Eli Lilly 2010 Annual Report Download - page 16

FORM 10-K
Pharmaceutical Marketing Collaborations
We market certain of our significant products in collaboration with other pharmaceutical companies:
• Cymbalta is co-marketed in Japan by Shionogi & Co. Ltd. and, under an arrangement that ended in 2010, was
co-promoted or co-marketed in most other major countries outside the U.S. by Boehringer Ingelheim GmbH.
• Evista is marketed in major European markets by Daiichi Sankyo Europe GmbH, a subsidiary of Daiichi Sankyo
Co., Ltd. of Japan.
• We co-promote Byetta with Amylin Pharmaceuticals, Inc. in the United States and Puerto Rico, and we have
exclusive marketing rights in other territories.
• Erbitux is marketed in North America by Bristol-Myers Squibb. We co-promote Erbitux in North America.
Outside North America, Erbitux is commercialized by Merck KGaA. We receive royalties from Bristol-Myers
Squibb and Merck KGaA.
• Effient is co-promoted with us by Daiichi Sankyo in the United States, major European markets, Brazil, Mexico,
China and several other Asian countries. Daiichi Sankyo retains sole marketing rights in Japan, and we retain
sole marketing rights in Canada, Australia, Russia, and certain other countries.
Animal Health Products
Our Elanco animal health business unit employs field salespeople throughout the United States. Elanco also has an
extensive sales force outside the United States. Elanco sells its products primarily to wholesale distributors.
Competition
Our pharmaceutical products compete with products manufactured by many other companies in highly competitive
markets throughout the world. Our animal health products compete on a worldwide basis with products of animal
health care companies as well as pharmaceutical, chemical, and other companies that operate animal health
divisions or subsidiaries.
Important competitive factors include safety, effectiveness, and ease of use of our products; price and demonstrated
cost-effectiveness; marketing effectiveness; and research and development of new products and processes. Most
new products that we introduce must compete with other products already on the market or products that are later
developed by competitors. If competitors introduce new products or delivery systems with therapeutic or cost
advantages, our products can be subject to progressive price reductions, decreased volume of sales, or both.
Increasingly, to obtain favorable reimbursement and formulary positioning with government payers, managed care
organizations, and pharmacy benefits managers, we must demonstrate that our products offer not only medical
benefits but also more value as compared with other forms of care.
Manufacturers of generic pharmaceuticals invest far less than we do in research and development and therefore can
price their products much lower than our branded products. Accordingly, when our branded pharmaceutical loses its
market exclusivity, it normally faces intense price competition from generic forms of the product. In many countries
outside the United States, intellectual property protection is weak or nonexistent and we must compete with generic
or counterfeit versions of our products.
We believe our long-term competitive success depends upon discovering and developing (either alone or in
collaboration with others) or acquiring innovative, cost-effective medicines that provide improved outcomes to
individual patients and deliver value to payers, together with our ability to continuously improve the productivity of
our operations in a highly competitive environment. There can be no assurance that our research and development
efforts will result in commercially successful products, and it is possible that our products will become
uncompetitive from time to time as a result of products developed by our competitors.
Patents, Trademarks, and Other Intellectual Property Rights
Overview
Intellectual property protection is critical to our ability to successfully commercialize our life sciences innovations
and invest in the search for new medicines. We own, have applied for, or are licensed under, a large number of
patents in the United States and many other countries relating to products, product uses, formulations, and
manufacturing processes. There is no assurance that the patents we are seeking will be granted or that the patents
we hold would be found valid and enforceable if challenged. Moreover, patents relating to particular products, uses,
formulations, or processes do not preclude other manufacturers from employing alternative processes or marketing
alternative products or formulations that compete with our patented products. In addition, competitors or other third
parties sometimes may assert claims that our activities infringe patents or other intellectual property rights held by
them, or allege a third-party right of ownership in our existing intellectual property.
Outside the United States, the adequacy and effectiveness of intellectual property protection for pharmaceuticals
varies widely. Under the Trade-Related Aspects of Intellectual Property Agreement (TRIPs) administered by the
World Trade Organization (WTO), over 140 countries have now agreed to provide non-discriminatory protection for
most pharmaceutical inventions and to assure that adequate and effective rights are available to all patent owners.
Because of TRIPs transition provisions, dispute resolution mechanisms, and substantive limitations, it is difficult to
assess when and how much, if at all, we will benefit commercially from this protection.
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