lilly corporate citizenship - socially responsible … · lilly corporate citizenship website...

52
Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the environmental, social, and economic aspects of our products and operations. The site reflects our performance in 2004 and our vision for the future. Lilly Corporate Citizenship

Upload: phamdat

Post on 21-Aug-2018

226 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

Lilly Corporate Citizenship Website Contents

This is the printer-friendly version of Lilly’s Internet-based report on the environmental, social, and economic aspects of our products and operations. The site reflects our performance in 2004 and our vision for the future.

Lilly Corporate Citizenship

Page 2: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– ii –

Corporate Citizenship 1

Vision and Strategy

Chairman’s Message 2

Corporate Citizenship Statements of Conduct 3

The Lilly Difference 4

Company Profile

Our History 5

Products That Make A Difference 8

The Lilly Difference Extends Across the Globe 10

Making A Difference Through Reporting 11

Management

Structure and Management Systems 12

Voluntary Initiatives 12

Engaging with Our Stakeholders 15

Key Stakeholder Issues 16

Policies, Practices, and Programs 24

Performance 26

Performance Summary Table 27

Economic Performance

Sustaining Economic Performance via Breakthrough Products and Medical Expertise 29

Philanthropy 31

Environmental Performance

Resource Use 34

Biodiversity 35

Emissions, Effluents, and Waste 37

Product Life Cycle 41

Social Performance

Responsibility Toward Employees 42

Upholding Human Rights 44

Code of Business Conduct 45

Supplier Diversity Development 47

Product Responsibility 48

Awards and Recognition 50

Contents

© Copyright 2005 Eli Lilly and Company

Page 3: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– � –

Welcome to the Corporate Citizenship web pages for Eli Lilly and Company, our Internet-based report on the environmental, social, and economic aspects of our products and operations. This report reflects our performance in 2004 and our vision for the future.

Lilly has a strong tradition of philanthropy, which we continue to pursue as part of our overall approach to corporate citizenship. This report also discusses important initiatives we are undertaking to address key issues such as the tuberculosis pandemic, access to medicines, and other key areas of interest for our stakeholders.

Our Corporate Citizenship Statements of Conduct build upon the long-standing core values of Lilly. The

Corporate Citizenship Statements of Conduct outline our commitment to operating ethically and fairly, in a way that protects employee health and the environment, and with respect for the needs of local communities and of society at large.

If you have questions or comments about the Corporate Citizenship site, please contact us. Engaging in dialogue with you supports the values we live everyday: respect for people, integrity, and excellence.

We would like to know your thoughts about Lilly’s Corporate Citizenship Report. Please take a minute to fill out our survey.

Corporate Citizenship

Page 4: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– � –

I am pleased to introduce the third Corporate Citizenship Report from Eli Lilly and Company. It describes how our company has put the principles of corporate citizenship into action during 2004.

For more than 129 years, Lilly has been dedicated to meeting the health care needs of people in the United States and around the world. We address these needs primarily by developing innovative medicines—investing a higher percentage of our sales in research and development than any other major pharmaceutical company. In the past three years, while our industry’s output has slowed, Lilly has introduced nine new medicines—many of which treat serious conditions for which no previous treatment existed.

As essential as this work is, our mission is broader. We are also working to ensure that patients who need our medicines can get them.

Even in the United States—the world leader in developing and manufacturing medicines—about 45 million Americans lack affordable access to medicine. This inequity must be dealt with, and we are working hard to be part of the solution. Our Lilly Cares™ and LillyAnswers® programs provide free or low-cost medicines to patients in need. Together, these initiatives served nearly 400,000 Americans in 2004. We have also joined with our peer companies to establish the Partnership for Prescription Assistance (PPA)—the largest-ever private sector program for patients who lack prescription coverage. This national coalition offers a single point of access to more than 275 public and private patient assistance programs, including more than 150 programs offered by pharmaceutical companies.

Around the globe, we take seriously our mission to address society’s unmet needs for health care products and services. For example, we are leaders in fighting the spread of multi-drug resistant tuberculosis (MDR-TB) through a many-faceted partnership with the World Health Organization, the U.S. Department of Health and Human Services, and other organizations. Over the course of this four-year initiative, Lilly will provide an estimated $70

million. These funds will support a wide range of activities, including increased production of MDR-TB medicines, the development and implementation of guidelines for MDR-TB treatment, enhanced training of medical staff around the world, and related patient services.

I have also been speaking with thought leaders around the world, championing principles of health care reform that will enable nations to produce and afford innovative medicines to meet their societies’ needs—including the growing health needs of aging populations.

At a time when many constituents are demanding more transparency from pharmaceutical companies, Lilly last year became the first in our industry to disclose the results of all company-sponsored clinical trials for our marketed products, as well as the initiation of all Phase III and Phase IV clinical trials. The New England Journal of Medicine and several major U.S. newspapers have singled Lilly out for our openness with this essential medical information.

For Lilly, good corporate citizenship extends to the way we interact with our constituents and with each other. Operating in an ethical and trustworthy manner … listening and responding to people’s needs and concerns … respecting our employees and the communities in which we work … protecting the environment—these are also a big part of who we are. We pledge to continue our longstanding tradition of providing our stakeholders with “Answers That Matter” as we embrace the responsibilities of corporate citizenship.

I invite you to read through this report to learn more about the many ways in which Eli Lilly and Company touches lives and communities. You can also view this report on our website at www.lilly.com/about/citizenship. Please contact us with your comments and questions.

Sidney Taurel Chairman, President, and Chief Executive Officer

Corporate Citizenship > Vision And Strategy > Chairman's Message

Chairman’s Message

Page 5: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– � –

Long-established core values guide Eli Lilly and Company in all that we do. These values are:• Respect for People – We maintain an environment built

on mutual respect, openness, and individual integrity. Respect for people includes our concern for the interests of all people who touch—or are touched by—our company: customers, employees, shareholders, partners, suppliers, and communities.

• Integrity – We conduct our business in a way that embraces the very highest standards of honesty and ethical behavior and is consistent with all applicable laws and regulations. We are honest in our dealings with customers, employees, suppliers, competitors, shareholders, and the community.

• Excellence – We pursue pharmaceutical innovation, pro-vide high-quality products, and strive to deliver superior business results. Our quest for excellence is reflected in our unsurpassed focus on quality and a continuous search for new ways to improve everything we do. As a result, customers around the world will increasingly choose our products, enabling us to generate a superior financial performance that benefits our shareholders, employees, and the communities where we live.

Building upon these values, Lilly embraces the following corporate citizenship principles:• We are dedicated to providing customers “Answers That

Matter” through innovative medicines, information, and exceptional customer service. Our dedication will enable people to live longer, healthier, and more active lives.

• We discover and develop products through rigorous testing and in accordance with the highest scientific and ethical standards. We strive to create innovative products that are either first-in-class or best-in-class and fulfill the clinical promise of their Lilly label.

• We reliably manufacture and supply high-quality medicines that are safe and effective.

• We comply with the laws and regulations of every country in which we conduct business and act affirmatively to verify our compliance.

• We conduct our business activities with respect for people and a commitment to diversity, equal opportunity,

and freedom from exposure to improper conduct and discrimination.

• We listen and respond forthrightly to questions and criticisms of Lilly and the pharmaceutical industry. We commit ourselves to doing so with the utmost in transparency and timeliness. Our aim is to lead within our industry, improving its responses to the questions and criticisms it faces.

• We select and maintain relationships with suppliers based on the merit and value of their products and services. We will work only with suppliers that we believe are in full compliance with local laws and Lilly’s standards of social, environmental, and economic performance.

• We safeguard and make proper use of nonpublic company and third-party information to which we have access.

• We respect the privacy of individuals’ personal information.

• We create and maintain safe and healthful working conditions.

• We respect and protect the environment. • We comply with all laws and regulations that govern

the manner in which we participate in the political process and interact with government officials and public international organizations.

• We create and maintain proper records, adhere to the highest standards of external reporting practices, and are as transparent, clear, and accurate as possible in providing information to our stakeholders.

• We price our products mindful of dual responsibilities—to realize the profits that will enable us to invest in discovery of the next generation of innovative medicines and to permit patients to have access to the value that our innovative medicines can bring to them and their families today.

• We are at the forefront of good corporate governance and have strong, independent, and diverse membership on our board of directors.

• We support charitable needs in communities where we operate and in areas where we have talents and resources that will make a difference.

Corporate Citizenship > Vision and Strategy > Corporate Citizenship Statements of Conduct

Corporate Citizenship Statements of Conduct

Page 6: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– � –

Mission

We provide customers “Answers That Matter” through innovative medicines, information, and exceptional customer service that enable people to live longer, healthier, and more active lives.

Strategic Intent

By providing for the unmet needs of our customers through a constant stream of innovation, we will outgrow all competitors.

Vision

“Answers That Matter” is the foundation of our promise to our customers. We will deliver on our promise by listening to and understanding the needs of our customers and providing unmatched value.

To provide our customers unmatched value, we will create four dimensions of competitive advantage:• generating an accelerating flow of pharmaceutical

products from internal discovery and external sources that address our customers' unmet needs

• manufacturing and supplying our portfolio of products at an ever-increasing level of quality and service

• providing information, services, and delivery systems that maximize the customer-defined value and that drive the early and sustained adoption of our products

• partnering to obtain access to high-potential molecules and strengthen key capabilities, thereby creating more value for Lilly and our partner from Lilly assets than we could achieve on our own

Our organization will be adaptive and highly flexible, allowing us to respond to both internal and external changes.

Corporate Citizenship > Vision and Strategy > The Lilly Difference

The Lilly Difference

Page 7: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– � –

Eli Lilly and Company is a leading innovation-driven pharmaceutical corporation committed to developing a growing portfolio of best-in-class pharmaceutical products that help people live longer, healthier, and more active lives. We have a long history of meaningful medical innovation, most notably in the treatment of infections, diabetes, and depression.

The timeline below illustrates some significant events in the history of our development as a responsible public corporation. Visit the “About Lilly” pages on Lilly.com for additional information about our corporate history and significant medical breakthroughs at Lilly.

1876 Colonel Eli Lilly opens his new drug manufacturing company.

1881 The company is incorporated, and the first shares of stock are issued.

1882 J.K. Lilly Sr. is named superintendent of the research laboratories.

1884 Lilly sends its first overseas shipment of product to London.

1886 The scientific division is established; the company’s first chemist, Ernest Eberhardt, is hired.

1898 Colonel Lilly dies; J.K. Lilly Sr. takes over the business.

1900 The “Red Lilly” is adopted as the company’s logo and trademark.

1905 Sales reach $1 million.

1906 A tradition of philanthropy begins with disaster relief after the San Francisco earthquake.

1907 Eli Lilly, elder son of J.K. Sr. joins the company after graduating from Philadelphia College of Pharmacy.

1914 Eli’s brother, J.K. Jr., joins the company after graduating with a pharmacy degree from University of Michigan.

1914 The Greenfield biological facility opens to produce vaccines and antitoxins.

1916 J.K. Lilly Jr. issues his report on employment to ensure fair, equitable treatment for all employees.

1918 John G.W. King goes to China and serves as the first sales representative abroad.

1919 Dr. G.H.A. Clowes is hired as director of the scientific division.

1923 Iletin®, the first commercial insulin product, is launched.

1926 The Lilly Laboratory for Clinical Research is opened to oversee clinical trials.

1928 Lilly works with Harvard Medical School to produce the first treatment for pernicious anemia.

1928 A sales office is opened in Shanghai, China.

1932 J.K. Lilly Sr. retires; Eli Lilly becomes president.

1934 The first non-U.S. affiliate office is established in London.

1937 Lilly Endowment, Inc., the family trust fund, is founded.

1939 Lilly’s first manufacturing plant outside the United States is opened at Basingstoke, England.

1941 Lilly supplies blood plasma to the armed forces at no profit to the company.

1943 The company’s first penicillin product is produced for use by the armed forces.

Corporate Citizenship > Company Profile > Our History

Our History

Page 8: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– � –

1944 Mass production of penicillin begins.

1948 J.K. Lilly Sr. dies; Eli Lilly becomes chairman of the board, and J.K. Lilly Jr. is named president.

1953 J.K. Lilly Jr. retires; Eugene N. Beesley is named president of the company – the first president from outside the Lilly family.

1954 Tippecanoe Laboratories manufacturing plant opens near Lafayette, Indiana.

1954 Agricultural research officially begins at Greenfield Laboratories.

1955 Lilly manufactures its first commercial shipment of the Salk polio vaccine.

1955 Lilly stock becomes publicly traded.

1957 Darvon®, a new painkiller, is introduced.

1960 Elanco Products Company is established to market agricultural and animal health products.

1963 A new herbicide, Treflan®, is launched; it becomes the company’s top-selling product from 1973 to 1982.

1964 Keflin®, the first cephalosporin antibiotic, is introduced.

1965 Lilly opens Erl Wood, its first research facility outside the United States.

1970 Clinton Laboratories, another major manufacturing plant, opens in Indiana, U.S.

1970 Lilly stock is listed for the first time on the New York Stock Exchange.

1974 Sales reach $1 billion.

1976 The company celebrates its 100-year anniversary.

1977 Eli Lilly, grandson of the founder, dies.

1979 Ceclor® is launched; it eventually becomes the world’s top-selling oral antibiotic.

1982 Humulin®, Lilly’s human insulin, is launched. It is the world’s first pharmaceutical product produced through recombinant DNA technology.

1982 Oraflex®, a treatment for arthritis, is withdrawn from the market after deaths in elderly patients are reported.

1986 Prozac®, the first of a revolutionary new class of antidepressant drugs, is launched in Belgium; the U.S. launch follows in 1988.

1989 Lilly and The Dow Chemical Company form DowElanco, a joint venture for agricultural chemicals. Lilly sells its share of the company in 1997.

1989 Elanco Products Company is renamed Elanco Animal Health.

1990 The Church of Scientology attacks the safety and efficacy of Prozac. Charges are later proven unfounded.

1991 Lorabid®, first in a new class of oral antibiotics, is approved for marketing.

1993 Lilly CEO Vaughn D. Bryson resigns amid controversy over issues surrounding the company’s strategic direction; Bryson is succeeded by former AT&T President Randall L. Tobias.

1994 The company announces its intent to divest from its medical devices and diagnostics businesses to better focus on its core pharmaceutical business.

1994 Lilly announces a definitive agreement with Sphinx Pharmaceuticals Corporation for the acquisition of Sphinx in Durham, North Carolina, U.S. The facility is later renamed Lilly Research Triangle Park Laboratories.

1994 Lilly acquires PCS Health Systems, Inc., the largest managed-pharmaceutical-care company in the United States. Lilly sells the company to Rite Aid Corporation in 1998.

1995 A joint venture is formed in China to invest up to $28 million to build a pharmaceutical manufacturing plant in Suzhou.

1995 Lilly launches an Internet site, www.lilly.com.

1996 Humalog®, an insulin analog designed to mimic the body’s natural rapid insulin output in response to eating a meal, is launched in the United States and Europe.

1996 Gemzar® is launched in the United States for the treatment of locally advanced or metastatic pancreatic cancer.

1996 Zyprexa® is introduced in the United States for the treatment of schizophrenia; it is eventually approved to treat bipolar disorder.

Page 9: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– � –

1997 Pulmotil®, a new treatment for respiratory disease in pigs, is launched in the United States.

1997 The company receives approval to market Evista®, first in a class of new drugs called selective estrogen receptor modulators, for the prevention of osteoporosis in postmenopausal women. Marketing begins in early 1998.

