Eli Lilly 2007 Annual Report Download - page 54

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FINANCIALS
52
Note 13: Contingencies
We are a party to various legal actions, government investigations, and environmental proceedings. The most
signifi cant of these are described below. While it is not possible to determine the outcome of these matters, we
believe that, except as specifi cally noted below, the resolution of all such matters will not have a material adverse
effect on our consolidated fi nancial position or liquidity, but could possibly be material to our consolidated results
of operations in any one accounting period.
Patent Litigation
We are engaged in the following patent litigation matters brought pursuant to procedures set out in the Hatch-
Waxman Act (the Drug Price Competition and Patent Term Restoration Act of 1984):
• Barr Laboratories, Inc. (Barr), submitted an Abbreviated New Drug Application (ANDA) in 2002 seeking permission
to market a generic version of Evista prior to the expiration of our relevant U.S. patents (expiring in 2012-2017)
and alleging that these patents are invalid, not enforceable, or not infringed. In November 2002, we fi led a lawsuit
against Barr in the U.S. District Court for the Southern District of Indiana, seeking a ruling that these patents are
valid, enforceable, and being infringed by Barr. Teva has also submitted an ANDA seeking permission to market
a generic version of Evista. In June 2006, we fi led a similar lawsuit against Teva in the U.S. District Court for the
Southern District of Indiana. The lawsuit against Teva is currently scheduled for trial beginning March 9, 2009, while
no trial date has been set in the lawsuit against Barr. We believe that Barr’s and Teva’s claims are without merit
and we expect to prevail. However, it is not possible to determine the outcome of this litigation, and accordingly, 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.
• Sicor Pharmaceuticals, Inc. (Sicor), Mayne Pharma (USA) Inc. (Mayne), and Sun Pharmaceutical Industries Inc.
(Sun) each submitted ANDAs seeking permission to market generic versions of Gemzar prior to the expiration
of our relevant U.S. patents (compound patent expiring in 2010 and method-of-use patent expiring in 2013), and
alleging that these patents are invalid. We fi led lawsuits in the U.S. District Court for the Southern District of
Indiana against Sicor (February 2006) and Mayne (October 2006), seeking rulings that these patents are valid and
are being infringed. In November 2007, the lawsuit against Mayne was stayed and administratively closed by the
court. Also in November 2007, Sun fi led a declaratory judgment action in the United States District Court for the
Eastern District of Michigan, seeking a ruling that our method-of-use patent is invalid or unenforceable, or would
not be infringed by the sale of Sun’s generic product. Sun informed us in December 2007 that it is also challenging
our compound patent, and that patent has now been added to the declaratory judgment action. In January 2008,
we fi led a second lawsuit against Mayne in response to a second ANDA fi led by Mayne for a new dosage strength.
We expect to prevail in this litigation and believe that these claims are without merit. However, it is not possible
to determine the outcome of this litigation, and accordingly, 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.
• Actavis Elizabeth LLC (Actavis), Glenmark Pharmaceuticals Inc., USA (Glenmark), Sun Pharmaceutical Industries
Limited (Sun), Sandoz Inc. (Sandoz), Mylan Pharmaceuticals Inc. (Mylan), Teva Pharmaceuticals USA, Inc. (Teva),
Apotex Inc. (Apotex), Aurobindo Pharma Ltd. (Aurobindo), Synthon Laboratories, Inc. (Synthon), and Zydus
Pharmaceuticals, USA, Inc. (Zydus) each submitted an ANDA seeking permission to market generic versions
of Strattera prior to the expiration of our relevant U.S. patent (expiring in 2017), and alleging that this patent
is invalid. We fi led a lawsuit against Actavis in the United States District Court for the District of New Jersey in
August 2007. Sandoz fi led a declaratory judgment action in the same court, but its case has been dismissed. In
September 2007, we amended the complaint in the New Jersey lawsuit to add Glenmark, Sun, Sandoz, Mylan,
Teva, Apotex, Aurobindo, Synthon, and Zydus as defendants. We fi led a second action against Synthon in the United
States District Court for the Eastern District of Virginia. Synthon has fi led a motion to dismiss our lawsuit in New
Jersey. In December 2007, Zydus agreed to entry of a consent judgment in which Zydus conceded the validity
and enforceability of the patent and agreed to a permanent injunction. We expect to prevail in this litigation and
believe that these claims are without merit. However, it is not possible to determine the outcome of this litigation,
and accordingly, 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.
We have received challenges to Zyprexa patents in a number of countries outside the U.S.:
• In Canada, several generic pharmaceutical manufacturers have challenged the validity of our Zyprexa compound
and method-of-use patent (expiring in 2011). In April 2007, the Canadian Federal Court ruled against the fi rst