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LILLY (ELI) & COMPANY: Lilly Reports Q4 and Full-Year 2012 Results

LILLY (ELI) & COMPANY: Lilly Reports Q4 and Full-Year 2012 Results
Date: January 29, 2013 
For Release:  Immediately
Refer to:     (317) 433-9899 - Ed Sagebiel (Media) 


              (317) 655-6874 - Philip Johnson (Investors)
       Lilly Reports Fourth-Quarter and Full-Year 2012 Results, Revises
                              2013 EPS Guidance

- Fourth quarter revenue declined 1 percent driven by Zyprexa patent
expiration, largely offset by growth in other products.

- Fourth quarter earnings per share were $0.74 (reported), or $0.85
(non-GAAP).

- Full-year 2012 revenue declined 7 percent to $22.6 billion.

- Full-year 2012 earnings per share totaled $3.66 (reported), or $3.39
(non-GAAP).

- 2013 guidance increased by $0.07 per share to reflect the estimated benefit
from the delayed enactment of the American Taxpayer Relief Act of 2012.

- 2013 earnings per share now expected to be in the range of $4.10 to $4.25
(reported), or $3.82 to $3.97 (non-GAAP).


Eli Lilly and Company (NYSE: LLY) today announced financial results for the
fourth quarter and full year of 2012.


$ in millions, except per        Fourth Quarter        %         Full Year      
   %
share data


                            2012         2011   Growth    2012      2011    
Growth 
Total Revenue - Reported      $5,957.3     $6,046.6    (1)% $22,603.4 $24,286.5  
(7)%
Net Income - Reported            827.2        858.2    (4)%   4,088.6   4,347.7  
(6)%
EPS - Reported                    0.74         0.77    (4)%      3.66      3.90  
(6)% 
Net Income - non-GAAP            945.2        968.9    (2)%   3,784.0   4,913.5 
  (23)%
EPS - non-GAAP                    0.85         0.87    (2)%      3.39      4.41 
  (23)% 
Financial results for 2012 and 2011 are presented on both a reported and a
non-GAAP basis. Some numbers in this press release may not add due to
rounding. Reported results were prepared in accordance with generally accepted
accounting principles (GAAP) and include all revenue and expenses recognized
during the period. Non-GAAP results exclude the items described in the
reconciliation tables later in the release. The non-GAAP results are presented
in order to provide additional insights into the underlying trends in the
company's business. The company's 2013 financial guidance is also being
provided on both a reported and a non-GAAP basis. 
"Lilly delivered solid financial results in the fourth quarter of 2012, as we
successfully offset a large part of the revenue decline from the Zyprexa
patent expiration with growth in other products such as Cymbalta, Forteo,
Alimta, Effient and our animal health portfolio," said John C. Lechleiter,
Ph.D., Lilly's chairman, president and chief executive officer. "At the same
time, we continued to control costs while investing in R&D in order to
replenish and advance our pipeline. Today, Lilly has 13 potential new
medicines in Phase III testing. We are well-positioned to deliver on our
innovation-based strategy and create long-term value for all of our
stakeholders." 
Key Events Over the Last Three Months 
- The company's board of directors authorized a new $1.5 billion 


    share repurchase program, which the company anticipates completing in
    2013. The company repurchased $400 million of shares in 2012 under this
    program and also completed a previously authorized share repurchase
    program.

  - The company announced plans to conduct an additional Phase III
    study of solanezumab in patients with mild Alzheimer's disease. Enrollment
    is expected to begin no later than the third quarter of 2013.

  - The company and its partner, Boehringer Ingelheim, announced
    top-line results for four completed Phase III clinical trials for
    empagliflozin, an investigational sodium glucose co-transporter-2 (SGLT-2)
    inhibitor being studied for treatment of patients with type 2 diabetes. In
    all four studies, the primary efficacy endpoint, defined as significant
    change in HbA1c from baseline compared to placebo, was met with
    empagliflozin (10 and 25 mg) taken once daily.

  - The company and its partner, Boehringer Ingelheim, adjusted the
    scope of their diabetes alliance, with Lilly reassuming sole worldwide
    development and commercialization rights for LY2605541, Lilly's
    investigational novel basal insulin analog which is currently in Phase III
    clinical testing.

  - The company stopped one of three Phase III rheumatoid arthritis
    (RA) registration studies of tabalumab, an anti-BAFF monoclonal antibody,
    due to insufficient efficacy. The decision was not based on safety
    concerns, and patients currently enrolled in other tabalumab RA studies
    will continue treatment.

  - The European Commission approved Cialis® 5 mg for once daily use
    for the treatment of the signs and symptoms of benign prostatic
    hyperplasia (BPH).

