addition to fi ne-tuning our skills in the traditional
marketing and selling efforts directed at providers and
private payers, we’ve enhanced our ability to compete
in consumer marketing and created the industry’s fi rst
business-to-government sales organization. We’re using
both new and traditional communications technology to
build vital two-way relationships with our customers. For
instance, launches of both Forteo and Strattera benefi ted
greatly from feedback coming through our U.S. call cen-
ter—a facility that now handles some 3,500 inquiries each
week. In both cases, we were able to learn about special
needs and concerns from patients or caregivers and bring
our medical expertise to bear on offering effective answers.
Four consecutive quarters of double-digit sales growth
from our established brands are powerful evidence of
the value of what we’ve built in this part of the business.
Gemzar® and Humalog® both became billion-dollar
products in 2003, and Evista® is “knocking on the door” at
over $920 million. Zyprexa sales increased by 16 percent,
to $4.3 billion, with especially strong growth coming from
outside the U.S. Finally, the outstanding launches of our
new products—Strattera, Forteo, and Cialis—combined to
deliver more than $500 million in revenues for the year.
We’ve also done a great deal of work in manufactur-
ing to build world-class manufacturing capabilities and
address quality issues in this area. We’ve made signifi cant
Nine Key Growth Products
Collectively Delivered 24 Percent
Increase in Net Sales
($ millions; percentages represent
changes from 2002)
The company’s established key growth
products—Zyprexa, Humalog,
Gemzar, Evista, and Actos—gener-
ated $1.1 billion of incremental net
sales and $7.7 billion of total
net sales in 2003. In addition, our
newly launched growth products—
Strattera, Cialis, Forteo, and Xigris—
generated $670 million of net sales
in 2003. Combined, all our key growth
products grew 24 percent for the
year.
Zyprexa
Humalog
Gemzar
Evista
Actos
Strattera
Cialis
Forteo
Xigris
Established Newly Launched
Growth Products Growth Products
+$588 +16%
+$187 +22%
+$147 +17%
+$100 +12%
+$40 +10%
+$368 NM
+$74 NM
+$60 NM
+$60 +60%
investments in modernizing our facilities, as well as creat-
ing new capacity for our growth products. We’ve hired
and transferred into manufacturing and quality hundreds
of experienced employees with high levels of expertise
and undertaken a massive training and development
program. We’ve also been working to streamline and
simplify our processes in these operations.
We made very signifi cant progress in 2003 as illus-
trated by the FDA’s decision to consider the company’s
injectable and dry product plants in Indianapolis to be in
a state of compliance with current Good Manufacturing
Practices. This subsequently led to a successful preapprov-
al inspection for Zyprexa® IntraMuscular at Indianapolis.
Based on this outcome, the FDA has indicated that it
does not currently believe a preapproval inspection for
Cymbalta will be necessary, although such an inspection
remains at the discretion of the FDA. In addition, we’ve
had two successful preapproval inspections for Cialis and
Alimta. We are pleased with the progress we’ve made
thus far and are committed not only to sustain it but to
make Lilly the benchmark for quality within the industry.
Finally, partnering has become an integral skill in all
phases of our business. Our partnerships with Centocor
for ReoPro®, with Takeda for Actos®, and now with ICOS
for Cialis have all extended beyond product development
and into the arena of sales and marketing. As we look
ahead, we will partner with Quintiles to market Cymbalta
in the U.S. and Boehringer Ingelheim for Cymbalta
outside the U.S. and duloxetine SUI worldwide, excluding
Japan. Recognizing the growing contribution of partner-
ing all along the value chain, we have elevated it to a key
role in our strategy and created the industry’s fi rst offi ce
of alliance management to keep learning and improving
in this vital dimension. Ultimately, partnering enhances
our ability to keep winning as a mid-sized competitor in
a world of behemoths. It serves as a tremendous “force
multiplier” for all the other capabilities we have built—a
way of adding strength without adding size.
Overall, I believe the people of Lilly have success-
fully met each of the key challenges that we have faced.
In terms of our operational fi tness, we are now well
positioned to deliver on our promise of strong growth.
Looking ahead, I believe the next set of challenges is not
internal or even competitive issues. Rather they arise in
the arena of public policy that increasingly defi nes the
limits of our business environment.
As populations in the developed world grow older
and health care expenditures grow larger, the focus on
our industry as a cost driver is intensifying. It doesn’t
matter whether this pressure is fair or reasonable—it is
a fact. And while we must, as an industry, step up our ef-
forts to make our case for the incredible value we deliver
to society, we must also be prepared to contribute solu-
tions to the growing problem of affordability. To that end,
I am challenging the organization to focus on improving
productivity in all phases of the business. Doing more