Eli Lilly 2013 Annual Report Download - page 27

Download and view the complete annual report

Please find page 27 of the 2013 Eli Lilly annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 160

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160

13
molecules targeting various cancers, diabetes, Alzheimer’s disease, depression, pain, migraine, bipolar
disorder, anemia, cardiovascular disease, musculoskeletal disorders, renal diseases, lupus, and Crohn's
disease. We are also developing new uses, formulations, or delivery methods for many of these molecules as
well as several currently marketed products, including Axiron, Cialis, Effient, Humalog, and Trajenta. See
"Management's Discussion and Analysis--Late-Stage Pipeline," for more information on certain of our product
candidates.
Raw Materials and Product Supply
Most of the principal materials we use in our manufacturing operations are available from more than one
source. However, we obtain certain raw materials principally from only one source. In the event one of these
suppliers was unable to provide the materials or product, we generally have sufficient inventory to supply the
market until an alternative source of supply can be implemented. However, in the event of an extended failure
of a supplier, it is possible that we could experience an interruption in supply until we established new sources
or, in some cases, implemented alternative processes.
We produce most of our products in our own facilities. Our principal active ingredient manufacturing occurs at
four owned sites in the U.S. as well as owned sites in Ireland, Puerto Rico, and the United Kingdom. Finishing
operations, including formulation, filling, assembling, delivery device manufacturing, and packaging, take
place at a number of sites throughout the world. We utilize third parties for certain active ingredient
manufacturing and finishing operations.
We manage our supply chain (including our own facilities, contracted arrangements, and inventory) in a way
that should allow us to meet all expected product demand while maintaining flexibility to reallocate
manufacturing capacity to improve efficiency and respond to changes in supply and demand. To maintain a
stable supply of our products, we take a variety of actions including a company-wide, comprehensive quality
system, inventory management, and back-up sites.
However, human pharmaceutical and animal health production processes are complex, highly regulated, and
vary widely from product to product. Shifting or adding manufacturing capacity can be a very lengthy process
requiring significant capital expenditures, process modifications, and regulatory approvals. Accordingly, if we
were to experience extended plant shutdowns at one of our own facilities, extended failure of a contract
supplier, or extraordinary unplanned increases in demand, we could experience an interruption in supply of
certain products or product shortages until production could be resumed or expanded.
Quality Assurance
Our success depends in great measure upon customer confidence in the quality of our products and in the
integrity of the data that support their safety and effectiveness. Product quality arises from a total commitment
to quality in all parts of our operations, including research and development, purchasing, facilities planning,
manufacturing, distribution, and dissemination of information about our medicines.
Quality of production processes involves strict control of ingredients, equipment, facilities, manufacturing
methods, packaging materials, and labeling. We perform tests at various stages of production processes and
on the final product to assure that the product meets all regulatory requirements and Lilly standards. These
tests may involve chemical and physical chemical analyses, microbiological testing, testing in animals, or a
combination. Additional assurance of quality is provided by a corporate quality-assurance group that audits
and monitors all aspects of quality related to human pharmaceutical and animal health manufacturing
procedures and systems in the parent company, subsidiaries and affiliates, and third-party suppliers.
Risk Factors
In addition to the other information contained in this Annual Report, the following risk factors should be
considered carefully in evaluating our company. It is possible that our business, financial condition, liquidity, or
results of operations could be materially adversely affected by any of these risks.