  - AmyvidTM received marketing authorization from the European
    Commission as a diagnostic radiopharmaceutical indicated for Positron
    Emission Tomography (PET) imaging of beta-amyloid neuritic plaque density
    in the brains of adult patients with cognitive impairment who are being
    evaluated for Alzheimer's disease and other causes of cognitive
    impairment.

  - The company received notification from its partner, Bristol-Myers
    Squibb, to terminate the collaboration for necitumumab in North America
    and Japan, which will result in Lilly assuming sole worldwide development
    and commercialization rights. Necitumumab is currently in Phase III
    testing as a potential treatment for squamous non-small cell lung cancer.

  - The company reached an agreement with the U.S. Securities and
    Exchange Commission (SEC) to settle the SEC's investigation into the
    company's compliance with the U.S. Foreign Corrupt Practices Act (FCPA).
    Without admitting or denying the allegations, Lilly paid a civil
    settlement amount of $29.4 million and agreed to have an independent
    compliance consultant conduct a 60-day review of the company's internal
    controls and compliance program related to the FCPA.

Fourth-Quarter Reported Results

In the fourth quarter of 2012, worldwide total revenue was $5.957 billion, a
decrease of 1 percent compared with the fourth quarter of 2011. This 1 percent
revenue decline was comprised of a decrease of 3 percent due to lower volume
and 1 percent due to the unfavorable effect of foreign exchange rates,
partially offset by an increase of 2 percent due to price. (Numbers do not add
due to rounding) The decrease in volume was driven primarily by the loss of
patent exclusivity for Zyprexa® in most major markets, partially offset by
volume gains for certain other products. Total revenue in the U.S. decreased 2
percent to $3.230 billion due primarily to the loss of patent exclusivity for
Zyprexa, largely offset by increased prices for pharmaceutical products, as
well as higher demand for animal health products. Total revenue outside the
U.S. decreased by 1 percent to $2.728 billion, driven by the loss of patent
exclusivity for Zyprexa in markets outside of Japan, the unfavorable effect of
foreign exchange rates, and decreased prices, partially offset by increased
volume in certain other products.

Gross margin decreased 0.3 percent to $4.709 billion in the fourth quarter of
2012, as the loss of patent exclusivity for Zyprexa was largely offset by
growth in other products. Gross margin as a percent of total revenue was 79.0
percent, an increase of 0.9 percentage points compared with the fourth quarter
of 2011. The increase in gross margin percent was primarily due to the impact
of foreign exchange rates on international inventories sold which decreased
cost of sales in the fourth quarter of 2012 and increased cost of sales in the
fourth quarter of 2011, partially offset by lower sales of Zyprexa.

Total operating expense, defined as the sum of research and development,
marketing, selling and administrative expenses, decreased 1 percent compared
with the fourth quarter of 2011 to $3.441 billion. Marketing, selling and
administrative expenses decreased 7 percent to $1.978 billion, driven
primarily by lower marketing and selling expenses resulting from the company's
cost containment efforts. Research and development expenses increased 8
percent to $1.463 billion, or 25 percent of total revenue, driven by expenses
related to late-stage clinical trials, including a $50.0 million milestone
payment to Incyte Corporation based on the formal initiation of the rheumatoid
arthritis (RA) Phase III program for baricitinib.

In the fourth quarter of 2012, the company recognized a $204.0 million charge
for asset impairments, restructuring and other special charges, comprised
primarily of $122.6 million related to an intangible asset impairment for
liprotamase and $64.7 million related to restructuring to reduce the company's
cost structure and global workforce. In the fourth quarter of 2011, the
company recognized a charge of $167.6 million for asset impairments,
restructuring and other special charges, including a special charge of $85.0
million related to the withdrawal of Xigris® and $82.6 million related to
restructuring to reduce the company's cost structure and global workforce.

Operating income in the fourth quarter of 2012 was $1.064 billion, which was
essentially flat compared to the fourth quarter of 2011, as higher charges (as
described in the previous paragraph) and slightly lower gross margin were
offset by lower total operating expenses.

Other income (expense) was a net expense of $52.0 million, compared with net
expense of $26.8 million in the fourth quarter of 2011.

The effective tax rate was 18.3 percent in the fourth quarter of 2012,
compared with an effective tax rate of 17.6 percent in the fourth quarter of
2011. The increase in the fourth quarter 2012 effective tax rate reflects the
expiration of the R&D tax credit in the U.S. at the end of 2011, partially
offset by the tax benefit related to the intangible asset impairment for
liprotamase.

Although operating income was essentially flat, higher other expense caused
net income and earnings per share to decrease 4 percent to $827.2 million and
$0.74, respectively, compared with fourth-quarter 2011 net income of $858.2
million and earnings per share of $0.77.

