Eli Lilly 2004 Annual Report Download - page 48

FINANCIALS
46
2002 were not signifi cant.
Our U.S. defi ned benefi t pension and retiree health benefi t plan investment allocation strategy currently com-
prises approximately 85 percent to 95 percent growth investments and 5 percent to 15 percent fi xed-income invest-
ments. Within the growth investment classifi cation, the plan asset strategy encompasses equity and equity-like
instruments that are expected to represent approximately 75 percent of our plan asset portfolio of both public and
private market investments. The largest component of these equity and equity-like instruments is public equity
securities that are well diversifi ed and invested in U.S. and international small-to-large companies. The remaining
portion of the growth investment classifi cation is represented by other alternative growth investments.
Our defi ned benefi t pension plan and retiree health plan asset allocations as of December 31 are as follows:
Percentage of Percentage of
Pension Plan Assets Retiree Health Plan Assets
(Percents) 2004 2003 2004 2003
Asset Category
Equity securities and equity-like instruments . . . . . . . . . . . . . 74 79 78 81
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 8 10 12
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 1 1
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 11 11 6
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 100 100 100
In 2005, we expect to contribute approximately $30 million to our defi ned benefi t pension plans to satisfy mini-
mum funding requirements for the year. In addition, we expect to contribute approximately $75 million of additional
discretionary funding in 2005 to our defi ned benefi t plans. We also expect to contribute approximately $100 million
of discretionary funding to our postretirement health benefi t plans during 2005.
Note 13: Contingencies
Three generic pharmaceutical manufacturers, Zenith Goldline Pharmaceuticals, Inc. (Zenith), Dr. Reddy’s Labora-
tories, Ltd. (Reddy), and Teva Pharmaceuticals (Teva), have submitted abbreviated new drug applications (ANDAs)
seeking permission to market generic versions of Zyprexa in various dosage forms several years prior to the expi-
ration of our U.S. patents for the product, alleging that our patents are invalid, unenforceable, or not infringed. We
fi led suit against the three companies in the 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 district court judge in Indianapolis was held in January and February of 2004, and we are awaiting
the court’s decision. Regardless of the trial court ruling, we anticipate that appeals will follow. If we are unsuc-
cessful at the trial court level, we cannot predict whether any of the generic companies would launch generic ver-
sions 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 possible to predict or determine the out-
come 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 operations, liquidity, and fi nancial position.
In October 2002, we were notifi ed that Barr Laboratories, Inc. (Barr), had submitted an ANDA with the 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. In November 2002, we fi led suit against
Barr in the U.S. District Court for the Southern District of Indiana seeking a ruling that Barr’s challenges to our
patents claiming the methods of use and pharmaceutical form (expiring from 2012 to 2017) are without merit. Re-
cently, Barr has also asserted that the method of use patents are unenforceable. On September 28, 2004, the U.S.
Patent and Trademark Offi ce issued to us a new patent (expiring in 2017) directed to pharmaceutical compositions
containing raloxifene. Barr has challenged this patent, alleging that the patent is invalid, unenforceable, or will
not be infringed. This patent has been added to the lawsuit. The suit is in discovery and the trial is now scheduled
to begin in February 2006. While we believe that Barr’s claims are without merit and we 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, U.S.
Department of Justice, related to our marketing and promotional practices and physician communications with
respect to Evista. We received subpoenas seeking additional documents in July 2003, July 2004, and August 2004.