1998 Lilly CEO Randall Tobias announces his intention to retire at the end of 1998; Tobias is succeeded by Sidney Taurel, who becomes CEO and chairman of the board.

1999 Actos®, a new oral treatment for type 2 diabetes developed by Takeda America Research and Development Center, Inc., is approved for marketing in the United States.

2000 Zyprexa reaches a prescribing milestone by having been prescribed to 5 million consumers in 84 countries worldwide since its market entry four years earlier, surpassing Prozac to become Lilly’s leading product.

2000 Paylean®, a new technology to enhance leanness and improve growth, is introduced for pigs.

2001 Lilly loses U.S. market exclusivity for Prozac.

2001 The company launches its first separate e-business venture, InnoCentive LLC, a wholly owned enterprise that will use the power of the Internet to create and enhance open-source scientific research and development.

2001 Xigris®, a breakthrough biotech therapy discovered and developed by Lilly, is approved for the reduction of mortality in adult patients with severe sepsis who have a high risk of death.

2002 Lilly announces LillyAnswers®, a prescription drug program for seniors.

2002 Cialis®, a medication to treat male erectile dysfunction, is approved for marketing in the European Union; the U.S. launch follows in 2004.

2002 Strattera®, a nonstimulant, noncontrolled medication to treat attention deficit hyperactivity disorder, is approved.

2002 Forteo®, a first-in-class medicine for osteoporosis patients to stimulate new bone formation, is approved; Lilly USA begins promoting Forteo in December.

2003 Optaflexx® is approved by the U.S. FDA to be fed to beef cattle to increase red meat yield.

2004 Symbyax™, the first and only FDA-approved medication to treat bipolar depression, is launched in the United States.

2004 Alimta® is approved for use with cisplatin, a standard chemotherapy agent, for the treatment of malignant pleural mesothelioma.

2004 Lilly acquires Applied Molecular Evolution, Inc. (AME), headquartered in San Diego, California, U.S.

2004 Lilly launches publicly available, online clinical trial registry at www.lillytrials.com.

2004 Elector®, the first new insecticide class in more than 20 years for control of flies and lice on cattle, is launched.

Lilly has been a publicly held company for more than 50 years. Lilly common stock is listed on the U.S. New York and Pacific stock exchanges and the London and Swiss stock exchanges. On the New York Stock Exchange, our shares trade under the ticker symbol LLY. Our net sales in 2004 totaled $13.9 billion, and our 2004 market value was approximately $64 billion.

Additional information about our 2004 financial performance is available at the Economic Performance section of this website, and in our Annual Report.

Page 10: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– � –

Human Health

Lilly’s current product line addresses a broad array of the world’s medical needs. The table below lists the pharmaceutical products we currently market. For full prescribing information for these products, use the respective website links listed on our products web page.

Lilly Trademark Chemical Identity / Generic Name Product Use

Actos® pioglitazone hydrochloride* for type 2 diabetes

Alimta® pemetrexed for malignant pleural mesothelioma, for second-line treatment of non-small-cell lung cancer

Byetta™ exenatide injection** for type 2 diabetes

Ceclor® cefaclor for infections

Cialis® tadalafil*** for male erectile dysfunction

Cymbalta® duloxetine hydrochloride for major depressive disorder, for diabetic peripheral neuropathic pain

Evista® raloxifene hydrochloride for prevention and treatment of osteoporosis in postmenopausal women

Forteo® teriparatide for osteoporosis

Gemzar® gemcitabine hydrochloride for non-small-cell lung cancer, for pancreatic cancer, for bladder cancer (not approved in the U.S.), for metastatic breast cancer, for recurrent ovarian cancer (not approved in the U.S.)

Humalog® insulin lispro injection (rDNA origin) for treatment of type 1 and type 2 diabetes

Humatrope® somatropin (rDNA origin) for injection for growth failure caused by pediatric growth hormone deficiency, for replacement therapy for adult growth hormone deficiency, for short stature caused by Turner syndrome, for idiopathic short stature

Humulin® human insulin (rDNA origin) (identical to that produced by the human body)

for type 1 and type 2 diabetes

Keflex® cephalexin for infections

Prozac® fluoxetine hydrochloride for depression, obsessive-compulsive disorder, bulimia, and panic disorder

ReoPro® abciximab, Centocor for cardiovascular disease

Strattera® atomoxetine hydrochloride for attention-deficit/hyperactivity disorder (ADHD) in children, adolescents, and adults

Symbyax™ olanzapine and fluoxetine hydrochloride for bipolar depression

Xigris® drotrecogin alfa (activated) for adult severe sepsis patients at high risk of death

Yentreve™ duloxetine hydrochloride for stress urinary incontinence (not approved in the U.S.)

Zyprexa® olanzapine for schizophrenia, for acute bipolar mania, for schizophrenia maintenance, as a combination therapy with lithium or valproate for acute bipolar mania, for bipolar maintenance

* Actos is a registered trademark of Takeda Chemical Industries, Ltd., and is used under license by Takeda Pharmaceuticals America, Inc. ** Byetta is a trademark of Amylin Pharmaceuticals, Inc. *** Cialis is a trademark of Lilly ICOS LLC.

The product names appearing in these tables are U.S. approved products (except where indicated) and U.S. trademarks. There are different product names and additional products marketed in other countries.

Corporate Citizenship > Company Profile > Products That Make A Difference

Products That Make A Difference

Page 11: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– � –

Animal Health

Our Elanco Animal Health business unit markets products worldwide to improve the health of animals. Elanco’s current product line (see list below) concentrates on four areas: antibacterials, parasiticides, anticoccidials, and productivity enhancers. The division develops and markets innovative technologies for use in animal production, care, disease treatment, and prevention.

Lilly Trademark Chemical Identity / Generic Name Product Use

Coban® monensin sodium prevention of coccidiosis, a common poultry disease

Elector® spinosad a cattle pour-on or dilutable spray for controlling horn flies and lice; can be used as a dilutable spray for house flies and stable flies on agricultural animal premise

Maxiban® narasin and nicarbiazin prevention of coccidiosis, a common poultry disease

Micotil® tilmicosin antibiotic used to control respiratory disease in cattle*

Monteban® narasin prevention of coccidiosis, a common poultry disease

Optaflexx™ ractopamine hydrochloride a feed ingredient used in cattle to increase live weight gain, improve feed efficiency, and increase red meat yield

Paylean® ractopamine hydrochloride a feed ingredient used in swine to increase the amount of quality meat while improving grain and feed efficiency

Pulmotil® tilmicosin phosphate antibiotic used to control respiratory disease in swine

Rumensin® monensin sodium widely used for more efficient beef production

Tylan® tylosin an agricultural antibiotic used in swine, cattle, and poultry

* For Micotil product label, including the boxed warning, see www.elanco.com or call 1-800-428-4441.

The product names appearing in these tables are U.S. approved products (except where indicated) and U.S. trademarks. There are different product names and additional products marketed in other countries.

Product Pipeline

Our pipeline for new product introductions is one of the healthiest in the pharmaceutical industry, thanks to our world-class scientists and clinical researchers. While such a strong pipeline may encourage some companies to decrease spending on research and development in favor of other expenditures, we have every intention of maintaining our focus on R&D to ensure that we fulfill our promise to consistently deliver breakthrough products.

Page 12: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �0 –

Lilly Employees

Employees

United States 23,824

Intercontinental 12,397

Europe 6,698

Japan 1,536

In 2004, more than 44,000 people worked for Lilly worldwide. Lilly has sales offices in 89 countries and we market our products in approximately 143 countries. View a detailed version of Lilly’s global presence (540k PDF).

Employees are engaged in a wide range of activities, from information technology to demand realization. About 19 percent of our employees are engaged directly in research and development of new, breakthrough products to address unmet medical needs, while about 27 percent of the employees work to manufacture our existing product line.

Major Business Units

Lilly Manufacturing

In 2004, our global manufacturing operations consisted of 25 sites. We had more than 13,000 manufacturing employees working in Brazil, China, Egypt, France, Germany, Ireland, Italy, Japan, Mexico, Puerto Rico, Spain, the United Kingdom, and the United States. Skilled in the art of making medicine, these employees made and supplied products sold in 143 countries.

Lilly manufacturing consists of complex operations where employees translate deep knowledge of science, chemistry, engineering, production, and numerous other disciplines into the reliable manufacture and supply of high-quality, safe, and effective medicines. Because of the unique challenges associated with making medicine, we place special emphasis on ensuring that our operations are safe in the broadest sense of the word—for patients, employees, the environment, and the communities in which we

operate. This means that the health, safety, environmental, and quality aspects of making medicine are the starting point for all that we do.

In 2004, Lilly made continuing progress in strengthening manufacturing quality while also supporting the launch of new, innovative products. Lilly is fully committed to ensuring compliance with current good manufacturing practices as required by all regulatory agencies that govern our industry. In addition, we are driving a renewed cultural mindset where compliance is the minimum expectation. We are working to build a world-class manufacturing and quality organization.

Lilly Research and Development

Our research division, Lilly Research Laboratories (LRL), is responsible for the discovery, development, and clinical evaluation of potential new pharmaceutical products. LRL also provides ongoing scientific support for marketed products. Discovering and developing innovative therapies for many of the world’s unmet medical needs is at the core of LRL’s mission.

In 2004, LRL consisted of approximately 8,400 people from a wide variety of scientific disciplines. Research and development locations in the United States include three sites in Indiana (Indianapolis, Greenfield, and West Lafayette). In February 2004, Lilly acquired Applied Molecular Evolution, Inc. (AME), to make it a wholly

Corporate Citizenship > Company Profile > The Lilly Difference Extends Across the Globe

The Lilly Difference Extends Across the Globe

Page 13: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

owned subsidiary of Lilly. AME, located in San Diego, California, U.S., is a recognized leader in optimizing and developing human biotherapeutics.

Outside the U.S., our research and development facilities are located in Australia*, Belgium, Canada, China*, England, Germany, Japan, Singapore, and Spain. Lilly conducts clinical research in more than 60 countries.

* joint venture

Elanco Animal Health

A division of Lilly, Elanco Animal Health markets products worldwide to improve the health of animals. Products are marketed primarily to cattle, poultry, and swine producers. With key operations in North America, Europe, the Middle East, Africa, the Asia-Pacific area, and Latin America, Elanco employs about 2,000 people and markets its products in more than 100 countries.

This web-based report is an update of Lilly’s 2004 corporate citizenship report.

The development of this report was influenced by the Global Reporting Initiative (GRI) Guidelines for Sustainability Reporting. The GRI guidelines are designed to meet the needs of diverse stakeholders throughout the world. Although all of the GRI reporting elements are not included in this report at this time, the guidelines are a useful tool for organizing the report and identifying potential areas for improving reporting efforts in the future. For information on locating each GRI element addressed in this website, see the GRI content index.

Data contained in this report are for the 2004 calendar year and include global operations, unless otherwise noted. This report does not include joint ventures, partially owned subsidiaries, leased facilities, outsourced operations, and other items, unless such business arrangements would materially affect the intent of this report. AME, which was acquired in 2004, is not included in the environmental data for 2004. We plan to include at least partial data for AME in next year’s report (2005 data).

Accuracy and Validity of Information

Our financial information is prepared according to the Generally Accepted Accounting Principles in the U.S. and is subject to our own internal accounting control systems as well as external third-party audits.

Lilly uses an internal information technology application to gather health, safety, and environmental (HSE) performance data from our sites around the world. These data are extensively reviewed by internal subject-matter experts in the corporate HSE division. At this time we do not engage third-party services to review our HSE performance data.

Contact Us

We want to know what you think. We encourage you to contact us with your feedback and inquiries on these and any other issues.

Corporate Citizenship > Company Profile > Making A Difference Through Reporting

Making A Difference Through Reporting

Page 14: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

The Lilly Governance Structure and Board

At Eli Lilly and Company, we firmly believe that a strong system of corporate governance is vital to creating long-term shareholder value. To that end, our board of directors is elected by our shareholders to provide direction for our corporation, with a focus on protecting the interests of our principal constituents. The board comprises 12 members, 10 of whom are independent directors. Reflecting Lilly’s diversity in its broadest sense, the board includes people diverse in geography, gender, and ethnicity, representing a mix of backgrounds and experiences.

Lilly’s dedication to corporate citizenship and sustainability is evident at this highest level of the corporation. The public policy and compliance committee of the board of directors reviews the policies and practices of the company, and monitors compliance in areas of legal, social, and environmental responsibility. This committee is composed entirely of independent directors, and supporting corporate staff includes our vice president of corporate affairs.

You can learn more about our board of directors, senior management, and corporate governance at the Corporate Governance portion of this website.

Corporate Citizenship > Structure and Management Systems

Structure and Management Systems

Corporate Citizenship > Structure and Management Systems > Voluntary Initiatives

Voluntary Initiatives

Lilly’s dedication to corporate responsibility is evident through our involvement in several external, voluntary initiatives. We participate in voluntary codes pertaining to business practices, and the pharmaceutical industry in particular, in all geographic regions where we operate. A few of these voluntary initiatives include:• Responsible Care® • OSHA Voluntary Performance Program • Climate RESOLVE • PhRMA Principles for Conduct of Clinical Trials and

Communication of Clinical Trial Results • Lilly Clinical Trial Data Disclosure Registry• PhRMA Code on Interactions with Health Care

Professionals

We also participate in several business associations (see partial listing below).

Responsible Care®

In 2004, Lilly continued its longstanding involvement in the American Chemistry Council’s Responsible Care® initiative. This voluntary program aims at achieving improvements in health, safety, and environmental (HSE) performance at participating manufacturing facilities beyond levels required by the U.S. government. Highlights of Lilly’s efforts in 2004 include progress in implementing the requirements of the initiative’s recently developed Security Code. Lilly has shared facility security plans with

Page 15: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

local law enforcement agencies during on-site visits. We also publish various HSE performance metrics via the Responsible Care metrics website.

Lilly’s manufacturing sites in Kinsale, Ireland, and Speke, U.K., are also members of Responsible Care in their respective countries.

OSHA Voluntary Performance Program

The U.S. Occupational Safety and Health Administration’s (OSHA) Voluntary Performance Program sets performance-based criteria for a managed safety and health system, invites sites to apply, and then assesses applicants against these criteria. OSHA’s verification includes an application review and a rigorous on-site evaluation by a team of OSHA safety and health experts.

On October 16, 2002, the Lilly Technology Center in Indianapolis, Indiana, was awarded “Star” status—the highest level of recognition in this OSHA program. The Lilly Technology Center was able to demonstrate that it has excellent injury reduction and health and safety programs in place. Other U.S.-based Lilly sites are considering participation in this initiative.

Climate RESOLVE

We are an active participant in Climate RESOLVE (Responsible Environmental Steps, Opportunities to Lead by Voluntary Efforts), an initiative involving some of America’s largest companies aimed at voluntarily controlling emissions of greenhouse gases (GHGs) linked to global warming. The Business Roundtable developed Climate RESOLVE in response to President Bush’s challenge to the business community to voluntarily reduce GHG intensity by 18 percent by 2012. Lilly and other companies participating in the program have pledged to seek innovative and cost-effective methods for mitigating GHG emissions while fostering continued economic growth.