Fourth-Quarter 2012 non-GAAP Results

On a non-GAAP basis, fourth quarter 2012 operating income increased 3 percent
to $1.268 billion, as lower gross margin due to the loss of patent exclusivity
for Zyprexa, along with higher research and development expenses, were more
than offset by growth in other products and lower marketing, selling and
administrative expenses. The effective tax rate was 22.3 percent, compared
with 19.9 percent in the fourth quarter of 2011 principally due to the
expiration of the R&D tax credit in the U.S. at the end of 2011. Net income
and earnings per share both decreased 2 percent to $945.2 million and $0.85,
respectively. These decreases were driven by higher operating income that was
more than offset by higher other expense and a higher tax rate.

Non-GAAP results exclude items totaling $0.11 and $0.10 per share of expense
in the fourth quarters of 2012 and 2011, respectively. For further detail, see
the reconciliation below as well as the footnotes to the non-GAAP income
statement later in this press release.
                                         Fourth Quarter
                                         2012       2011  % Change

Earnings per share (reported)           $0.74      $0.77    (4)%
Asset impairment, restructuring and
  other special charges                  0.11       0.10
Earnings per share (non-GAAP)           $0.85      $0.87    (2)%


Full-Year 2012 Reported Results


For the full-year 2012, worldwide total revenue decreased 7 percent to $22.603
billion compared with 2011, driven by the loss of patent exclusivity for
Zyprexa in most major markets, partially offset by growth in other products.
This 7 percent revenue decline was comprised of a 7 percent decrease due to
lower volume and a 2 percent decrease due to the impact of foreign exchange
rates, partially offset by a 2 percent increase due to higher prices. Total
revenue in the U.S. decreased 5 percent to $12.313 billion due to the loss of
patent exclusivity for Zyprexa, partially offset by higher prices and demand
growth for certain other products. Total revenue outside the U.S. decreased 9
percent to $10.290 billion due to the loss of patent exclusivity for Zyprexa
in markets outside of Japan, the unfavorable impact of foreign exchange rates,
and lower prices, partially offset by demand growth for certain other
products.

Gross margin decreased 7 percent to $17.807 billion in 2012. Gross margin as a
percent of total revenue decreased by 0.3 percentage points in 2012 to 78.8
percent. This decrease was due primarily to lower sales of Zyprexa and, to a
lesser extent higher miscellaneous manufacturing costs, partially offset by
the effect of foreign exchange rates on international inventories sold, which
decreased cost of sales in 2012 and increased cost of sales in 2011.

Total operating expense decreased 1 percent in 2012. Marketing, selling and
administrative expenses decreased 5 percent to $7.514 billion driven by lower
marketing expenses resulting from the company's cost containment efforts.
Research and development expenses increased 5 percent to $5.278 billion, or 23
percent of total revenue, due to higher late-stage clinical trial costs.

In 2012, the company recognized charges of $281.1 million for asset
impairments, restructuring and other special charges. These charges were
comprised of $122.6 million related to an intangible asset impairment for
liprotamase, $74.5 million related to restructuring to reduce the company's
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, the company recognized asset impairment,
restructuring and other special charges of $401.4 million, of which $316.4
million related primarily to severance costs from the previously announced
strategic actions and $85.0 million related to the withdrawal of Xigris. In
2011, the company also recognized a charge of $388.0 million related to
acquired in-process research and development associated with the Boehringer
Ingelheim diabetes collaboration.

Operating income in 2012 decreased 14 percent to $4.734 billion compared to
2011, driven by lower gross margin, partially offset by lower charges in 2012
compared to 2011 (as described in the previous paragraph), as well as lower
total operating expenses.

Other income (expense) in 2012 was a net income of $674.0 million, compared to
net expense of $179.0 million in 2011. The increase in other income (expense)
was driven by $787.8 million of income related to the early payment of the
exenatide revenue-sharing obligation from Amylin Pharmaceuticals.

The effective tax rate was 24.4 percent in 2012, compared with 18.7 percent in
2011. The increase in the 2012 effective tax rate reflects the tax impact of
the payment received from Amylin and the expiration of the R&D tax credit at
the end of 2011, partially offset by the tax benefit related to the intangible
asset impairment for liprotamase. The effective tax rate for 2011 was lower
due to a tax benefit on the in-process research and development charge
associated with the Boehringer Ingelheim diabetes collaboration, as well as a
benefit of $85.3 million primarily from the resolution in 2011 of the IRS
audits of tax years 2005-2007, along with certain matters related to
2008-2009.

For the full-year 2012, net income and earnings per share decreased 6 percent
to $4.089 billion and $3.66, respectively, compared to full-year 2011 net
income of $4.348 billion and earnings per share of $3.90. The decreases in net
income and earnings per share were due to lower operating income, partially
offset by higher other income from the early payment of the exenatide
revenue-sharing obligation.

