Eli Lilly 2013 Annual Report Download - page 33

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19
19
Management’s Discussion and Analysis of Results of
Operations and Financial Condition
RESULTS OF OPERATIONS
Executive Overview
This section provides an overview of our financial results, recent product and late-stage pipeline
developments, and legal, regulatory, and other matters affecting our company and the pharmaceutical
industry. Earnings per share (EPS) data is presented on a diluted basis.
Financial Results
Worldwide total revenue increased 2 percent to $23.11 billion in 2013, driven by growth in several products,
including Cialis®, Humalog®, Trajenta®, Alimta®, Forteo®, and animal health products, partially offset by the
continued erosion of Zyprexa® sales following the loss of patent exclusivity in the U.S. and most major
markets outside Japan. In 2013, net income increased 15 percent to $4.68 billion and EPS increased 18
percent to $4.32, compared to 2012 net income and EPS of $4.09 billion and $3.66, respectively. The
increases were due to higher gross margin, lower marketing, selling, and administrative expenses, and, to a
lesser extent, a lower effective tax rate, partially offset by higher research and development expenses and
lower other income. EPS in 2013 also benefited from a lower number of shares outstanding compared to
2012 as a result of our share repurchase programs.
The following highlighted items affect comparisons of our 2013 and 2012 financial results:
2013
Collaborations (Note 4 to the consolidated financial statements)
• We recognized income of $495.4 million (pretax), or $0.29 per share, related to the transfer to Amylin
Pharmaceuticals, Inc. (Amylin) of exenatide commercial rights in all markets outside the United States.
Acquired In-Process Research & Development (IPR&D) (Note 3 to the consolidated financial statements)
• We recognized acquired IPR&D charges of $57.1 million (pretax), or $0.03 per share, resulting from our
acquisition of all development and commercial rights for a calcitonin gene-related peptide (CGRP)
antibody currently being studied as a potential treatment for the prevention of frequent, recurrent migraine
headaches, following a successful Phase II proof-of-concept study.
Asset Impairment, Restructuring, and Other Special Charges (Note 5 to the consolidated financial statements)
• We recognized charges of $120.6 million (pretax), or $0.08 per share, primarily related to severance
costs for actions taken to reduce our cost structure and global workforce, as well as other costs
associated with the anticipated closure of a packaging and distribution facility in Germany.
2012
Collaborations (Note 4 to the consolidated financial statements)
• We recognized income of $787.8 million (pretax), or $0.43 per share, related to the early payment of
the exenatide revenue-sharing obligation following the completion of Amylin's acquisition by Bristol-
Myers Squibb (BMS).
Asset Impairment, Restructuring, and Other Special Charges (Note 5 to the consolidated financial statements)
• We recognized asset impairment, restructuring, and other special charges of $281.1 million (pretax),
or $0.16 per share, consisting of an intangible asset impairment related to liprotamase, restructuring
charges related to initiatives to reduce our cost structure and global workforce, charges associated
with the decision to stop development of a delivery device platform, and charges related to changes
in returns reserve estimates for the withdrawal of Xigris™.