PhRMA Principles for Conduct of Clinical Trials and Communication of Clinical Trial Results

These voluntary principles, adopted by the Pharmaceutical Research and Manufacturers of America (PhRMA), set forth rules that subscribing companies should follow to protect the safety of research participants wherever the companies conduct clinical trials. As a subscribing company, Lilly discloses publicly all medical research results that are significant to patients, health care providers, or payers—whether favorable or unfavorable to a Lilly product—in an accurate, objective, and balanced manner in order for our customers to make more informed decisions about our products.

Lilly adhered to many of these clinical trial, patient protection, and ethical standards prior to the PhRMA code being adopted and provided leadership within PhRMA to adopt the standards. Lilly also believes that there are other parts of the code, such as principles addressing trials outside the United States, that may require more attention as situations and concerns evolve in the external environment.

Lilly Clinical Trial Data Disclosure Registry

In 2004, Lilly launched a new clinical trial registry, www.lillytrials.com, to publicly disclose the result summaries of Lilly-sponsored clinical studies (Phase I through Phase IV) conducted on Lilly marketed products. We will also post information on the initiation of all of our Phase II, III, and IV clinical trials, making Lilly the first pharmaceutical company to commit to post these trials at their inception and append results when completed.

For each posted trial, Lilly will include summary results of trial designs and methodology. Results are posted whether they are favorable or unfavorable to any Lilly product. For studies that are under review by peer-reviewed journals that prohibit pre-publication results disclosure, the results will be posted on the registry at the time of the publication. We will rely on a third-party auditor to verify that our registry has met its commitments. Lilly already posts studies being conducted for serious and life-threatening diseases to the U.S. government’s website, www.clinicaltrials.gov.

PhRMA Code on Interactions with Health Care Professionals

This voluntary code, which provides guidance on how the pharmaceutical industry interacts with physicians and other health care professionals, took effect on July 1, 2002. This code describes how member companies may reasonably and appropriately promote their products to, and otherwise interact with, individuals who can recommend or prescribe their use. Lilly actively participated in the development of the code within PhRMA, and adopted it promptly.

Business Associations

Lilly has memberships in a number of industry and business associations, as well as national and international advocacy organizations, that help us keep abreast of best practices, provide us with valuable feedback, and enable us to be active in citizenship-related activities and issues (see partial listing below).

American Chemistry Council: The American Chemistry Council represents the leading companies engaged in

Page 16: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

the business of chemistry. The council is committed to improved environmental, health, and safety performance through Responsible Care, common sense advocacy designed to address major public policy issues, and health and environmental research and product testing.

Association of British Pharmaceutical Industries: ABPI is the trade association for approximately 100 companies in the United Kingdom that produce prescription medicines. Its member companies research, develop, manufacture and supply more than 90 percent of the medicines prescribed through the U.K. National Health Service.

Biotechnology Industry Organization: BIO is the trade association representing companies specializing in healthcare, food and agriculture, and industrial applications of biotechnology. BIO members work to benefit mankind by expanding the boundaries of science.

Business Roundtable: The Business Roundtable is the association of chief executive officers of leading U.S. corporations, committed to advocating public policies that foster vigorous economic growth, a dynamic global economy, and a well-trained and productive U.S. workforce essential for future competitiveness.

Council of the Americas: The members of this business organization share a common commitment to free trade and open markets throughout the Americas. Industry sectors represented in the council include manufacturing, natural resources, technology, communications, health care and pharmaceuticals, and financial services.

European Federation of Pharmaceutical Industries and Associations: EFPIA is composed of 29 national pharmaceutical industry associations and 43 leading pharmaceutical companies, all involved in the research, development, and manufacturing of medicinal products in Europe for human use. EFPIA’s mission is to promote pharmaceutical research and development and the best conditions for companies to bring to market medicines that improve human health and the quality of life around the world.

Farmaindustria: The national association of the pharmaceutical industry in Spain, Farmaindustria has nearly 250 member companies. The group has a number of technical committees that provide support to member firms and coordinate activities with the government and other stakeholders.

Global Environmental Management Initiative: GEMI is a nonprofit organization of leading companies with the mission of providing a forum to help businesses improve environmental, health and safety performance, increase shareholder value, and strengthen corporate citizenship.

International Federation of Pharmaceutical Manufacturers and Associations: IFPMA is a nonprofit, nongovernmental organization representing major global research-based pharmaceutical and vaccine companies from both developed and developing countries.

Japan Pharmaceutical Manufacturers Association: JPMA is the national association of the research-based pharmaceutical industry in Japan. JPMA works to promote greater public understanding and finding solutions to pharmaceutical industry issues. JPMA is a member of the International Federation of Pharmaceutical Manufacturers and Associations.

Pharmaceutical Research and Manufacturers of America: PhRMA represents the country’s leading research-based pharmaceutical and biotechnology companies, which are devoted to developing medicines that allow patients to live longer, healthier and more productive lives.

Pharmachemical Ireland: PharmaChemical Ireland, formerly known as The Irish Pharmaceutical and Chemical Manufacturers Federation, is committed to furthering the success and growth of the pharmaceutical industry in Ireland.

The Conference Board: This board creates and disseminates information about management and the marketplace to help businesses strengthen their performance and better serve society. The board conducts research, convenes conferences, forecasts, assesses trends, publishes information and analysis, and brings executives together to learn from one another.

Verband Forschender Arzneimittelhersteller (Association of Research-based Pharmaceutical Companies): The trade organization of research-based pharmaceutical companies in Germany, VFA, works to promote therapeutic progress and the development of high-quality pharmaceuticals that meet society’s needs.

Page 17: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

The nature of Lilly’s business, together with its global reach, means that a vast array of people, institutions, government agencies, and nongovernmental organizations are interested in the choices it makes and actions it takes. The varied backgrounds and interests of our stakeholders mean they can often present us with fresh ideas for improvement. By listening and responding to our stakeholders’ concerns, Lilly can improve its transparency and the way it does business.

Who Are Our Stakeholders? • Alliance partners • Board of directors • Business partners • Community leaders and members • Employees • Governing/authorizing organizations • Health maintenance organizations (HMOs) • Hospitals • Insurance companies • Investment community • Managed care facilities • Media • Opinion formers • Patients • Payers • Pharmacies • Physicians • Prescribers • Regulatory agencies• Service providers • Shareholders • Special interest groups • Suppliers • Trade associations

Engaging in Dialogue with Our Stakeholders

We use a variety of techniques to communicate with our stakeholders, and we continue to look for ways to improve how we receive feedback. This web-based report is an important method for directly communicating with you and for soliciting your comments and questions.

Other successful ways we have found to engage in dialogue with interested parties include:• The Lilly Answer Center – This call center provides U.S.

customers with accurate information about Lilly and its products. On staff we have bilingual employees and also a language interpreter service available.

• Community Advisory Panels (Indiana facilities) – Our manufacturing facilities in Indianapolis, Clinton, and Lafayette, Indiana, have established active Community Advisory Panels made up of community leaders and facility staff. The panels meet regularly throughout the year to discuss items of mutual interest to the community and to Lilly. These groups serve as a forum for community leaders to learn what’s happening at Lilly facilities, and to recommend and implement activities or programs that help meet mutual needs.

• Neighborhood Meetings – Lilly employees organize visits of neighbors to several Lilly plant sites, providing community members the opportunity to interact directly with facility managers and other employees. Staff members from many of our locations help local emergency planning committees gather information and conduct training to enhance community safety.

• Tours for Business Guests – The tour guides at our Indiana sites are front-line employees who make Lilly products, support manufacturing and administrative operations, or are involved in research. They provide guided tours of Lilly facilities to business guests who are interested in learning more about who we are and what we do.

• Employee Surveys – Building upon past efforts, which have helped us tailor our professional development and training resources, Lilly continues to seek input from the dedicated employees throughout our corporation. We are implementing a new survey method, beginning in 2005, which will involve contacting employees from most of our business units annually on a staggered basis throughout the year, so that corporatewide results can be reported monthly. This will provide our senior management with more timely feedback on employee attitudes and opinions.

• Voice of the Alliance – We began this survey in 2000 due to an increased awareness of the importance of our

Corporate Citizenship > Structure and Management Systems > Engaging with Our Stakeholders

Engaging with Our Stakeholders

Page 18: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

research and manufacturing alliances. Our Office of Alliance Management performs about 30 surveys per year, including over 2,000 respondents, asking both our partners and the Lilly employees involved in partnerships how relationships could be improved. Our alliance managers use results from this diagnostic survey to determine how well the partnership is performing on 14 different measures. These data are then used to design

and implement interventions targeted at improving the probability of success of the partnership.

• Other Lilly Surveys – We want to know what each of our stakeholders is thinking. We gather information from many other “Voice” surveys, including Voice of the Customer, Government, Shareholder, and Payer. We use this information to improve our performance and to deliver on our promise to be a reliable and trustworthy company.

The pharmaceutical industry and Lilly are being asked a number of tough questions.

Below, we have identified a few of the ways that we are responding to the primary issues that concern you. As always, we encourage you to contact us with your feedback so that we are aware of your concerns and can address them. • Public Sector Needs • Shareholder Proposals • Importation and Counterfeiting • Access to Medicines

• LillyAnswers®

• Lilly Cares™ • Partnership for Prescription Assistance (PPA)• Xigris Treatment Support Program • Gemzar, Alimta, and Humatrope • Multi-drug Resistant Tuberculosis Treatment

(MDR-TB)• Lilly's Principles of Medical Research • Thimerosal • Zyprexa • Contact Us

Public Sector Needs

Lilly’s commitment to innovation and patient care makes us a valuable partner for public-sector payers such as

Medicaid. We actively seek to provide for the needs of our customers and are able to offer a variety of resources to improve patient care and financial outcomes in the public health sector. To best address public health needs, Lilly established a business-to-government organization in 2002. This organization’s mission is to align Lilly resources to help public-sector customers achieve the optimal balance of quality, access, and cost of care for patients who use public sector health care programs. Important components of this mission include partnering with state Medicaid agencies on disease management and patient care quality improvement projects, tailoring our patient assistance programs to meet local health care needs, and working for unrestricted access to medicines for people with mental illness.

We have developed partnerships with many states and local health care authorities over the past three years to support our business-to-government mission. Some key programs of this type are highlighted below. Currently, we have fully implemented 26 programs in 24 states. • Since 2001, Lilly has been working with the Arkansas

Medicaid agency on a disease management initiative that focuses on an intensive patient education program for people with diabetes. Through the Arkansas Diabetes Control Program, patients are taught about how weight, body mass index, blood pressure, and a high hemoglobin A1c level affect their disease. Participants receive detailed guidance about blood glucose monitoring, foot care,

Corporate Citizenship > Structure and Management Systems > Key Stakeholder Issues

Key Stakeholder Issues

Page 19: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

and other health behaviors. The program has resulted in measurable reductions in depression, blood pressure, blood sugar level, and other disease complications among participating patients. Concurrently, Lilly has partnered with Arkansas to significantly improve the infrastructure for diabetes treatment and has established 12 American Diabetes Association-accredited education centers across the state.

• In an effort to help state Medicaid departments manage pharmaceutical spending without restricting patients' access to appropriate medicines, Lilly established a pilot partnership with the state of Missouri in 2003. The Missouri Mental Health Medicaid Pharmacy Partnership Program (MHMPP) was made available to all Missouri Medicaid prescribers to identify inappropriate or inefficient use of behavioral health medications within the Medicaid system. MHMPP uses nationally accepted guidelines for clinical practice to identify inappropriate or inefficient prescribing. The physician is identified for educational communications aimed at changing his or her prescribing behavior. Benefits of MHMPP include increased adherence to clinical practice guidelines and evidence-based practices, which then lead to potentially superior clinical outcomes. During the first full year of the partnership, the state's Medicaid program saw a decrease of 98 percent in the number of patients who are prescribed the same mental health medicines from multiple doctors, and a 43 percent reduction in the number of children who take three or more psychotropic medicines. The program allowed Missouri to save $7.7 million in taxpayer-funded Medicaid costs. Based on the initial success in Missouri, Lilly is actively partnering with 15 other states on MHMPP.

We continue to learn from these projects how best to meet the needs of public-sector customers and the patients they serve.

Shareholder Proposals

Shareholders are informed each year in the proxy statement about the deadline for submitting a proposal for consideration at the annual meeting of shareholders, which typically occurs in April. The deadline for submitting a proposal changes from year to year in accordance with our by-laws, but it is identified in our proxy statement and is usually in early November. All properly submitted shareholder proposals are reviewed by management and the appropriate committee of the board of directors, and the shareholders submitting the proposal are contacted to discuss their submission in order to understand and, if possible, address the concern that precipitated the shareholder proposal.

We received six shareholder proposals in 2004, all of which were included in the proxy statement. None of the six proposals were adopted by the shareholders.

1. A proposal requesting that the board establish a policy of separating the roles of chairman and CEO and expressing concern about access to medicines.

Submitted by: The Congregation of the Sisters of Charity of the Incarnate Word in Houston, Texas

Lilly Chairman Sidney Taurel responded with the following statement at the annual meeting in April:

“We already have a governance structure that ensures independent oversight of management—and the chairman. Our board includes �0 independent, nonemployee members. Charlie Golden and I are the only exceptions.

Our independent board members—under the direction of the chair of the board’s compensation committee who also serves as presiding director—meet privately after each board meeting.

Each year, they also meet in a closed session to review the company’s performance and my performance. Dr. Beering has served as chair of the compensation committee and as presiding director.

Under his leadership, the board formalized the role of the presiding director who not only chairs discussions of the board when the chairman is not present but also serves as a formal liaison between the board and the chairman—and reviews information sent to the board and meeting agendas.

After Dr. Beering retires, Mrs. Horn will assume those responsibilities. She will lead a very able board, an independent board, in its efforts to help us balance our stakeholders’ interests.

With that independent leadership, the board’s public policy and compliance committee actively oversees issues like access to medicines.

With this committee’s support, we introduced the LillyAnswers program for low-income seniors who do not have public or private prescription-drug coverage. Seniors in this program pay only a $�� administrative fee for a �0-day supply of Lilly retail prescriptions. Last year, some ���,000 seniors were enrolled in LillyAnswers and received prescriptions valued at $��� million.

Through our Lilly Cares program, we offer free Lilly products to patients who are otherwise unable to obtain medicines they need. In �00�, we responded to more than ��0,000 requests through physicians—and provided $��� million in free products to people in need through the program. Those kinds of company initiatives are having a growing impact.

Last year, the U.S. pharmaceutical industry provided Americans more than �� million free prescriptions with a wholesale value of nearly $�.� billion. But we recognize that

Page 20: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

many eligible patients are not aware of those programs or various public-sector efforts—or find them confusing.

To fill that gap, our primary trade association—the Pharmaceutical Research & Manufacturers of America, or PhRMA—just launched a clearinghouse for all prescription-support programs that is called the Partnership for Patient Assistance.

This program’s national call center can direct patients to some ��� programs, including more than �00 pharmaceutical company initiatives. Based on pilot tests in a number of states, we believe this new clearinghouse will really, literally, help millions of people.

In addition, we have been strong advocates of the passage and implementation of the new Medicare drug benefit program. We are also working with state officials and community leaders on the Rx for Indiana program here in our home state that has initially qualified almost �0,000 patients for prescription-medication assistance in just over one month.

With the support of the board’s independent public policy and compliance committee, we are not only on the right track with programs like LillyAnswers and Lilly Cares but are also promoting change through our leadership at PhRMA and through our efforts with policymakers, patient advocates, and others.”