Full-Year 2012 non-GAAP Results

Operating income decreased 21 percent to $5.015 billion due to the loss of
patent exclusivity for Zyprexa and higher research and development expenses,
partially offset by growth in other products and lower marketing, selling and
administrative expenses. The effective tax rate for 2012 was 22.8 percent. Net
income and earnings per share each decreased 23 percent, to $3.784 billion and
$3.39, respectively.

For purposes of non-GAAP reporting, items totaling $0.27 of income and $0.52
of expense for 2012 and 2011, respectively, have been excluded. For further
detail, see the reconciliation below as well as the footnotes to the non-GAAP
income statement later in this press release.
                                            Full-Year      % Change
                                          2012       2011

Earnings per share (reported)            $3.66      $3.90    (6)%
In-process research and development
 charges associated with Boehringer
 Ingelheim collaboration                     -       0.23
Asset impairment, restructuring and
 other special charges                    0.16       0.29
Income from early payment of exenatide
 revenue-sharing obligation             (0.43)          -
Earnings per share (non-GAAP)            $3.39      $4.41    (23)%


Numbers in the 2011 full-year column do not add due to rounding.


Revenue Highlights
                                         % Change Over/(Under)                  


    % Change Over/(Under) 
(Dollars in          Fourth Quarter                                    Full-Year
millions) 
                2012         2011            2011               2012        
2011             2011
Cymbalta®         $1,420.4     $1,180.7           20%            $4,994.1      
$4,161.3                20%
Alimta®              684.3        638.1            7%             2,594.3      
 2,461.1                5%
Humalog®             616.0        662.0           (7)%            2,395.5      
 2,367.6                1%
Cialis               513.4        494.2            4%             1,926.8       
1,875.6                3%
Zyprexa              384.8        749.6          (49)%            1,701.4       
4,622.0               (63)%
Humulin®             343.0        345.6           (1)%            1,239.1      
 1,248.8               (1)%
Forteo®              314.6        262.5           20%             1,151.0       
949.8                21%
Evista®              241.0        267.1          (10)%            1,010.1      
 1,066.9               (5)%
Strattera®           163.9        170.6           (4)%              621.4       
620.1                0%
Effient®             120.6         90.9           33%               457.2       
302.5                51%
Animal Health        554.1        468.2           18%             2,036.5       
1,678.6                21%
Total Revenue     $5,957.3     $6,046.6           (1)%          $22,603.4     
$24,286.5               (7)% 
Cymbalta 
For the fourth quarter of 2012, Cymbalta generated $1.420 billion in revenue,
an increase of 20 percent compared with the fourth quarter of 2011. U.S. sales
of Cymbalta increased 25 percent, to $1.141 billion, driven by higher prices
and, to a lesser extent, increased demand. Revenue outside the U.S. was $279.8
million, an increase of 5 percent, driven primarily by increased demand,
partially offset by the unfavorable impact of foreign exchange rates. 
For the full year of 2012, worldwide Cymbalta sales increased 20 percent to
$4.994 billion. U.S. Cymbalta sales for 2012 were $3.918 billion, a 23 percent
increase driven by higher prices and, to a lesser extent, increased demand.
Cymbalta sales outside the U.S. were $1.076 billion, a 9 percent increase
driven by higher demand, partially offset by the unfavorable impact of foreign
exchange rates. 
Alimta 
For the fourth quarter of 2012, Alimta generated sales of $684.3 million, an
increase of 7 percent compared with the fourth quarter of 2011. U.S. sales of
Alimta increased 19 percent, to $297.6 million, driven by increased demand
and, to a lesser extent, higher prices. Sales outside the U.S. remained
relatively flat at $386.7 million, driven by increased demand, offset by lower
prices in Japan and the unfavorable impact of foreign exchange rates. 
For the full year of 2012, worldwide Alimta sales increased 5 percent to
$2.594 billion. U.S. Alimta sales for 2012 were $1.122 billion, a 13 percent
increase driven by higher demand and higher prices. Alimta sales outside the
U.S. were $1.472 billion, which was relatively flat with 2011 driven by
increased demand offset by lower prices in Japan and the unfavorable effect of
foreign exchange rates. 
Humalog 
For the fourth quarter of 2012, worldwide Humalog sales decreased 7 percent,
to $616.0 million. Sales in the U.S. decreased 19 percent to $331.6 million,
driven by lower net effective selling prices due to increased government and
commercial rebates and changes in estimates for sales rebate reserves based
