Eli Lilly 2012 Annual Report Download - page 29

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human pharmaceutical patents; as a result, we expect that our U.S. patents on major pharmaceutical
products will be routinely challenged, and there can be no assurance that our patents will be upheld. See
Item 1, “Business—Patents, Trademarks, and Other Intellectual Property Rights,” for more details. We
face generic manufacturer challenges to our patents outside the U.S. as well. In addition, competitors or
other third parties may claim that our activities infringe patents or other intellectual property rights held
by them. If successful, such claims could result in our being unable to market a product in a particular
territory or being required to pay damages for past infringement or royalties on future sales. See Item 1,
“Business—Patents, Trademarks, and Other Intellectual Property Rights,” for more details.
• We depend on patent-protected products for most of our revenues, cash flows, and earnings, and we
will lose effective intellectual property protection for many of them in the next several years. Seven
significant patent-protected products, which together composed 68 percent of our worldwide revenue in
2012, recently have lost, or will lose in the next several years, their most significant remaining U.S. patent
protection and data-based protection, as well as their intellectual property-based exclusivity in most
countries outside the United States:
Product Worldwide Revenues
(2012) Percent of Total 2012 Revenues Loss of Relevant U.S. Exclusivity
Cymbalta $4.99 billion 22 December 2013 (compound patent plus pediatric
exclusivity)
Alimta $2.59 billion 11 2017 (compound patent plus pediatric exclusivity); 2022
(vitamin dosage regimen patent plus pediatric
exclusivity)
Humalog $2.40 billion 11 May 2013
Cialis $1.93 billion 9 2017
Zyprexa $1.70 billion 8 2011
Evista $1.01 billion 4 March 2014
Strattera $621.4 million 3 2017
Outside the U.S., important patent or data package protection includes Cymbalta in major European
countries (data package protection until August 2014); Alimta in major European countries (compound
patent 2015; vitamin dosage regimen patent 2021); Cialis in major European countries (compound patent
2017); and Zyprexa in Japan (compound patent 2015).
Loss of exclusivity, whether by expiration or as a consequence of litigation, typically results in a rapid and
severe decline in sales. See Item 7, “Management’s Discussion and Analysis—Financial Condition,” and
Item 1, “Business—Patents, Trademarks, and Other Intellectual Property Rights,” for more details.
• Our human pharmaceutical business is subject to increasing government price controls and other
restrictions on pricing, reimbursement, and access for our drugs. Globally, governments are becoming
increasingly aggressive in imposing health care cost-containment measures in response to budget deficit
challenges. These measures can significantly affect our revenue and profitability. In many countries
outside the U.S., government agencies strictly control, directly or indirectly, pricing, reimbursement, and
patient access to our human pharmaceuticals. In the U.S., we are subject to substantial pricing,
reimbursement, and access pressures from state Medicaid programs and private insurance programs and
pharmacy benefit managers, including those operating under the Medicare Part D pharmaceutical
benefit, and implementation of U.S. health care reform legislation is increasing these pricing pressures.
In addition, many state legislative proposals would further negatively affect our pricing and
reimbursement for, or access to, our products. Globally, public and private payers are increasingly
restricting access to human pharmaceuticals based on the payers' assessments of comparative
effectiveness and value. We expect pricing, reimbursement, and access pressures from both governments
and private payers inside and outside the U.S. to become more severe. See Item I, “Business—
Regulations Affecting Pharmaceutical Pricing, Reimbursement, and Access,” for more details.