2. A proposal requesting that the board adopt a policy not to constrain reimportation of prescription drugs into the United States by limiting the supply of drugs in foreign markets and to prepare a report to shareholders on that policy at reasonable cost and omitting proprietary information by September 2005.

Submitted by: The American Federation of State, County, and Municipal Employees

Lilly Chairman Sidney Taurel responded with the following statement at the annual meeting in April:

“To begin with, the importation of pharmaceuticals into the U.S. outside of formal regulatory channels is illegal. This shortcut exposes Americans to threats of counterfeit medicines, product tampering, and product integrity issues. We are already seeing a growing evidence of those risks.

After gathering extensive input from all interested parties, the U.S. Department of Health and Human Services Task Force on Drug Importation confirmed that importation would ‘open the door’ for potentially dangerous counterfeit products.

Canadian officials have said that they will not establish regulatory processes for medicines passing through Canada on their way to other countries. Likewise, U.S. officials have

said they cannot certify the safety of those products under both the Clinton and the Bush Administrations.

What’s more, the Internet masks the true sources of medicines that people obtain through its ‘virtual world’. For instance, one of the largest Internet pharmacies—Canada Rx—has acknowledged that it is turning to suppliers in India for products used to fill U.S. prescriptions.

Due to the unknowns of importation, it is increasingly clear that Americans prefer prescription-assistance initiatives in this country. For example, a pharmaceutical industry program—Rx for Illinois—has helped pre-qualify more than �00,000 patients for discounted prescriptions. But the State of Illinois’s importation website has only filled just over �,000 prescriptions at last count.

Now, in coming to the issue of pricing, this proposal would have a second negative effect on Lilly shareholders and on patients. The Canadian government imposes tight price controls on medicines. The price differentials are not a result of a Lilly policy; it is the result of the price controls in Canada. So, the importation of medicines from Canada would effectively result in the importation of its price controls.

Decades of experience in countries like Canada, France, Germany, and Japan have proven that price controls discourage R&D investments and undermine pharmaceutical innovation.

Consequently, importation would threaten the innovation-based strategy that has enabled Lilly to develop so many outstanding new products for patients. And it would undermine the free-market environment that has made this country the global leader in medical innovation.”

3. A proposal requesting that the board prepare a report on the impact of limiting the availability of products to Canada.

Submitted by: The Minnesota State Board of Investment

Lilly Chairman Sidney Taurel responded with the following statement at the annual meeting in April:

“… we already disclose material financial and legal risks in our filings with the Securities and Exchange Commission. For example, we have disclosed that Lilly—like several of its competitors—has been named in lawsuits regarding its supply-chain practices.

Those practices are well established—and comply with the laws and regulations that govern them. They are also essential to the public interest. Our rigorous supply-chain management ensures that the right quantities of our products are available to patients in more than ��0 countries worldwide—and that patients can depend on the safety of those products.

Page 21: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

We believe the lawsuits challenging our supply-chain practices, which were referred to in the resolution, are without merit—and will not have a material effect on our operations. We do not think they warrant a special report.

Now, let me add a counterpoint to this proposal. The best solutions to pharmaceutical access are not coming through litigation—but through cooperation. Thoughtful, creative partnerships among public officials, community leaders, nonprofit organizations, and companies are working. Examples include the Rx for Indiana program I mentioned earlier and I would urge you to make sure your members check their eligibility for this program. Similar initiatives are underway in eight other states—with others on the ‘drawing board.’ And we are very excited that those state initiatives are being linked together through PhRMA’s national ‘Partnership for Patient Assistance.’ Let’s work together to achieve lasting solutions.”

4. A proposal requesting that the board prepare a report on the company’s political contributions and making a statement expressing appreciation for the company’s willingness to work productively with their organization.

Submitted by: The Sisters of Mercy Regional Community of Detroit Charitable Trust

Lilly Chairman Sidney Taurel responded with the following statement at the annual meeting in April:

“We are pleased that our discussions have been productive—and that we are providing information that addresses your organization’s questions. Let me add that Lilly is committed to participating in the political process as a responsible corporate citizen.

We have an obligation to our shareholders to take part in discussions of policies affecting our industry. As we all know, our industry is subject to extensive government regulation. Moreover, we have an obligation to the public to apply our deep expertise to policy discussions about health care and pharmaceutical innovation.”

5. A proposal requesting that the board adopt a senior executive compensation policy based on performance-based stock options.

Submitted by: The Amalgamated Bank, Longview Collective Investment Fund

Lilly Chairman Sidney Taurel responded to the proposal with the following statement at the annual meeting in April:

“Our executive-compensation policy has long been grounded on the principle that our programs have to address two related goals. First, they must help the company attract and retain strong, results-oriented leadership. And, second, they

must foster a balanced commitment to delivering optimal near-term results—and maintaining the long-term focus necessary for success in the pharmaceutical industry.

With the guidance of the compensation committee and its independent consultant, we have just revised our executive-compensation program based on compensation trends for leadership talent—as well as pharmaceutical industry performance trends.

As you may have seen in our proxy, the value of our top people’s equity opportunities for �00� has declined—in line with industry trends. In addition, we are decreasing our use of stock options in favor of stock grants—or Performance Awards—that are based on company and personal performance.

Meanwhile the smaller proportion of executives’ equity awards delivered as stock option grants will still be awarded according to personal performance. Of course, our corporate results will be a major factor in the ultimate value of those grants.

We believe the board has struck the right balance on behalf of pay for performance. At some point, the stock options recommended in this proposal could be useful. Our compensation committee will continue to evaluate them. But we think the committee needs the flexibility to consider any and all approaches that would motivate strong performance in the near and long term.”

6. A proposal requesting that the board take specific actions to limit animal testing.

Submitted by: Gloria Eddie, Meredith Page, and James Moran

Lilly Chairman Sidney Taurel responded to the proposal with the following statement at the annual meeting in April:

“We understand and respect the profound concerns about animals’ well-being that are at the heart of this proposal. Wherever possible, as we said, we are replacing animal testing with other research techniques that can help predict the safety and efficacy of drug candidates. But the scientific community still believes animal tests are necessary to confirm those results in some cases.

Regulatory bodies such as the FDA require that drug candidates must be tested in animals before they are tested in humans. So I would strongly support the work you are doing with the FDA to change those requirements. Our scientists must conduct animal studies of all our drug candidates. During those studies, we are making every effort to minimize the number of animals we use. We are absolutely committed to treating them humanely—and reducing their distress. And—very importantly—we continue to seek alternatives to animal testing wherever we can.”

Page 22: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �0 –

Importation and Counterfeiting

Lilly recognizes that there is growing political and public momentum for legalizing the importation of prescription drugs from Canada and other countries. Lilly opposes importation for three key reasons. Drug importation poses a clear danger to the U.S. prescription drug supply, and it threatens our ability to develop new medicines. Importation also has the potential to harm the U.S. economy through the loss of jobs and investment by the research pharmaceutical industry.

Importantly, every federal agency responsible for drug safety that has looked at importation has voiced safety concerns. Most Americans who buy drugs from Canadian websites assume that these drugs come from Canada. However, growing evidence suggests that drugs are being shipped from other countries, through Canada, into the United States. Canadian health authorities do not regulate medicines transshipped through Canada; thus the safety of these products cannot be ensured.

In an effort to ensure appropriate Canadian domestic supply and to address increasing levels of illegal importation of pharmaceuticals from Canada and the patient safety issues caused by importation, Lilly introduced a program to allocate the supply of its products to Canadian wholesalers based on Canadian patient demand.

The prescription drug counterfeiting business has become a highly sophisticated, globalized endeavor, encompassing highly specialized distribution syndicates that deliver high-quality replicas of packages containing counterfeited drug product. Counterfeit product is largely produced in Asia and destined for markets around the world, including numerous countries targeted as potential U.S. importation sources, if importation were to be legalized. Lilly tests the counterfeit materials we recover during investigations and finds wide variance in quality and sterility of the end product. Some counterfeit materials have no active ingredient, some contain too much or too little active ingredient, some have unrecognizable content, some contain other products, and many are made in unhygienic settings. Legalizing drug importation would likely increase exponentially these sophisticated counterfeiting activities.

To combat counterfeiting, Lilly has initiated a broad range of actions, including the addition of enhanced anti-counterfeit technologies for Lilly products and packaging in our retail product portfolio and changes in our distribution system to protect patients as well as product integrity. Additionally, we work closely with government and law enforcement officials to aggressively pursue and litigate against those who manufacture and market counterfeit medicines.

Access to Medicines

Access to medicines is a growing concern, both in the United States and abroad, and we understand how important this issue is to a large number of our stakeholders. We are responding by supporting actions that increase drug coverage and by researching opportunities to allow greater access to affordable health care coverage. We recognize the need to develop programs that respond to the rising costs of health care, especially for our older and underinsured populations.

Below is more information about these and some of our other major programs that show our commitment to assist with access to treatments and drugs. In addition to the following initiatives, we have instituted access programs in more than two dozen states and several other countries. Visit our Access to Medicines web page for more details.

LillyAnswers®

LillyAnswers was implemented to help address concerns about growing medical expenses for senior citizens without prescription drug coverage. For those who are eligible, the program offers a flat $12 administration fee for a 30-day supply of any Lilly retail drug, which could provide up to $7,000 in annual savings. U.S. citizens who are uninsured and whose annual income falls below 200 percent of the federal poverty level (approximately $19,000 for an individual and approximately $25,000 for a household) are usually eligible for LillyAnswers. Medicare-enrolled seniors and persons with disabilities also are eligible to apply for a LillyAnswers card. LillyAnswers currently has more than 200,000 members and, in 2004, provided more than 828,000 prescriptions valued at $141 million.

In 2004, Lilly conducted outreach efforts to increase awareness of the program and enroll eligible Medicare beneficiaries in the LillyAnswers program. These efforts included:• Advertising in multiple publications targeting potential

LillyAnswers customers and caregivers, including seniors, African Americans, Hispanics, and Native Americans

• Print media impressions through newspaper stories nationwide

• Prominent display of LillyAnswers information throughout the Lilly.com website and placement on leading industry websites, including HelpingPatients.org

• Lilly-sponsored events across the country to provide information and enroll eligible individuals

• Lilly-sponsored booths at meetings where eligible individuals or caregivers were likely to be in attendance

• Providing information for distribution at local, regional, and national meetings and conventions

• Partnering with the HoosierRx Program using Lilly retiree volunteers to distribute information and enroll eligible seniors and conducting an extensive statewide

Page 23: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

media campaign to promote partnership through television, radio, and newspapers

Additionally, Lilly has integrated its LillyAnswers program into the Medicare discount card program, allowing even more patients to benefit. More information about this program is available on our Direct Patient Assistance website, or you may call 1-877-RX-LILLY (1-877-795-4559).

Lilly Cares™

As part of the company’s efforts to provide access to our products for all Americans regardless of their ability to pay, we created a program to offer free medication, through physicians, to patients who are otherwise unable to obtain our products. Lilly Cares assists patients who are uninsured and whose income is less than 200 percent of the federal poverty level (approximately $19,000 for an individual and $25,000 for a household). In 2004, the Lilly Cares program responded to 275,000 requests, valued at $167 million, for Lilly products. Most Lilly products (except controlled substances) are available through the program.

Eligibility is determined on a case-by-case basis in consultation with each prescribing physician. Eligibility is based on the patient’s inability to pay and lack of third-party drug payment assistance, including insurance, Medicaid and government, community, or private programs. Patients can access the program through their physicians.

Partnership for Prescription Assistance

In 2004, Lilly helped establish the Partnership for Prescription Assistance (PPA), which brings together America’s biopharmaceutical research companies, health care providers, patient advocacy organizations, and community groups to help patients who lack prescription coverage in the United States get the medicines they need. Through a toll-free telephone number and user-friendly website, PPA offers a single point of access to more than 275 public and private patient assistance programs, including more than 150 programs offered by pharmaceutical companies. Patients in need may qualify for programs that offer prescription medicines for free or nearly free. Outreach efforts increase awareness of these programs and boost enrollment for those who are eligible.

Xigris® Treatment Support Program

Xigris is the first and only pharmaceutical treatment indicated for the reduction of mortality in adult patients with severe sepsis who have a high risk of death. This product is now available in 56 countries around the world. To assist uninsured people who might need this life-saving treatment, it is provided at no cost through the Xigris Treatment Support Program. Pharmacists, social workers, and other health care

providers can access information on the program via the Xigris website.

Gemzar, Alimta, and Humatrope

Lilly provides assistance with obtaining reimbursement and product supplies through programs designed specifically for these particular products.

Multi-drug Resistant Tuberculosis Treatment

Treating tuberculosis (TB) is a lengthy, complicated, and costly process. Sadly, the majority of cases worldwide are in poverty-stricken areas where the necessary infrastructure and medical expertise are not available to deliver and monitor the complex treatment regimes. In addition some people cannot afford the cost of the lengthy treatments. In many parts of the world inappropriate or incomplete treatment has caused new strains of TB to evolve that are resistant to previous therapies. Every year there are 400,000 new cases of multi-drug resistant TB (MDR-TB) in more than 100 countries including Russia, Peru, the Philippines, and increasingly in Africa. The World Health Organization (WHO) estimates that before dying the average MDR-TB patient may infect another 20 people. According to David Heymann, M.D., representative of the Director-General for Polio Eradication at the WHO, “though little known, MDR-TB represents one of the most severe threats to public health today. Without proper treatment and surveillance now, MDR-TB can easily become a global health emergency in years to come.”

Lilly produces two antibiotic drugs, capreomycin and cycloserine, which have long been used to fight MDR-TB.

Dr. Paul Farmer, a professor at Harvard Medical School and the Division of Social Medicine and Health Inequalities at Brigham and Women’s Hospital, and his colleague, Dr. Jim Yong Kim, an internationally known MDR-TB expert and director of HIV/AIDS at the WHO, had received a grant from Lilly in 1999 to develop an MDR-TB protocol to be tested in Peru. In addition, in 2000 a partnership was developed with Médecins Sans Frontières (Doctors without Borders) and the WHO to ensure larger access to second-line TB drugs. And in 2002, The Green Light Committee (GLC) was established at WHO to ensure proper and rational use of those drugs. Through these efforts and collaborations, Lilly became aware of the urgency of the problem and began to develop a unique, many-faceted program to address it.

In June 2003, Lilly announced a $70 million partnership with the WHO; the U.S. Department of Health and Human Services’ Centers for Disease Control and Prevention (CDC); Brigham and Women’s Hospital, an affiliate of Harvard Medical School; Purdue University; and the International Council of Nurses to battle this growing public health threat. At the core of the partnership is increasing the

Page 24: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

supply and proper use of capreomycin and cycloserine, supporting efforts to enhance disease surveillance and health care worker training, and transferring proprietary Lilly manufacturing technology to countries where MDR-TB is most prevalent.

Some of the important accomplishments of the Lilly MDR-TB partnership are highlighted in the following sections.

Increasing Supply of Capreomycin and Cycloserine

A recently completed $7 million expansion of Lilly’s manufacturing facility in Speke, an operation south of Liverpool in the United Kingdom, has doubled the company’s capacity for producing capreomycin. We have also signed agreements with third-party manufacturers to produce dosage formulations of both capreomycin and cycloserine. These measures have increased supply to provide drugs for 30 WHO-approved projects in 23 countries, including Bolivia, Egypt, Georgia, Haiti, Kyrgyzstan, Malawi, Nepal, and Syria, to name a few.