upon updated information. U.S. sales of Humalog have also been negatively
impacted by the product's removal from a large formulary in 2012. Sales
outside the U.S. increased 12 percent to $284.4 million, due primarily to
increased demand. 
For the full year of 2012, worldwide Humalog sales increased 1 percent to
$2.395 billion. U.S. Humalog sales for 2012 were $1.371 billion, a 2 percent
decline due to increased government and commercial rebates. U.S. sales of
Humalog have also been negatively impacted by the product's removal from a
large formulary in 2012. Humalog sales outside the U.S. were $1.025 billion, a
6 percent increase driven by higher demand, partially offset by the
unfavorable impact of foreign exchange rates. 
Cialis 
Cialis sales for the fourth quarter of 2012 increased 4 percent to $513.4
million. U.S. sales of Cialis were $211.0 million in the fourth quarter, a 6
percent increase compared with the fourth quarter of 2011, driven by increased
demand. Sales of Cialis outside the U.S. increased 2 percent, to $302.4
million, driven by higher prices, as well as increased demand in Japan,
partially offset by the unfavorable impact of foreign exchange rates. 
For the full year of 2012, worldwide Cialis sales increased 3 percent to
$1.927 billion. U.S. Cialis sales for 2012 were $782.2 million, an 11 percent
increase driven by higher demand and higher prices. Cialis sales outside the
U.S. were $1.145 billion, a 2 percent decrease driven by the unfavorable
impact of foreign exchange rates, partially offset by increased demand and
higher prices. 
Zyprexa 
In the fourth quarter of 2012, Zyprexa sales totaled $384.8 million, a
decrease of 49 percent compared with the fourth quarter of 2011 due to the
loss of patent exclusivity in the U.S. and most major international markets,
partially offset by growth in Japan. U.S. sales of Zyprexa decreased 80
percent to $60.1 million. Zyprexa sales in international markets decreased 29
percent, to $324.7 million. 
For the full year of 2012, worldwide Zyprexa sales totaled $1.701 billion, a
decrease of 63 percent compared with 2011 due to the loss of patent
exclusivity in the U.S. and most major international markets, partially offset
by growth in Japan. U.S. sales of Zyprexa decreased 83 percent to $360.4
million. Zyprexa sales in international markets decreased 45 percent, to
$1.341 billion. Zyprexa sales in Japan for the full-year 2012 were
approximately $585 million. 
Humulin 
Worldwide Humulin sales decreased 1 percent in the fourth quarter of 2012, to
$343.0 million. U.S. sales decreased 4 percent to $163.0 million, driven
primarily by lower demand, partially offset by higher prices. U.S. sales of
Humulin have been negatively impacted 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. Sales outside the
U.S. increased 2 percent, to $180.0 million, driven primarily by increased
demand, partially offset by the unfavorable impact of foreign exchange rates
and lower prices. 
For the full year of 2012, worldwide Humulin sales decreased 1 percent to
$1.239 billion. U.S. Humulin sales for 2012 were $592.1 million, a 1 percent
increase driven by higher prices, largely offset by decreased demand. U.S.
sales of Humulin have been negatively impacted 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. Humulin
sales outside the U.S. were $647.0 million, a 2 percent decrease driven by the
unfavorable impact of foreign exchange rates, partially offset by higher
volume. 
Forteo 
Fourth-quarter sales of Forteo were $314.6 million, a 20 percent increase
compared with the fourth quarter of 2011. U.S. sales of Forteo were relatively
flat at $120.8 million, due to lower volume, offset by higher prices. Sales
outside the U.S. increased 37 percent, to $193.8 million, due primarily to
increased demand in Japan, partially offset by the unfavorable impact of
foreign exchange rates. 
For the full year of 2012, worldwide Forteo sales increased 21 percent to
$1.151 billion. U.S. Forteo sales for 2012 were $488.2 million, an 8 percent
increase driven by higher prices, partially offset by decreased volume. Forteo
sales outside the U.S. were $662.8 million, a 33 percent increase driven
primarily by higher demand in Japan. 
Evista 
Evista sales for the fourth quarter of 2012 decreased 10 percent to $241.0
million. U.S. sales of Evista decreased 3 percent to $177.0 million, driven by
decreased demand, partially offset by higher prices. Sales outside the U.S.
decreased 25 percent to $64.0 million, driven by lower volume. 
For the full year of 2012, worldwide Evista sales decreased 5 percent to
$1.010 billion. U.S. Evista sales for 2012 were $699.5 million, a 1 percent
decrease driven by lower demand, largely offset by higher prices. Evista sales
outside the U.S. were $310.6 million, a 14 percent decrease driven by
decreased volume and, to a lesser extent, the unfavorable impact of foreign
exchange rates. 
Strattera 
