Eli Lilly 2012 Annual Report Download - page 41

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Sales of Humulin, an injectable human insulin for the treatment of diabetes, increased 1 percent in the U.S.,
driven by higher prices, largely offset by decreased demand. U.S. sales of Humulin were negatively affected by
the product's removal from a large formulary in 2012, as well as the continued decline in the market for
human insulin and the termination of the Humulin ReliOn agreement with Walmart. Sales outside the U.S.
decreased 2 percent, driven by the unfavorable impact of foreign exchange rates, partially offset by increased
volume.
Sales of Forteo, an injectable treatment for osteoporosis in postmenopausal women and men at high risk for
fracture and for glucocorticoid-induced osteoporosis in postmenopausal women and men, increased
8 percent in the U.S., driven by higher prices, partially offset by decreased volume. Sales outside the U.S.
increased 33 percent, primarily due to the increased demand in Japan.
Sales of Evista, a product for the prevention and treatment of osteoporosis in postmenopausal women and for
reduction of risk of invasive breast cancer in postmenopausal women with osteoporosis and postmenopausal
women at high risk for invasive breast cancer, decreased 1 percent in the U.S., driven by decreased demand,
largely offset by higher prices. Sales outside the U.S. decreased 14 percent, driven by decreased volume and,
to a lesser extent, the unfavorable impact of foreign exchange rates.
Sales of Strattera, a treatment for attention-deficit hyperactivity disorder in children, adolescents, and in the
U.S. in adults, decreased 2 percent in the U.S., due to decreased demand, partially offset by higher prices.
Sales outside the U.S. increased 4 percent, driven by increased demand in Japan, partially offset by lower
prices and the unfavorable impact of foreign exchange rates.
Sales of Effient, a product for the reduction of thrombotic cardiovascular events (including stent thrombosis)
in patients with acute coronary syndrome who are managed with an artery-opening procedure known as
percutaneous coronary intervention, including patients undergoing angioplasty, atherectomy, or stent
placement, increased 52 percent in the U.S., driven by increased demand and, to a lesser extent, higher
prices. Sales outside the U.S. increased 47 percent, due to increased demand, partially offset by the
unfavorable impact of foreign exchange rates.
Animal health product sales in the U.S. increased 30 percent, primarily due to increased demand for
companion animal products. Sales outside the U.S. increased 12 percent, driven primarily by the impact of the
acquisition of certain Janssen animal health assets in Europe (see Note 3 to the consolidated financial
statements), and the growth of other products, partially offset by the unfavorable impact of foreign exchange
rates.
Gross Margin, Costs, and Expenses
Gross margin as a percent of total revenue decreased by 0.3 percentage points in 2012 to 78.8 percent. This
decrease was primarily due to lower sales of Zyprexa and, to a lesser extent, higher miscellaneous
manufacturing costs, partially offset by the impact of foreign exchange rates on international inventories sold,
which decreased cost of sales in 2012 and increased cost of sales in 2011.
Marketing, selling, and administrative expenses decreased 5 percent in 2012 to $7.51 billion, driven by lower
marketing expense resulting from our cost-containment efforts. Research and development expenses
increased 5 percent to $5.28 billion, due to higher late-stage clinical trial costs.
No acquired IPR&D charges were incurred in 2012, compared with $388.0 million in 2011, all of which was
associated with the diabetes collaboration with Boehringer Ingelheim. We recognized asset impairments,
restructuring, and other special charges of $281.1 million in 2012. These charges comprised $122.6 million
related to an intangible asset impairment for liprotamase, $74.5 million related to restructuring to reduce our
cost structure and global workforce, $64.0 million related to the asset impairment of a product delivery device
platform, and $20.0 million related to the withdrawal of Xigris. In 2011, we recognized asset impairments,
restructuring, and other special charges of $401.4 million, of which $316.4 million primarily related to
severance costs from strategic actions and $85.0 million related to the withdrawal of Xigris. See Notes 4 and 5
to the consolidated financial statements for additional information.
Other—net, (income) expense was income of $674.0 million in 2012, compared with expense of $179.0 million
in 2011. The increase was driven by income of $787.8 million recognized from the early payment of the
exenatide revenue-sharing obligation by Amylin. See Note 17 to the consolidated financial statements for
additional information.