Manufacturing Technology Transfer

Lilly has signed technology transfer agreements with companies in India (Shasun Chemical and Drugs, Ltd.), South Africa (Aspen Pharmacare Holdings, Ltd.), and China (Zhejiang Hisun Pharmaceutical Co., Ltd.). In addition to making available the necessary manufacturing know-how, Lilly is providing financial assistance for the purchase of equipment and/or conversion of manufacturing facilities and technical training for various steps in manufacturing processes. Currently, the companies are in various stages of facility conversion and initial production: • Shasun has already produced its first validation batches

of cycloserine. A commercial batch is to be shipped to South Africa in mid-2005.

• The first validation production batch of capreomycin will be produced by Hisun Pharmaceutical in July 2005, and commercial batches could be ready by the end of December 2005.

• Aspen Pharmacare in South Africa is in the process of building a new site to host the sterile facility required for the production of capreomycin vials. Lilly has committed to purchase a lyophilizer to equip the plant, and a validation batch of product is expected by early 2007.

Lilly is also engaged with Purdue University in West Lafayette, Indiana, U.S., to develop a training course specific for the manufacturing sites partnering with Lilly. The Purdue team has visited both the plants in China and India to assess local training needs and has designed programs for each of the partners. In 2004, a group of Indian and Chinese scientists and production staff successfully completed a two-week course, with activities at Purdue and at Lilly facilities in Indianapolis. A followup two-week course is scheduled for August 2005. Purdue is

also establishing direct links to Chinese, Indian, and South African universities.

Prevention, Treatment, and Surveillance

Through funding from Lilly:• Harvard University/Partners in Health has established

an MDR-TB research and training program in Tomsk, Russia. As a part of the training, health care workers from Russia and other countries of the former Soviet Union with high burdens of MDR-TB were trained in treating the illness, while research data obtained are being used globally to improve and potentially develop new treatments. The first class completed training in January 2004 and additional classes were held during 2004-2005. The training course received official accreditation by the Russian Ministry of Health in 2004.

• The International Council of Nurses has published TB and MDR-TB treatment guidelines for nurses around the world, launched in May 2004. The format is a pocket version specifically tailored to provide practical clinical guidance on how to prevent and treat TB and MDR-TB. A particular focus of this publication is prevention of drug resistance and management of side effects, which often are responsible for patients’ abandoning the treatment process.

• CDC developed a laboratory-based electronic surveillance system to monitor resistance to drugs used for treating MDR-TB in Russian patients.

• The WHO has developed software to standardize data collection of patient outcomes at Green Light Committee-approved treatment sites. Strengthening of data management will assist in improving logistics, training, and drug management (i.e., better forecasting of drugs needed at treatment sites). Studies conducted in 2004 also verified the cost-effectiveness of the WHO’s efforts to treat MDR-TB in the Philippines and Russia.

• The World Medical Association, in close collaboration with TB experts, WHO and national health organizations, is developing a physicians’ distance-learning course on clinical management of TB and MDR-TB.

• The International Hospital Federation is drafting a syllabus for training hospital managers on the managerial and policy aspects of TB prevention and control.

• The International Federation of Red Cross and Red Crescent Societies (IFRC) is developing communication plans to reduce stigma and discrimination associated with TB. The IFRC volunteers will also provide psychological support and care assistance for home-bound patients, to ensure that patients comply with treatment protocols designed by TB specialists.

Lilly is pleased with the continuing progress of this partnership and believes that it will improve health care worldwide while establishing a model for bringing together public and private organizations to address global public health threats.

Page 25: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

Lilly’s Principles of Medical Research

Lilly creates and delivers innovative medicines that enable people to live longer, healthier, and more active lives. Lilly carefully conducts medical research to generate important information regarding those medicines and promotes them for the indications for which they have been approved. Moreover, Lilly thoughtfully aligns its medical research and marketing activities to provide “Answers That Matter” to its customers.

We sponsor and support medical research for the purpose of answering scientific questions that are important and relevant to our customers. The medical component of Lilly is accountable for the design, approval, conduct, and scientific disclosure of medical research sponsored by Lilly. Lilly makes payments to health care providers only for legitimate, reasonable, and necessary services and in amounts that are no more than the fair market value for the services performed. Lilly discloses publicly all medical research results that are significant to patients, health care providers, or payers—whether favorable or unfavorable to a Lilly product—in an accurate, objective and balanced manner in order for our customers to make more informed decisions about our products.

Thimerosal

Lawsuits have been filed against Lilly and other manufacturers claiming that there is a link between the vaccine preservative thimerosal and autism. Studies as recent as 2004 continue to show there is no scientific evidence that supports such a link. In fact, the scientific evidence indicates exactly the opposite.

In a report published in the October 1, 2003, Journal of the American Medical Association, “Association Between Thimerosal-Containing Vaccine and Autism,” the medical researchers concluded: “We found no evidence of an association between thimerosal-containing vaccines and autism in children compared with children who received the same vaccine formulated without thimerosal.” This is the largest, most scientific study to date, based on a review of 467,450 Danish children.

Studies released in 2002 by the World Health Organization’s Global Advisory Committee on Vaccine Safety and the University of Rochester Medical Center also have confirmed the safety of thimerosal. In the University of Rochester study, researchers found that ethyl mercury

(the kind of mercury that is in thimerosal) has a half-life in the blood of about 7 days versus methyl mercury with a half-life of 45 days. This quick elimination suggests that ethyl mercury would not accumulate in the body, according to researchers at the Vaccine Safety Institute.

Lilly understands that autism is a devastating diagnosis for any family. But in the end, we want to ensure that science, not politics, will find the causes of autism, the best possible treatments for it, and, hopefully, a cure.

Zyprexa®

Over the past year, product liability cases have been filed against Lilly claiming that its antipsychotic medication Zyprexa had caused patients a variety of injuries. Most of these cases allege that Zyprexa caused diabetes or high blood glucose levels. As of December 10, 2004, approximately 125 lawsuits had been filed, representing approximately 300 claims. Along with those claims were several thousand “tolling agreements” that extended the deadline for potential claimants to file a lawsuit. This type of litigation has included other manufacturers of atypical antipsychotics including Risperdal® and Seroquel®.

Questions have arisen whether there is an increased risk of diabetes in patients who take Zyprexa. It is important to note that, compared with the general population, patients with serious mental illness have a substantially greater rate of diabetes among patients with serious mental illness (2 to 4 times greater). Available data do not support a causal link between Zyprexa and diabetes. Since Zyprexa was introduced in 1996, it has been prescribed to more than 16 million people worldwide.

In 2003, the FDA informed all sponsors of marketed atypical antipsychotic medications that the product labels should be updated concerning diabetes adverse events. The agency recognizes that the relationship between atypical antipsychotic use and hyperglycemia-related adverse events is not completely understood, but epidemiological studies have suggested some increased risk. By the end of 2004 all manufacturers had complied with this request.

Contact Us

We want to know what you think. We encourage you to contact us with your feedback and inquiries on these and any other issues.

Page 26: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

Lilly is driven by its values. Our mission, vision, core values, and Corporate Citizenship Statements of Conduct are featured elsewhere in this report. Here are other subordinate policies, practices, and programs that influence our economic, environmental, and social performance:• Corporate Health, Safety, and Environmental (HSE) Policy• Organizational Structure and Key Individual

Responsibilities • Goals for Improving HSE Performance• Protecting Soil and Groundwater • Precautionary Principle in the Pharmaceutical Industry • ISO 14001 Certification Status • Emergency Response Programs and Practices

Corporate HSE Policy

As a health care company, we are committed to the present and future well-being of people and the environment in which we live. This commitment is pursued with a goal of continuous improvement and guided by the following principles: • Encourage and expect each employee to be

environmentally responsible and to conduct work practices in a safe manner in accordance with established policies and procedures. These practices are considered an essential measure of performance for all employees. Contract employees working on Lilly premises and external entities engaged in the production of our products will also be held accountable for this expectation.

• Build health, safety, and environmental (HSE) considerations into all phases of the business, including product and technology discovery and development, facility design, operation and maintenance, and product delivery

• Strive for an injury-free workforce and minimize environmental impact through implementation of programs in our facilities and the surrounding communities that reduce risks to employees, neighbors, the public at large, and the environment

• Comply with all applicable laws and regulations. Where existing laws and regulations are not adequate, we will adopt our own standards consistent with this policy.

• Encourage and promote waste minimization, the sustainable use of natural resources, recycling, energy efficiency, resource conservation, and resource recovery

• Engage in dialogue with our stakeholders about our commitment to the environment and to the health and safety of Lilly employees, contractors, shareholders, vendors, customers, visitors, and the communities in which we operate

• Actively participate with government agencies and other appropriate groups to ensure that the development and implementation of environmental, health, and safety policies, laws, regulations, and practices promote the present and future well-being of people and the environment and are based on sound scientific judgment

• Regularly assess and report to management and the board of directors on the status of compliance with these principles

Organizational Structure and Key Individual Responsibilities

Every Lilly employee is responsible for embracing the long-established Lilly core values of respect for people, integrity, and excellence. Building upon these values, Lilly has articulated 16 corporate citizenship principles to drive our commitment to economic, environmental, and social performance. Each of these principles is put into action by a number of company policies communicated throughout the organization. As an illustration of how this works, let’s look at one of these principles: “to create and maintain safe and healthful working conditions.”

One of our corporate policies that support maintaining safe and healthy working conditions is the HSE Policy and Principles noted in the previous section. An organization has been structured and given the responsibility for global governance to ensure adherence to this policy. Each of our facilities is held accountable for developing its own HSE objectives in accordance with corporate commitments and requirements. These sites are held accountable via the HSE management system that includes oversight through metrics review, site self-assessments and a corporate audit

Corporate Citizenship > Structure and Management Systems > Policies, Practices, and Programs

Policies, Practices, and Programs

Page 27: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

program. Similar processes are in place for a number of functions (e.g., engineering) across Lilly.

Staying with the example of the HSE program, 36 HSE global functional policies contain specific requirements on common HSE issues such as process safety, air pollution control and emergency management. Periodically, each of our facilities is the subject of a corporate HSE internal au-dit that consists of both internal experts and external con-sultants who form an audit team to examine various areas of both regulatory and policy compliance. The information gathered during the auditing process is the basis for annual reports to the corporate compliance committee and the corporate HSE guidance council. These committees report issues requiring senior management intervention through the policy committee (CEO and senior staff).

These organizational structures and assignment of key individual responsibilities assure us that we are striving to operate in accordance with our corporate citizenship principles.

Goals for Improving HSE Performance

Lilly is committed to developing goals and programs that enable the company to better manage its economic, environmental, and social performance over the entire spectrum of its value chain. The corporate HSE function, working with other functions within the company, developed a comprehensive corporate strategy to drive performance improvement. Leveraging the many strengths of the historic HSE program, our corporate strategy embodies a commitment to reduce environmental impacts and reduce injuries. Existing program strengths include an outstanding compliance record, reductions in process safety risks, strong manufacturing accountability, and a good foundation of HSE global policies.

One of the outputs of the strategy development process is five public HSE goals. Lilly is striving to achieve the following goals by the end of the decade:

1. Realize a one-third reduction in the energy intensity and corresponding greenhouse gas emissions of our operations (compared to the baseline year of 2003)

2. Realize a one-third reduction in the purchase of hazardous materials as a percentage of sales (compared to the baseline year of 2003)

3. Achieve zero serious environmental events

4. Reduce serious ergonomic injuries by 50 percent (compared to the baseline year of 2003)

5. Attain a one-third reduction in collisions per million miles in our top 10 sales affiliates (compared to the baseline year of 2005)

Protecting Soil and Groundwater

We are committed to ensuring that our present and future operations do not negatively impact soil and groundwater. To this end, we have established a global Soil and Groundwater Protection Policy that requires each of our facilities to conduct periodic risk assessments of activities and processes that could result in impacts to soil and groundwater. The assessments must include evaluations of possible spills from activities and leaks from equipment, containers, and piping; drum storage practices; and the impacts of past waste management practices. Once risks are identified, programs are implemented to minimize these risks. These programs may include, but are not limited to, preparing spill prevention plans, implementing secondary containment inspection and repair programs, and training employees/contractors in spill response measures.

Precautionary Principle in the Pharmaceutical Industry

The European Commission defines the precautionary principle as “an approach to risk management that is applied in circumstances of scientific uncertainty, reflecting the need to take action in the face of a potentially serious risk without awaiting the results of scientific research.”

EFPIA (the pharmaceutical trade association in Europe) asserts that “the application of the precautionary principle must be based on reasoned and unambiguous methodologies that recognize the principle of proportionality and involve objective risk and cost/benefit assessment.” The EFPIA further states that a precautionary approach is already in place in the pharmaceutical sector. It is found in the stringent requirements of drug regulators. European Union pharmaceutical law and U.S. Food and Drug Administration requirements are built on the three basic requirements of quality, efficacy, and safety. In addition, a pharmaceutical product is subject, after its approval, to permanent and stringent scientific surveillance by public authorities, allowing continuous re-assessment on the basis of updated information, data, and scientific knowledge.

ISO 14001 Certification Status

The International Organization for Standardization (ISO), based in Geneva, Switzerland, has established ISO 14001 as a voluntary standard for environmental management systems (EMS). The goal of the ISO 14001 standard is similar to our sustainability objective: to demonstrate the integrity of our HSE management system through continuous improvement, compliance, and minimization of environmental impacts. Our strategy is to allow individual Lilly sites around the world to determine whether facility registration is appropriate for their facility. Lilly has selected Bureau Veritas Quality International (BVQI) as

Page 28: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

our global registrar to facilitate the registration process for those sites that choose to register and to maximize the overall benefits within the organization. Three manufacturing facilities—our locations in Morumbi, Brazil; Kinsale, Ireland; and Mexico City, Mexico—and the corporate EMS have achieved certification to the ISO 14001 standard.

Emergency Response Programs and Practices

All Lilly sites must have an emergency management system. This includes a risk assessment to identify the critical risks that should be addressed in the site emergency plan. Each site is required to assess its readiness annually.

Testing the plan can range from tabletop exercises to full-scale drills that include community fire and emergency agencies.

In addition to testing the local site plan, Lilly has a corporate-level incident support team that is ready to commit corporate resources in the event of an incident at one of our facilities. Major exercises have been conducted in the past, including working with manufacturing facilities in Indiana (U.S.), Puerto Rico, France, and Mexico. These drills test the site emergency plan, emergency response teams, and local agencies. Past drills have also included the local hospitals, law enforcement agencies, and local emergency response agencies.

For Eli Lilly and Company, corporate citizenship means operating ethically and fairly, in a way that protects our employees and the environment, and with regard for the needs of local communities and of society at large.

Learn more about Lilly’s performance in helping to sustain the natural environment and communities across the globe for generations to come.• Economic Performance: Sustaining economic

performance via breakthrough products and medical expertise

• Environmental Performance: Delivering on our commitment to reliable and trustworthy reporting of our environmental data

• Social Performance: Reliable and trustworthy reporting of our commitment to employees and society

Performance Summary Table

We provide a summary table of the key data presented in the economic, environmental, and social performance sections of this site.

Previous Reports

Our most recent corporate citizenship reports are available here:• Website contents discussing 2003 performance• Website contents discussing 2002 performance

MSDS Information

We provide Material Safety Data Sheet (MSDS) information for Lilly products currently marketed in the U.S.