During the fourth quarter of 2012, Strattera generated $163.9 million of
sales, a decrease of 4 percent compared with the fourth quarter of 2011. U.S.
sales decreased 14 percent to $95.8 million, due to lower net effective
selling prices and decreased demand. Sales outside the U.S. increased 15
percent to $68.1 million driven by increased demand in Japan, partially offset
by lower prices. 
For the full year of 2012, worldwide Strattera sales were relatively flat at
$621.4 million. U.S. Strattera sales for 2012 were $384.1 million, a 2 percent
decrease driven by lower demand, partially offset by higher prices. Strattera
sales outside the U.S. were $237.3 million, a 4 percent increase driven by
higher demand in Japan, partially offset by lower prices and the unfavorable
impact of foreign exchange rates. 
Effient 
Effient sales were $120.6 million in the fourth quarter of 2012, an increase
of 33 percent compared with the fourth quarter of 2011. U.S. Effient sales
increased 31 percent to $87.8 million, driven by increased demand and, to a
lesser extent, higher prices. Sales outside the U.S. increased 37 percent to
$32.8 million driven by higher demand. 
For the full year of 2012, worldwide Effient sales increased 51 percent to
$457.2 million. U.S. Effient sales for 2012 were $339.0 million, a 52 percent
increase driven by higher demand and, to a lesser extent, higher prices.
Effient sales outside the U.S. were $118.2 million, a 47 percent increase
driven by higher demand, partially offset by the unfavorable impact of foreign
exchange rates. 
Erbitux® 
Lilly recognizes net royalties received from its Erbitux collaboration
partners and revenue from manufactured product sold to these partners. For the
fourth quarter of 2012, Lilly recognized total revenue of $87.0 million for
Erbitux, a decrease of 19 percent from the fourth quarter of 2011, due to the
timing of product shipments to collaboration partners. For the full-year of
2012, Lilly recognized total Erbitux revenue of $397.0 million, a decrease of
3 percent from 2011. 
Animal Health 
Worldwide sales of animal health products in the fourth quarter of 2012 were
$554.1 million, an increase of 18 percent compared with the fourth quarter of
2011. U.S. sales grew 31 percent, to $312.2 million, due primarily to
increased demand for companion animal products. Sales outside the U.S.
increased 5 percent, to $241.9 million, driven primarily by increased volume. 
For the full year of 2012, worldwide animal health sales increased 21 percent
to $2.036 billion. Animal health sales in the U.S. increased 30 percent to
$1.162 billion, driven primarily by increased demand for companion animal
products. Animal health sales outside the U.S. increased 12 percent to $874.7
million, driven primarily by the acquisition of certain Janssen animal health
assets in Europe and the growth of other products, partially offset by the
unfavorable impact of foreign exchange rates. 
2013 Financial Guidance 
The company has revised certain elements of its 2013 financial guidance to
reflect an estimated $0.07 per share benefit from the one-time impact
associated with the R&D tax credit for 2012 that will be recorded in the first
quarter of 2013 resulting from the delay in the enactment of the American
Taxpayer Relief Act of 2012. The company now expects full-year 2013 earnings
per share to be in the range of $4.10 to $4.25 on a reported basis, or $3.82
to $3.97 on a non-GAAP basis. 
                                        2013         2012 
                                    Expectations    Results    % Change 
Earnings per share (reported)          $4.10 to $4.25    $3.66    12% to 16%
Asset impairments, restructuring and
 other special charges                        -           0.16
Income from early payment of Amylin
 revenue-sharing obligation                (0.28)       (0.43)
Earnings per share (non-GAAP)          $3.82 to $3.97    $3.39    13% to 17% 
The company still anticipates 2013 revenue of between $22.6 billion and $23.4
billion. Despite the initial impact of the U.S. Cymbalta patent expiration in
the fourth quarter of 2013 and the loss of the anticipated 15 percent revenue
sharing obligation on worldwide exenatide sales, the company expects overall
revenue growth, driven by a portfolio of products including Humalog, Humulin,
Cialis, Strattera, Forteo, Alimta, Cymbalta outside the U.S., Effient,
Tradjenta® and Axiron®, as well as animal health products. In addition,
significant revenue growth is expected in Japan and the emerging markets,
particularly China. 
The company still anticipates that gross margin as a percent of revenue will
be approximately 78 percent. 
Marketing, selling and administrative expenses are still expected in the range
of $7.1 billion to $7.4 billion. Research and development expenses are still
expected to be in the range of $5.2 billion to $5.5 billion. 
On a reported basis, other income and deductions is still expected to be in a
range between $340 million and $490 million of net income in 2013. On a