Corporate Citizenship > Performance

Performance

Page 29: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

Performance Summary TableMore information about these performance indicators is included throughout the performance section of this report.

Economic Indicators Unit 2001 2002 2003 2004 01–03 % 03–04 %

Net sales worldwide U.S.$ million 11,542 11,077 12,582 13,858 20% 10%

U.S. sales U.S.$ million 7,364 6,536 7,176 7,669 4% 7%

Western Europe sales U.S.$ million 1,953 2,155 2,711 3,535 81% 30%

Other foreign country sales U.S.$ million 2,225 2,386 2,696 2,655 19% -2%

Cost of revenue U.S.$ million 2,160 2,177 2,675 3,224 49% 21%

Cash payments of interest on borrowings U.S.$ million 126 55 45 0 -100% -100%

Cash payments of common stock dividends U.S.$ million 1,207 1,336 1,443 1,540 28% 7%

Retained earnings increase U.S.$ million 1,188 1,089 970 254 -79% -74%

Cash payments of income taxes U.S.$ million 320 864 614 487 52% -21%

Product donations U.S.$ million 177 204 222 338 91% 52%

Cash contributions U.S.$ million 38 27 29 46 20% 58%

Energy Use Unit 2001 2002 2003 2004 01–03 % 03–04 %

Purchased electricity billion megajoules 5.13 5.21 4.97 4.59 -10% -8%

Purchased electricity m mJ/$m sales 0.44 0.47 0.39 0.33 -25% -16%

Natural gas billion megajoules 2.41 3.58 3.94 3.58 49% -9%

Natural gas m mJ/$m sales 0.21 0.32 0.31 0.26 24% -17%

Coal billion megajoules 3.18 3.23 2.6 2.9 -9% 12%

Coal m mJ/$m sales 0.28 0.29 0.21 0.21 -24% 2%

Fuel oil billion megajoules 0.15 0.49 0.86 0.85 454% -1%

Fuel oil m mJ/$m sales 0.013 0.045 0.068 0.061 361% -10%

LP/Propane billion megajoules 0.0026 0.125 0.039 0.012 351% -70%

LP/Propane m mJ/$m sales 0.00023 0.011 0.0031 0.00085 275% -73%

Purchased steam billion megajoules 3.23 3.35 3.73 3.08 -4% -17%

Purchased steam m mJ/$m sales 0.28 0.30 0.30 0.22 -20% -25%

Total energy consumed billion megajoules 14.10 15.99 16.10 15.03 7% -7%

Total energy consumed m mJ/$m sales 1.22 1.44 1.28 1.08 -11% -15%

Water Unit 2001 2002 2003 2004 01–03 % 03–04 %

Manufacturing billions of liters 21 26 28.4 36.5 74% 28%

Normalized million liters/$m sales 1.82 2.35 2.26 2.63 45% 17%

Other water consumed billions of liters 4 5 6.1 0.47 -89% -92%

Normalized million liters/$m sales 0.35 0.45 0.48 0.034 -90% -93%

Total water consumed billions of liters 25 31 34.5 36.9 48% 7%

Normalized million liters/$m sales 2.17 2.80 2.74 2.67 23% -3%

Air Emissions Unit 2001 2002 2003 2004 01–03 % 03–04 %

CO2 equivalents thousand kg 1,915,030 1,953,593 1,985,067 1,813,329 -5% --9%

CO2 equivalents thousand kg/$m sales 166 176 158 131 -21% -17%

Ozone depleting substances thousand kg 234 266 296 225 -4% -24%

Ozone depleting substances thousand kg/$m sales 0.020 0.024 0.024 0.016 -20% -31%

SO2 equivalents thousand kg 4,910 5,511 4,527 4,631 -6% 2%

SO2 equivalents thousand kg/$m sales 0.43 0.50 0.36 0.33 -21% -7%

Solid Waste Unit 2001 2002 2003 2004 01–03 % 03–04 %

Hazardous waste generated million kg (1) 5.8 6.6 5.8 0% -12%

Hazardous waste generated thousand kg/$m sales (1) 0.52 0.52 0.42 -20% -20%

Non-hazardous waste generated million kg (1) 44.5 51.3 60.1 35% 17%

Non-hazardous waste generated thousand kg/$m sales (1) 4.02 4.08 4.34 8% 6%

Total waste recycled million kg (1) 16.3 13.5 13.3 -18% -2%

Total waste treated million kg (1) 14.8 16.1 15.9 7% -1%

Total waste disposed million kg (1) 19.2 28.4 36.6 91% 29%

Total solid waste generated (2) million kg (1) 50.3 57.9 65.9 31% 14%

Total solid waste generated thousand kg/$m sales (1) 4.54 4.60 4.76 5% 3%

Page 30: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

Liquid Organic Waste Unit 2001 2002 2003 2004 01–03 % 03–04 %

Hazardous waste generated million liters (1) 130.9 88.3 104.3 -20% 18%

Hazardous waste generated

thousand liters/$m sales (1) 11.8 7.0 7.5 -36% 7%

Non-hazardous waste generated million liters (1) 0.5 0.7 0.8 60% 14%

Non-hazardous waste generated thousand liters/$m sales (1) 0.05 0.06 0.06 28% 4%

Treated on-site percent (1) 97 95 96 -1% 1%

Treated or disposed off-site percent (1) 3 5 4 33% -20%

Total liquid waste generated million liters (1) 131.4 89.0 105.1 -20% 18%

Total liquid waste generated thousand liters/$m sales (1) 11.86 7.07 7.58 -36% 7%

Solvent Emissions Unit 2001 2002 2003 2004 01–03 % 03–04 %

Solvent emissions percent of use 1.10 1.15 0.43 0.46 -58% 7%

Environmental Spending Unit 2001 2002 2003 2004 01–03 % 03–04 %

Expense U.S.$ million 69.97 62.09 75.18 80.27 15% 7%

Expense percent of revenue 0.61% 0.56% 0.60% 0.58% -4% -3%

Capital U.S.$ million 29.59 35.36 51.60 34.30 16% -34%

Capital percent of revenue 0.26% 0.32% 0.41% 0.25% -3% -40%

Total U.S.$ million 99.55 97.45 126.78 114.57 15% -10%

Total percent of revenue 0.86% 0.88% 1.01% 0.83% -4% -18%

Toxics Release Inventory Unit 2001 2002 2003 2004 01–03 % 03–04 %

Air million kg 0.54 0.43 0.25 (3) -53% -41%

Air kg/$m US sales 73.3 65.9 35.4 -52% -46%

Water million kg 0.23 0.18 0.15 (3) -32% -13%

Water kg/$m US sales 30.9 27.1 21.5 -30% -21%

Land (on-site disposal) million kg 0.034 0.053 0.035 (3) 5% -34%

Land (on-site disposal) kg/$m US sales 4.55 8.14 4.92 8% -40%

Land (off-site disposal, excluding POTWs) million kg 0.43 0.24 0.15 (3) -65% -38%

Land (off-site disposal, excluding POTWs) kg/$m US sales 58.0 37.1 21.0 -64% -43%

Total million kg 1.23 0.90 0.59 (3) -52% -34%

Total kg/$m US sales 166.8 138.2 82.9 -50% -40%

Compliance Unit 2001 2002 2003 2004 01–03 % 03–04 %

Environmental fines number 1 2 2 1 0% -50%

Reportable accidental releases number 14 14 12 5 -64% -58%

Health & safety fines number 0 0 0 1 - -

Audits Unit 2001 2002 2003 2004 01–03 % 03–04 %

Environmental audits of Lilly facilities number 7 5 12 13 86% 8%

Health & safety audits of Lilly facilities number 6 9 14 16 167% 14%

Serious Injury and Illness Unit 2001 2002 2003 2004 01–03 % 03–04 %

Lilly USA per 100 employees 1.70 1.70 1.77 1.70 0% -4%

Lilly global per 100 employees 1.60 1.60 1.60 1.60 0% 0%

Lost-Time Cases Unit 2001 2002 2003 2004 01–03 % 03–04 %

Lilly USA per 100 employees 0.39 0.43 0.35 0.42 8% 20%

Lilly global per 100 employees 0.53 0.58 0.51 0.57 8% 12%

Lost Workdays Unit 2001 2002 2003 2004 01–03 % 03–04 %

Lilly USA per 100 employees 3.90 5.70 5.80 6.90 (4) 19%

Lilly global per 100 employees 5.60 10.50 9.20 11.90 (4) 29%

Page 31: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

Contractor Safety Statistics for Lilly’s Indiana Sites

Unit 2001 2002 2003 2004 01–03 % 03–04 %

Recordable case rate per 100 employees 3.0 1.7 1.2 1.4 -53% 17%

Lost-time case rate per 100 employees 0.3 0.2 0.1 0.1 -67% 0%

Lost workdays per 100 employees 4 3.8 5.8 4.7 (4) -19%

Fleet Safety Unit 2001 2002 2003 2004 01–03 % 03–04 %

Lilly USA collisions per million miles driven

10.7 9.10 7.49 7.79 -27% 4%

Pharmaceutical industry benchmark collisions per million miles driven

9.2 8.73 8.34 - - -

(1) Complete data for solid and liquid waste are not available for 2001.

(2) Solid waste generation figures do not include byproducts used by local farmers as soil supplements.

(3) Data for 2004 will be included when they become available.

(4) Because of new OSHA reporting rules for lost work days in 2002, industries such as Lilly experienced an increase in their total lost work days. Prior to 2002, OSHA reporting for lost work days counted only scheduled days of work. New OSHA rules for 2002 calculate lost work days by using calendar days (including weekends, for instance), thus increasing the number of days for each lost-work day case. Therefore, statistics on lost work days in 2002 through 2004 are not directly comparable to those for prior years.

Our financial health is vital to our advancement and development as a corporation and to stakeholders. Our economic performance, affecting our employees, shareholders, and suppliers, includes not just our financial returns but also our impact on the economies in which we operate.

Corporate Financial Information

Our worldwide sales for 2004 were $13,858 million. The following table and chart provide a summary of other key indicators of our 2004 economic performance. More detailed information on Lilly’s financial performance is provided in our 2004 Annual Report.

Key Indicator

Worldwide sales $13,858 million

U.S. sales $�,��� million

Western Europe sales $�,��� million

Other foreign country sales $�,��� million

Cost of Revenue $3,224 million

Cash payments of interest on borrowings $0

Cash payments of common stock dividends $1,540 million

Retained earnings increase $254 million

Cash payments of income taxes $487 million

Employee Benefits

Lilly offers extremely competitive compensation and benefits, earning us consistent recognition as an employer of choice in the United States and around the world. We view the money spent on benefits as an investment, one that serves as an excellent recruiting tool. Our employee benefits go above and beyond the standard medical, dental, and eye care expenditures. We offer our employees such advantages as flextime, generous maternity leave, paternity

Corporate Citizenship > Performance > Economic Performance > Sustaining Economic Performance

Sustaining Economic Performance via Breakthrough Products and Medical Expertise

2004 Sales

Other foreign countries

19%

WesternEurope

26%

UnitedStates55%

Page 32: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �0 –

leave, educational leave, and educational assistance. In addition, we provide on-site conveniences, such as dry cleaning, cafeterias, convenience stores, and child development centers. In 2004, we paid more than $3.4 million in U.S. childcare expenditures.

Subsidies

We realize that a key to our success as a corporate leader is our dedication to continuous advancement and improvement. In 1999, Lilly publicly announced plans to invest more than $1 billion in capital expansion and to create 7,500 new jobs (as well as retain 8,700 jobs) at its operations in Indianapolis. To support Lilly’s growth, the city and state offered financial incentives in the form of tax abatements and tax credits, respectively.

To date, Lilly has exceeded its $1 billion target for capital expansion. As of 2004 filings, the company reported approximately $600 million in investments. In addition, Lilly has an estimated $1 billion in construction in progress that relates to tax abatement projects. These investments include expansions to manufacturing, research and development, and administrative facilities. As of the end of 2004, the company has retained 8,700 jobs and created more than 5,500 new jobs, bringing total Lilly employment in Indianapolis to more than 14,200 individuals.

Along with our economic development efforts in Marion County, we continue to invest throughout Indiana. We currently have approved tax abatements in Tippecanoe County (Shadeland), Hancock County (Greenfield), and Hendricks County (Plainfield) related to our commitments to invest in these communities through employment opportunities and/or capital investment.

We also received incentives valued at more than $8 million for our commitments to invest $426 million in capital and employ at least 705 people in Prince William County, Virginia. In addition to the land donation, valued at $536,000, to build the insulin manufacturing facility, Virginia provided $2.25 million and the Prince William County Economic Development Agency provided $2 million for site development at the plant. The state, through its Virginia Investment Partnership Program, will pay us an additional $3 million over five years once we meet our capital investment and employment commitments on or before December 31, 2007. Prince William County also passed a law that reduces property taxes for investments of more than $85 million, and we will qualify for this incentive as well. Lilly initiated a comprehensive redesign of the proposed manufacturing facility in late 2004 and construction has not yet begun on the project.

Indirect Economic Benefits

Lilly’s ability to attract the most talented employees, tap scientific insights, develop effective supplier relationships,

and make sound investment decisions all depends to a large extent on conditions in our surrounding communities. Fortunately, Lilly’s headquarters and its operations worldwide are located in exceptional communities—places that combine aesthetic and cultural appeal, attractive and stable economic conditions, and a critical mass of related businesses. We benefit from these communities—and it is natural that we should give back much in return.

Lilly’s indirect economic contributions around the world generally are not quantified. That makes them no less genuine and far-reaching, however. For example:• Our employees make personal buying decisions and

pay taxes that strengthen the larger fabric of their communities. In Indiana alone, an Indiana University study determined that Lilly contributes more than $3 billion each year to the state's economy and that any change in Lilly's employment levels has a sevenfold impact on total employment in the state. Our employees in Indiana pay more than $30 million in personal and real-estate taxes.

• The personal philanthropy and citizenship of Lilly employees also create a significant impact. We encourage Lilly employees—and often provide them company time—to serve as volunteers in not-for-profit agencies and other civic roles. Our corporate foundation in many cases matches the personal financial contributions of our employees to groups that promote education, health, and cultural enrichment—adding millions of dollars each year to these vital purposes.

• Recognizing the essential ingredient of leadership in community initiatives, Lilly often lends the time and talents of its executives to economic-development or building projects that have no direct link to our own business. In Indianapolis and in other communities, Lilly's involvement often has made the difference in attracting a new corporate citizen or creating a vital new public facility.

• In the specific area of health care, Lilly's interests and the impact of our work go well beyond simply selling pharmaceutical products. When used appropriately, in-novative prescription drugs often generate disproportion-ate savings in other forms of health care by eliminating the need for costly and invasive surgeries in many cases, replacing long stays in hospitals or other institutions, or preventing the appearance of more difficult-to-treat con-ditions later in life. Therefore, Lilly invests considerably to educate our customers about the importance of ap-propriate use of medicines and compliance with medical treatment. And through our Lilly Cares and LillyAnswers programs, we devote large-scale resources to expanding access to pharmaceuticals for all patients, regardless of their income or insurance status.

Lilly is privileged to be part of many fine communities—and to take part in a virtuous cycle of economic and social benefit with these cities, states, regions, and countries.

Page 33: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

Philanthropy and community service are long-standing traditions at our company. The tradition began in 1906 when we donated medicine, supplies, and our time to help the victims of the San Francisco earthquake. Lilly’s commitment to the communities where we live, work, and raise our families continues to grow stronger every year. Never before in our history have we been so involved, in depth and breadth of programs, to serving the needs of people around the world as we are today.

Throughout our 129-year history, we have built upon the founding Lilly family’s commitment to good corporate citizenship. We illustrate this commitment by donating products and cash to a variety of special causes. In 2004, we donated $337.7 million in products to recipients throughout the world. The company also donated $45.7 million in cash, and its subsidiary foundation contributed another $25.6 million. The total value of philanthropy for 2004 from Lilly was $409.0 million.

Eli Lilly and Company Foundation

The Eli Lilly and Company Foundation was established in 1968 to carry out our philanthropic interests. The foundation is funded from the company’s profits and the annual appropriation for philanthropy is based upon a formula that, when combined with the company’s philanthropic spending, is designed to annually place Lilly among the top 10 most generous companies in the United States. The foundation is the major source of the company’s support for not-for-profit and charitable organizations around the world, and it complements other contributions made through the company’s corporate and operating divisions in cash and product gifts.

In 2004, Eli Lilly and Company Foundation made donations to 226 groups in the following categories: aligned health care and human services, public policy research, academic relations, civic and community development, diversity, culture, education and youth development, and discretionary/unclassified.

Eli Lilly International Foundation

The Eli Lilly International Foundation was formed in 1992 and is based in Germany. The foundation’s board consists at present of seven members: two independent scientists (from Germany and France) and five Lilly employees. The purpose of the foundation is to support international scientific work as well as charity and educational work, mainly in Europe. The majority of the grants have to be given to support scientific projects. Since its beginning, the foundation has supported projects in Austria, Belgium, the Czech Republic, France, Germany, Hungary, Italy, Lebanon, Macedonia, Norway, and the United Kingdom. In total, more than 100 projects have received approval after a thorough review by the board of the foundation, for a total donation amount of about 5 million euros (US$6.4 million).

Giving Back to Communities

Here are some of the ways that we are giving back to the communities in which we live and work. These highlights represent just a few of the hundreds of organizations that receive Lilly gifts and donations.

Lilly South Africa Foundation: Health and Education Initiatives

Lilly South Africa Foundation has worked to bridge the digital divide, which often prevents disadvantaged communities from reaping the benefits of modern technology. Partnering with Prince of Wales Trust (UK) and Microsoft Corp., the foundation provided a computer center with 45 desktop computers for Bonwelong Primary, a school situated in an informal South African settlement. Lilly will also provide for the center’s security and maintenance in the future. We have donated 40

2004 Donations

Product donations: $337.7 million

Contributions from the Eli Lilly and Company Foundation: $25.6 million

Cash donations: $45.7 million

Corporate Citizenship > Performance > Economic Performance > Philanthropy

Philanthropy

Page 34: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

computers as well to Thomas Nhlabathi Secondary School in Mpumalanga.

Apart from this, the foundation is supporting disadvantaged students pursuing a career in the health sector by providing them with scholarships. We are also involved in a partnership with the Center for Diabetes and Endocrinology to provide training and support to health care workers who work with diabetes patients at a local health clinic. We originally provided $160,000 in funding for the Lilly Diabetes Clinic; however, due to the high number of patients being served (more than 100 per day), the support is expected to increase in 2006. The foundation also donated $45,000 toward the construction of a rural health clinic in Limpopo.

Sponsoring Clown-therapy for Children in Italy

Recognizing the therapeutic value of smiling, Lilly Italy is sponsoring the introduction of “clown-therapy” in the pediatric wards in Italy. Developed in the 1980s in the United States, clown-therapy has been demonstrated to be a great success in overcoming children’s traumas and psychological blockages. The therapy not only helps the children forget the pain for a while, but it also has beneficial effects at psychological, neurological, and endocrinological levels, which lead to a more responsive immune system. On the occasion of the 40th anniversary of its foundation, Lilly Italy decided to espouse this cause by establishing a professional clown-therapy service at the Meyer Pediatric Hospital in Florence, one of the leading children’s hospitals in the country. With the collaboration and support of the Italian Theatrical Board and the European Social Fund, 14 Italian clown-doctors were selected from a group of actors, street artists, and magicians to go through a year-long training process, which included practical training at the Florence Children’s Hospital. Two of these clown-doctors have been employed as hospital hosting staff at the Meyer Hospital. This initiative is proving to be a successful trendsetter as other hospitals are following suit and employing similar services.

Lilly Italy is lending support to more traditional causes as well. Our commitment to supporting innovation and research led to Lilly Italy’s collaboration with Telethon, a research foundation started by Renato Dulbecco, a Nobel Prize-winning Italian scientist. In 2003, Lilly Italy supported the career of a Telethon scientist involved in rare genetic diseases research. And in 2004, Lilly helped Telethon grow by signing a new significant partnership that will lead to development of competence needed to manage the human clinical studies necessary to search for a cure for genetic diseases. Six scientists, two every year for the next three years, selected via a public job posting announcement, will receive a scholarship grant and will be hosted in Florence at a total cost of 300,000 euros (US$360,000). During their stay, these scientists will acquire the knowledge and the skills needed to

autonomously manage the future clinical studies of Telethon Foundation.

Lilly China: Supporting Mental Health and Other Disease Management Initiatives

Lilly China is an important force helping to improve mental health awareness, treatment, and conditions in China. In 1999, Lilly China and the China Ministry of Health (MOH) embarked on a five-year partnership to improve mental health. This program was based upon the WHO Nations for Mental Health Initiative and seeks to improve mental health conditions in three key areas: • increasing awareness and understanding of mental health

issues among teachers, parents, and students in China’s schools

• improving understanding of mental health treatment in diagnosis, including continuing medical education opportunities for general practitioners and pediatricians in China

• partnering with the MOH to help remove the stigmatization of mental health disorders in the Chinese media

A number of important and related initiatives have ema-nated from this partnership, including a collaboration between Lilly, the Chinese MOH, and the Chinese Psychi-atric Association (CPA) to develop China’s first Mental Health Treatment Algorithm and Guideline, which estab-lished the guidelines and standards of treatment for mental health patients in China. We have also sponsored an award program with the CPA to recognize and reward health care practitioners who have made significant contributions to helping reintegrate schizophrenia patients into society. In addition to our efforts to help improve mental health practice in China, Lilly China has also donated products, provided training and scholarships, and sponsored studies and research in the areas of anti-infectives, diabetes preven-tion and treatment, and oncology.

Lilly UK: Providing Students a View into the Pharmaceutical Industry

In conjunction with the South East England Development Agency (SEEDA), Lilly supported the development in 2004 of an innovative program that gives students a “virtual” view of working life and encourages young people to pursue a career in science. VIEW—the Virtual Interactive Employers Workplace—is a CD ROM-based program that provides students aged 14 to 16 with a unique insight into working life at different organizations. The VIEW sponsored by Lilly focuses on the Lilly Research Center in Surrey, which is one of the U.K.’s leading neuroscience research centers. The CD includes an interactive, behind-the-scenes guided tour as well as interviews of Lilly employees talking about their positions and the importance of their work in finding pharmaceutical solutions for

Page 35: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

patients. Students are able to see firsthand how scientific research is conducted within the pharmaceutical industry.

Lilly Brazil Health and Citizenship Day 2004

In November 2004, Lilly Brazil hosted its third Lilly Health and Citizenship Day at a local public school near the company’s offices in São Paulo. We provided a broad range of health-related services and information throughout the day, including lectures on diabetes, oral hygiene, breast cancer, and sexually transmitted diseases; blood pressure and glucose screenings; and first aid training. In addition, partner organizations such as the police and fire departments, government election office, public library, and even a hairdressing school participated in the event and contributed their services. The all-day event was a great success, with 4,000 community members in attendance and the full participation of 150 Lilly volunteers.

Tsunami Relief in Southeast Asia

Lilly provided $2 million in cash contributions to meet immediate needs following the December 2004 tsunami in Southeast Asia. These donations were directed to three global relief agencies responding to the disaster—the American Red Cross International Relief Fund, CARE, and UNICEF. We also organized a global fundraising effort among Lilly employees and pledged $1 million in matching funds to promote that effort. Lilly recognizes that the

relief efforts will require a long-term commitment and we are continuing to assess the situation to determine how Lilly can best provide aid to the survivors of this natural disaster, in the form of product donations and/or additional funding for relief agencies.

Battling the World’s Greatest Health Threats with the CDC

The U.S. Centers for Disease Control (CDC) play a crucial role in the worldwide fight against emerging and re-emerging infectious diseases. In 1998, we initiated an important partnership with the CDC to jointly establish a fellowship training program, focusing mainly on scientists from developing countries. These scientists were placed in research-based institutions at the state and national level to work toward alleviating some of the world’s greatest health threats, including multi-drug resistant TB (MDR-TB). The countries that participated in the most recent yearlong fellowship period were China, India, Russia, and Turkey.

In March 2002, we announced an additional $2 million gift to fund the training of 28 international scientists, from both developing and developed countries, to provide a rapid, multinational response to naturally occurring or intentionally released infectious agents. In 2005-2006, trainees in this program will be from China and will focus on laboratory diagnosis of MDR-TB, a major health threat in that country.

Page 36: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

Energy

As a large multinational company, energy use is one of the most significant aspects of our environmental footprint. Our total energy consumption in 2004 was approximately 15 billion megajoules, a slight decline over the past two years. When normalized by net sales, energy consumption decreased by about 15 percent compared to 2003, from 1.28 down to 1.08 million megajoules per million dollars sales.

We have established a 2010 goal of realizing a one-third reduction in energy intensity (energy consumption normalized by sales) and a corresponding reduction in greenhouse gas emissions from our operations, compared with the baseline year of 2003.

Water

In 2002, Lilly began collecting data on the total amount of water being brought into its manufacturing and R&D sites worldwide, either through direct extraction or from municipal sources, as well as the quantity of water demand necessary to conduct operations. From these data, we have begun to track a Water Conservation Index, which is the

quantity of water intake divided by the quantity of water demand. The index indicates the degree to which a facility reuses water internally to meet its total demand; the lower the index, the more internal reuse is occurring at a facility.

As of 2004, we are calculating Water Conservation Indices from sites with water intakes exceeding 200,000 liters per day (about 53,000 gallons per day), which represents 12 Lilly sites worldwide. Of those sites, five reported an index of less than 0.1 in 2004, which means that they take in less than one liter of water for every 10 liters of actual water demand needed for operations. While results show that some of our bulk manufacturing sites are doing very well in conserving water, we are striving for further improvements.

In terms of total water intake at all our operations in 2004, the volume increased by 7 percent over the previous year; when normalized to sales, there was a slight decrease (3 percent). About half of our total water use occurs in manufacturing operations in Indiana, where a significant proportion of our total manufacturing capacity is located. We continue to monitor the installation and startup of new equipment at these facilities to identify future water conservation opportunities.

Corporate Citizenship > Performance > Environmental Performance > Resource Use

Resource Use

0

5

10

15

20

’04’03’02’01

Total energy consumed (billion megajoules)

0.0

0.3

0.6

0.9

1.2

1.5

’04’03’02’01

(million megajoules per $ million sales)

0

5

10

15

20

25

30

35

40

’04’03’02’01

Total water consumed (billion liters)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

’04’03’02’01

(million liters per $ million sales)

Page 37: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

Lilly is continuously working to protect habitat and minimize the impacts of our operations on ecosystems. We are committed to engaging in conservation projects and habitat enhancements on the more than 7,300 acres of land that we own around the globe, as well as supporting conservation efforts outside our own properties.

Tippecanoe Laboratories, Indiana, U.S.

Since 1997, Lilly has been a corporate member of the Wildlife Habitat Council (WHC), a nonprofit organization dedicated to protecting and enhancing wildlife habitat. The WHC helps large landowners in the United States manage their unused lands in an ecologically sensitive manner for the benefit of wildlife and certifies sites that meet its stringent requirements for habitat enhancement.

Lilly’s WHC-certified Tippecanoe Laboratories site in Lafayette, Indiana, includes 1,486 acres of farmland and 607 acres that are managed for wildlife by a 100-member wildlife habitat team, made up of employees, retirees, their families, and numerous community volunteers. The team’s projects include prairie restoration, tree and shrub plantings, a butterfly garden, nest box placement and monitoring for bluebirds and house wrens, and walking trails to help promote awareness of environmental issues and efforts to enhance the property.

More than 750 students use the Tippecanoe Laboratories site every year through WHC’s Corporate Lands for Learning program. This program allows students of all ages to engage in activities designed to teach about a variety of habitats and historical resources. They follow the walking trail through prairies, observing such species as bluebird, wood ducks, herons, and beavers. A team of Lilly scientists, teachers, and community environmental leaders has developed curricula allowing students to perform experiments on site and return to their classrooms to analyze the data.

External Recognition for Tippecanoe Biodiversity Projects

Tippecanoe Laboratories was awarded the Indiana Governor’s Award for Environmental Excellence in 2004 in recognition of its partnerships with Purdue University and the local school district for using this site to further environmental education among young children. The award recognized the site’s seed germination and growing project at Mintoney Elementary School. The ongoing project began in 2002 when a lesson plan for germination was co-developed between Lilly, Purdue University, and teachers at the school. Germination and Planting Guidelines and curricula were prepared and shared with 16 teachers. More than 475 students grew plants in the classroom while 185 fifth graders participated in planting days at Tippecanoe Labs, transplanting 2,000 plants to the habitat area soil. The program continues today due to the enthusiastic support of the students and teachers. This marked the third Governor’s Award bestowed on the site.

The facility also received the 2004 River Friendly Farmer Award from the Tippecanoe County Soil and Water Conservation District for establishing a riparian buffer strip along the Wabash River near the Lilly site. The buffer strip will stabilize the river bank and provide a natural biofilter to absorb watershed pollutants before they enter the river. The buffer strip extends for 1.75 miles and contains three different ecosystems, including 43 acres of planted forest, 7 acres of cool season grass, and 8 acres of restored wetland. The U.S. EPA Office of Wetlands, Oceans and Watersheds recognized this project in 2004 at the WHC’s 14th Annual Symposium, Investing in Biodiversity, where Lilly was presented a bronze Five-Star plaque.

Lilly ARBOR Project, Indiana, U.S.

In 2004, the Lilly Foundation continued its financial com-mitment to support the Lilly ARBOR Project, an initiative of the Center for Earth and Environmental Science at

Corporate Citizenship > Performance > Environmental Performance > Biodiversity

Biodiversity

Page 38: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

Indiana University – Purdue University at Indianapolis. ARBOR is an acronym for Answers for Restoring the Bank Of the River, and its primary goal is to develop an outdoor research and experiential learning site for teaching princi-ples of science-based environmental stewardship. As a part of this long-term project, faculty, students, and community volunteers (including many Lilly employees) have worked together to plan, implement, and monitor reforestation along 8.5 acres of riverside corridor along the White River in downtown Indianapolis, Indiana, U.S.