non-GAAP basis, other income and deductions is still expected to be in a range
between $0 and $150 million of net expense, which excludes an estimated $490
million of deferred exenatide-related income contingent upon the transfer of
exenatide commercial rights outside the U.S. to Amylin, which is expected to
be largely complete by the end of the first quarter of 2013. 
On a reported basis, the 2013 tax rate is now expected to be approximately
21.0 percent, assuming a full-year 2013 benefit of the R&D tax credit. On a
non-GAAP basis, the 2013 tax rate is now expected to be approximately 19.5
percent. Both tax rates for 2013 include an estimated $0.07 per share one-time
impact associated with the R&D tax credit for 2012 that will be recorded in
2013 resulting from the delay in the enactment of the American Taxpayer Relief
Act of 2012. 
Operating cash flows are still expected to be more than sufficient to allow
for capital expenditures of approximately $900 million, fund potential
business development activity, pay the company's dividend, and complete the
company's previously announced $1.5 billion share repurchase program. 
Webcast of Conference Call 
As previously announced, investors and the general public can access a live
webcast of the fourth-quarter and full-year 2012 financial results conference
call through a link on Lilly's website at www.lilly.com. The conference call
will be held today from 9:00 a.m. to 10:00 a.m. Eastern Standard Time (EST)
and will be available for replay via the website. 
Lilly, a leading innovation-driven corporation, is developing a growing
portfolio of pharmaceutical products by applying the latest research from its
own worldwide laboratories and from collaborations with eminent scientific
organizations. Headquartered in Indianapolis, Ind., Lilly provides answers -
through medicines and information - for some of the world's most urgent
medical needs. Additional information about Lilly is available at
www.lilly.com. 
This press release contains management's current intentions and expectations
for the future, all of which are forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The words "estimate", "project", "intend", "expect",
"believe", "target" and similar expressions are intended to identify
forward-looking statements. Actual results may differ materially due to
various factors. There are significant risks and uncertainties in
pharmaceutical research and development. There can be no guarantees with
respect to pipeline products that the products will receive the necessary
clinical and manufacturing regulatory approvals or that they will prove to be
commercially successful. Pharmaceutical products can develop unexpected safety
or efficacy concerns. The company's results may also be affected by such
factors as competitive developments affecting current products; market uptake
of recently launched products; the timing of anticipated regulatory approvals
and launches of new products; regulatory actions regarding currently marketed
products; issues with product supply; regulatory changes or other
developments; regulatory compliance problems or government investigations;
patent disputes; changes in patent law or regulations related to data-package
exclusivity; other litigation involving current or future products; the impact
of governmental actions regarding pricing, importation, and reimbursement for
pharmaceuticals, including U.S. health care reform and deficit-reduction
measures; changes in tax laws, including the American Taxpayer Relief Act of
2012; asset impairments and restructuring charges; acquisitions and business
development transactions; and the impact of exchange rates and global
macroeconomic conditions. For additional information about the factors that
could cause actual results to differ materially from forward-looking
statements, please see the company's latest Form 10-Q and Form 10-K filed with
the U.S. Securities and Exchange Commission. You should not place undue
reliance on forward-looking statements, which speak only as of the date of
this release. Except as is required by law, the company expressly disclaims
any obligation to publicly release any revisions to forward-looking statements
to reflect events after the date of this release. 
# # # 
Alimta® (pemetrexed, Lilly)
AmyvidTM (florbetapir, Lilly)
Axiron® (testosterone, Acrux Corp.)
Cialis® (tadalafil, Lilly)
Cymbalta® (duloxetine hydrochloride, Lilly)
Effient® (prasugrel, Lilly)
Erbitux® (cetuximab, ImClone Systems, Lilly)
Evista® (raloxifene hydrochloride, Lilly)
Forteo® (teriparatide of recombinant DNA origin injection, Lilly)
Humalog® (insulin lispro injection of recombinant DNA origin, Lilly)
Humulin® (human insulin of recombinant DNA origin, Lilly)
Strattera® (atomoxetine hydrochloride, Lilly)
Tradjenta® (linagliptin, Boehringer Ingelheim)
Xigris® (drotrecogin alfa (activated), Lilly)
Zyprexa® (olanzapine, Lilly) 
Eli Lilly and Company Employment Information 


                          December 31, 2012          December 31, 2011

Worldwide Employees             38,350                     38,080



Eli Lilly and Company
Operating Results (Unaudited) - REPORTED
(Dollars in millions, except per share data)
                                                Three Months Ended              
         Twelve Months Ended
                                                    December 31                 
              December 31
                                                    2012         2011  % Chg.   


       2012         2011  % Chg. 
Total Revenue                                 $   5,957.3  $   6,046.6  (1)%     
  $  22,603.4  $  24,286.5 (7)% 
Cost of sales                                     1,248.3      1,321.7  (6)%     
      4,796.5      5,067.9 (5)%
Research and development                          1,463.1      1,355.3   8%      
      5,278.1      5,020.8  5%
Marketing, selling and administrative             1,977.5      2,133.4  (7)%     
      7,513.5      7,879.9 (5)%
Acquired in-process research and
 development                                            -            -   NM      
            -        388.0  NM 
Asset impairments, restructuring and other
 special charges                                    204.0        167.6  22%      


            281.1        401.4 (30)%
    Operating income                                  1,064.4      1,068.6   0%     


      4,734.2      5,528.5 (14)% 
Net interest income (expense)                     (16.5)       (25.6)           
       (72.8)      (106.1)
 Other income (expense) - Special                       -            -           
        787.8            -
 Net other income (expense)                        (35.5)        (1.2)           
       (41.0)       (72.9) 
Other income (expense)                             (52.0)       (26.8)  94%      
        674.0      (179.0)  NM 
Income before income taxes                        1,012.4      1,041.8  (3)%     
      5,408.2      5,349.5  1%
Income taxes                                        185.2        183.6   1%      
      1,319.6      1,001.8  32% 
Net income                                    $     827.2  $     858.2  (4)%     
      4,088.6      4,347.7 (6)% 
Earnings per share - diluted                  $      0.74  $      0.77  (4)%     
         3.66         3.90 (6)% 
Dividends paid per share                      $      0.49  $      0.49   NM      
         1.96         1.96  NM 
                                           
Weighted-average shares outstanding
 (thousands) - diluted                          1,113,880    1,115,883           
    1,117,294    1,113,967 
NM - not meaningful 
Eli Lilly and Company
Operating Results (Unaudited) - Non-GAAP
(Dollars in millions, except per share data) 
                              Three Months Ended                        
Twelve Months Ended 
                                 December 31                                
December 31 
                            2012(a)        2011(b)  % Chg.              
2012(a       2011(b) % Chg. 
Total Revenue               $   5,957.3    $   6,046.6  (1)%            $  
22,603.4  $  24,286.5  (7)% 
Cost of sales                   1,248.3        1,321.7  (6)%                
4,796.5      5,067.9  (5)%
Research and development        1,463.1        1,355.3   8%                 
5,278.1      5,020.8   5%
Marketing, selling and          1,977.5        2,133.4  (7)%                
7,513.5      7,879.9  (5)%
administrative 
Operating income                1,268.4        1,236.2   3%                 
5,015.3      6,317.9  (21)% 
Net interest income (expense)    (16.5)         (25.6)                       
(72.8)      (106.1)
Net other income (expense)       (35.5)          (1.2)                       
(41.0)       (72.9)
Other income (expense)           (52.0)         (26.8)  94%                 
(113.8)      (179.0)  (36)% 
Income before income taxes      1,216.4        1,209.4   1%                 
4,901.5      6,138.9  (20)%
Income taxes                      271.2          240.5  13%                 
1,117.5      1,225.4  (9)% 
Net income                  $     945.2    $     968.9  (2)%            $   
3,784.0  $   4,913.5  (23)% 
Earnings per share -
 diluted                    $      0.85    $      0.87  (2)%            $      
3.39  $      4.41  (23)% 
Dividends paid per share    $      0.49    $      0.49   NM             $      
1.96  $      1.96   NM 
                     
Weighted-average shares
 outstanding (thousands) -
 diluted                      1,113,880      1,115,883                    
1,117,294    1,113,967 
(a) The fourth-quarter 2012 financial statements have been adjusted to
eliminate asset impairments, restructuring and other special charges totaling
$204.0 million (pretax), or $0.11 per share (after-tax), primarily related to
an intangible asset impairment for liprotamase and restructuring to reduce the
company's cost structure and global workforce. The full-year 2012 financial
statements have been adjusted to eliminate asset impairments, restructuring
and other special charges of $281.1 million (pretax), or $0.16 per share
(after-tax), primarily related to an intangible asset impairment for
liprotamase, restructuring to reduce the company's cost structure and global
workforce, the asset impairment of a product delivery device platform, and the
withdrawal of Xigris. Additionally, the full-year 2012 financial statements
have been adjusted for income of $787.8 million (pretax), or $0.43 per share
(after-tax) related to the early payment of the exenatide revenue-sharing
obligation. 
(b) The fourth-quarter 2011 financial statements have been adjusted to
eliminate asset impairments, restructuring and other special charges totaling
$167.6 million (pretax), or $0.10 per share (after-tax), primarily related to
a special charge for the withdrawal of Xigris and restructuring to reduce the
company's cost structure and global workforce. The full-year 2011 financial
statements have been adjusted to eliminate asset impairments, restructuring,
and other special charges of $401.4 million (pretax), or $0.29 per share
(after-tax), primarily related to severance costs and a special charge for the
withdrawal of Xigris. Additionally, the full-year 2011 financial statements
have been adjusted for an acquired in-process research and development charge
of $388.0 million (pretax), or $0.23 per share (after-tax), associated with
the Boehringer Ingelheim diabetes collaboration. (Numbers do not add due to
rounding.) 
END 
-0- Jan/29/2013 13:33 GMT