Lilly Development Centre, Mont-Saint-Guibert, Belgium

Since acquiring our 11-hectare (22-acre) research site in Belgium in 1993, Lilly has worked diligently to enhance habitat and improve species diversity on the portion of this property that is maintained for wildlife. In a partnership with the local university, Catholic University of Louvain-la-Neuve, conservation scientists worked with Lilly to plan a biologically diverse ecological preserve focusing on reintroduction of native plants. Implementation began in 1994 with the planting of 5,000 trees over a 5-acre area,

including more than 20 varieties of trees and incorporating a walking trail and information signs. We also maintain an orchard and a wild grass area that attracts native insects and butterflies. In March 2004, Lilly employees participated in maintenance and planting days in the habitat area. Lilly has also provided information to other companies that are interested in how to establish wildlife areas at their own sites.

Erl Wood Facility Conservation Management, Erl Wood, England

Lilly’s R&D center at Erl Wood has joined hands with the local Wildlife Trust to gain a greater understanding of the 47-acre site in Surrey, England. Being an old establishment in the area, the Trust has vast experience and local know-how in managing nature reserves and sites of interest. Through this collaborative effort, we are developing a conservation management strategy for the site. Besides habitat preservation, the site enhancements being planned will provide Lilly employees the opportunity to explore the site through nature trails, guided walks and environmental challenge days.

Page 39: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

Greenhouse Gas Emissions

We track both our direct and indirect greenhouse gas (GHG) emissions; the totals are presented in the graphs below. Indirect emissions, which compose about 62 percent of our total GHG emissions, represent the quantity of GHGs emitted when off-site service providers engage in activities on our behalf. These activities include:• Electricity generation• Purchased steam generation• Chilled water production• Off-site waste incineration • Wastewater treatment at publicly owned treatment works

(POTWs)

The carbon dioxide (CO2) equivalent values used in the graphs below are based on EPA emission factors. Eighty-two percent of the total CO2 equivalents that Lilly reported in 2004 are from actual emission of CO2.

Emissions of chlorofluorocarbons and hydrofluorocarbons, which are both GHGs and ozone depleting substances, contribute about 6 percent to our total CO2 equivalents. The remaining equivalents come from a variety of compounds such as nitrogen oxides and volatile organic compounds.

Sulfur Emissions

Sulfur oxides and other acid gas precursors contribute to acid rain formation and are reported in terms of sulfur dioxide (SO

2) acidity equivalents. For Lilly, acidification

pollutants are mainly sulfur dioxide (SO2) and nitrogen

oxides (NOx). Air emissions of both compounds result

primarily from fossil fuel combustion for steam production at our manufacturing sites. In 2004, emissions reductions from decreases in steam demand at several sites were offset mostly by one site that burned approximately 24 percent more coal in 2004. As a result, SO

2 equivalents increased

slightly compared to 2003—a 2 percent increase, although for the period 2001-2004, SO

2 equivalent emissions have

decreased by about 6 percent (from 4.9 million kilograms down to 4.6 million kilograms). We expect SO

2 emissions

to decline in 2006 and to decline significantly after 2007 as several sites convert to lower sulfur fuels, including one site that plans to replace coal-fired boilers with natural gas units.

Corporate Citizenship > Performance > Environmental Performance > Emissions, Effluents, and Waste

Emissions, Effluents, and Waste

0

500,000

1,000,000

1,500,000

2,000,000

’04’03’02’01

CO2 equivalents(thousand kilograms)

0

50

100

150

200

’04’03’02’01

(thousand kilograms per $ million sales)

0

50

100

150

200

250

300

’04’03’02’01

Ozone depleting substances (thousand kilograms)

0.000

0.005

0.010

0.015

0.020

0.025

’04’03’02’01

(thousand kilograms per $ million sales)

0

1,000

2,000

3,000

4,000

5,000

6,000

’04’03’02’01

SO2 equivalents (thousand kilograms)

0.0

0.1

0.2

0.3

0.4

0.5

’04’03’02’01

(thousand kilograms per $ million sales)

Page 40: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

Solvent Emissions

Lilly uses solvents in a wide array of activities at its laboratories, pilot plants, and manufacturing operations. The vast majority of the solvent emissions occur at the bulk-scale manufacturing sites in Indiana. Most significant sources of solvent emissions are equipped with state-of-the-art emission control systems. In many locations, we use formal leak detection and repair programs to find and repair small leaks of solvent vapors. Furthermore, many of our manufacturing processes are equipped to recover and reuse solvents. We determined that an effective way to measure our progress in minimizing solvent emissions is to express loss as a percent of solvent used. We believe that our target of 1 percent loss as a percent of use is nearing an industry “best practice.” In 2003 and 2004, we exceeded our target by minimizing solvent emissions as a percent of use to less than 0.5 percent.

A subset of solvent emissions to air is reportable under the Toxics Release Inventory (TRI) requirements in the United States. We have seen these air emissions continue to decline both because of the reasons outlined above and due to discontinued processes that historically used large quantities of TRI chemicals.

Odor Abatement

Lily’s manufacturing site in Speke, England, completed an odor-abatement project last year that demonstrated the company’s commitment to living the brand attribute of “active listening and responding.” Speke is a part of the large-molecule bulk and natural products manufacturing networks. All fermentation operations at the Speke facility require that large volumes of filtered air pass through the fermentation media. Until the odor abatement project, air leaving the fermentation vessels, known as offgas, was released into the atmosphere without treatment. In 2000, Speke received 89 complaints about offgas odor. Site employees listened to their neighbors and put a plan

in place to respond to the complaints. After considering several options, two-stage scrubber technology was selected to contain the odor, and $6.7 million in corporate funds was provided to design, equip, and build the new scrubber plant, which opened in September 2003. Offgas is now treated with a sodium hypochlorite solution, followed by a caustic-based treatment. In 2004, the plant received only 15 complaints about offgas odor. Plants in the area are required to demonstrate that they use the “best available technique” when applying for a permit. Buoyed by the dramatic reduction in the number of complaints about offgas, the plant employees claim to have established the best available technique with respect to odor abatement for the large-scale fermentation industry in the United Kingdom.

Wastewater

The majority of Lilly’s wastewater and the greatest amount of total chemical oxygen demand (COD) that our facilities discharge directly to surface water come from three bulk pharmaceutical manufacturing locations in Indiana, U.S., and Ireland. The Indiana manufacturing plants—Clinton Laboratories and Tippecanoe Laboratories—discharge to the Wabash River under permits issued by the Indiana De-partment of Environmental Management. Discharges from both plants are significantly below the allowable discharge limits for total COD. The Kinsale, Ireland, plant operates under an Integrated Pollution Control license issued by the Irish EPA in 2002. It discharges to Kinsale Harbor.

2004 Water Discharge Data by Site

Average discharge flow

Average daily COD (total) Permit limit

Clinton 8.34 mgd 995 lb/day 15,559 lb/day

Tippecanoe 8.79 mgd 1,924 lb/day 38,962 lb/day

Kinsale 0.461 mgd 483 lb/day 17,857 lb/day

lb/day = pounds per day mgd = million gallons per day

We have a longstanding commitment to monitor the biological diversity of both the Wabash River and Kinsale Harbor. Lilly and the Cinergy Corporation (a regional electric utility that also discharges to the Wabash) have jointly funded river studies for more than 30 years. The 2001 Wabash River survey was conducted by Dr. Mark Pyron and Dr. Thomas Lauer of the Department of Biology at Ball State University. In their June 2002 report, they note: “The results of this work allow examination of current fish community in the middle Wabash River in the context of upstream/downstream comparisons and some limited historical comparisons. The overall trend of the fish community appears to be continued recovery from historically low levels in the 1970s. The trend for increasing degradation with downstream distance that [a prior 1998 study] identified is not apparent, and suggests the river quality continues to improve.”

0.00

0.25

0.50

0.75

1.00

1.25

1.50

’04’03’02’01

Solvent emissions (percent of use)

Total TRI releases(million kilograms)

0.0

0.3

0.6

0.9

1.2

1.5 releases to air

releases to water

releases to land

’04’03’02’01*

* Data for 2004 will be included when they become available

Page 41: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

In addition to commissioning this study of a reach of the Wabash River, we have also commissioned a long-term study of Kinsale Harbor, which is located along the southern coast of Ireland. This study, begun in 1978 by researchers at National University of Ireland, Galway, was recently completed. The monitoring results suggest that the minor changes observed in the aquatic life of Kinsale Harbor are associated with natural stresses, such as storm events, rather than any discharge effects from our facility. Overall, the ecologic system of the harbor has shown a high measure of resilience and an ability to thoroughly disperse wastewater discharges.

Ultimately, the Kinsale Harbor study added significantly to the body of scientific knowledge, identifying new ways of understanding the marine environment that are now being applied all over the world. New hardware was developed, which makes the business of sampling and analysis quicker and easier, thereby allowing more frequent and more intensive monitoring. Sadly, Professor Brendan Keegan, who directed the study from the beginning and whose scientific genius inspired a generation of marine biologists, died a few weeks after the completion of the study’s final documentation. In his honor, Lilly has established The Keegan Memorial Fellowship in Benthic Ecology, which will fund a Ph.D. student at the university for three years to continue research in marine ecology. Arrangements with the university have recently been completed to continue the study of Kinsale Harbor.

Waste Generation

We have adopted a corporate goal to realize a one-third reduction in the purchase of hazardous materials as a percentage of sales by 2010 through innovative process and facility design. Consistent with the Corporate Waste Man-agement Policy we have adopted an additional, internal goal to reduce waste generation. Although there are two ap-proaches the desired result is the same—reduce the amount of waste we generate as a result of our operations.

We plan on achieving our goals by three means:1. Using green chemistry to assist in design of our manu-

facturing processes to reduce the number of kilograms of waste generated per kilogram of product made.

2. Increasing solvent recovery to reduce the amount of solvent waste created during manufacturing.

3. Continuing use of waste minimization plans at all sites to drive reductions in everything from paper to production wastes.

Waste minimization has a multiplying effect. It will generate savings across the Lilly business, and it will generate safety and environmental improvements inside and outside the company’s boundaries.

Normalized to sales, total solid waste generation remained essentially flat from 2002 to 2004, while liquid organic waste generation declined by 36 percent.

Auditing Waste Facilities

Our corporate environmental affairs group coordinates and conducts reviews of commercial waste management facilities in the United States and Puerto Rico to verify that they are being operated in an environmentally appropriate manner. Sites outside the U.S. conduct reviews of the commercial waste management facilities they use following

0

1

2

3

4

5

6

7

8

’04’03’02’01

Solid waste generated – hazardous(million kilograms)

0.0

0.1

0.2

0.3

0.4

0.5

0.6

’04’03’02’01

(thousand kilograms per $ million sales)

* *

* Complete data for solid and liquid waste are not available for 2001

0

10

20

30

40

50

60

70

80

’04’03’02’01

Solid waste generated – non-hazardous(million kilograms) (thousand kilograms per $ million sales)

0

1

2

3

4

5

’04’03’02’01* *

* Complete data for solid and liquid waste are not available for 2001

Total solid waste generated(million kilograms) (thousand kilograms per $ million sales)

0

10

20

30

40

50

60

70

80 disposed

treated

recycled

’04’03’02’010

1

2

3

4

5disposed

treated

recycled

’04’03’02’01* *

* Complete data for solid and liquid waste are not available for 2001

Liquid organic waste generated(million liters) (thousand liters per $ million sales)

0

30

60

90

120

150treated or disposedoff-site

treated on-site

’04’03’02’010

2

4

6

8

10

12treated or disposedoff-site

treated on-site

’04’03’02’01* *

* Complete data for solid and liquid waste are not available for 2001

Page 42: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �0 –

the same corporate procedure. The frequency of the reviews is based upon the type of service that is supplied. For example, incinerators (hazardous and non-hazardous) are reviewed every three years, while non-hazardous waste landfills are reviewed every five years. A review may involve a site visit where the reviewing team observes operations, examines documentation, and interviews facility personnel.

Compliance and Liabilities

Efforts to reduce the number of accidental releases to the environment showed continued success in 2004. The number of reportable accidental releases dropped by 58 percent compared to 2003. One of our goals for the remainder of this decade is to achieve a level of zero serious environmental events.

Worldwide in 2004, Lilly sites experienced only five accidental releases significant enough to be reportable to various government agencies.

The largest volume accidental release was of approximately 1,600 gallons of ethylene glycol lost due to a malfunctioning valve. The material flowed to a storm water collection system and then to the Wabash River in Indiana. No impacts to the environment were observed by Lilly personnel or government investigators. A subsequent toxicological calculation of the potential impacts to aquatic organisms concluded there would be no harm caused by the quantity released. Four other accidental releases that were reported to various agencies in accordance with local requirements occurred at the following locations:• Tippecanoe Laboratories, Lafayette, Indiana, U.S. • Lilly Technology Center, Indianapolis, Indiana, U.S.• Lilly Kinsale, Ireland (2 releases)

None of these releases resulted in any identifiable threats to human health or the environment.

The number of fines and the resultant monetary penalties imposed by government agencies remained very low (see table below). The number of complaints registered to various sites has decreased substantially to less than 25 worldwide. The most common issue was nuisance odors.

Corporate HSE Audits

Every three years, the corporate HSE audit group completes an assessment of HSE and business risks associated with

Lilly global operations and facilities. This assessment is based primarily upon available site information, including: • role of the site • previous audits and annual site self-assessment results • corporate HSE staff input • geographic location • dates of previous audits • regulatory inspection history • process/operational changes • management/staff changes

The results of this assessment are used to create a plan for the following year as well as a tentative three-year HSE audit plan, which may be revised based on major changes in one or more risk factors.

Compliance Performance Summary for 20042001 2002 2003 2004

Environmental fines 1 2 2 1

Environmental fines (dollar amounts)

$3,000 $17,000 $71,392 $18,000

Reportable accidental releases 14 14 12 5

Health and safety fines 0 0 0 1

Health and safety fines (dollar amounts)

- - - $1,479

Environmental audits of Lilly facilities*

7 5 12 13

Health and safety audits of Lilly facilities*

6 9 14 16

* Beginning in 2002, all environmental audits of Lilly facilities were joint health, safety, and environmental audits. There were 12 of these joint audits conducted in 2003 and 13 in 2004. The additional health and safety audits (4 in 2002, 2 in 2003, 3 in 2004) represent process safety management audits.

Environmental Liabilities

Under the Comprehensive Environmental Response, Com-pensation, and Liability Act, commonly known as Super-fund, we have been designated as one of several potentially responsible parties with respect to fewer than 10 sites. Under Superfund, each responsible party may be jointly and severally liable for the entire amount of the cleanup. We also continue remediation of certain of our own sites. We have accrued for estimated Superfund cleanup costs, re-mediation, and certain other environmental matters, taking into account, as applicable, available information regarding site conditions, potential cleanup methods, estimated costs, and the extent to which other parties can be expected to contribute to payment of these costs. We have reached a settlement with our liability insurance carriers providing for coverage for certain environmental liabilities.

Page 43: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

We are committed to making health, safety, and environmental (HSE) considerations a priority in new product development and manufacturing. This necessitates identifying and managing risk by evaluating the potential HSE impacts of our operations and products as well as the HSE capabilities of our suppliers and third-party operations.

HSE Considerations in New Product Development

We believe that the greatest environmental benefit is realized by designing new products and processes in a way that minimizes their HSE impacts right from the start. The integration of HSE considerations into the development of our products and processes using green chemistry principles is a critical part of our development efforts. When selecting the best processes to use for producing our medicines, we evaluate attributes that predict the future HSE burden of a process, along with more traditional criteria such as yield, quality, cost, and equipment needs. However, identifying potential HSE impacts is only the beginning. Making pharmaceuticals requires highly specialized, state-of-the-art chemistry. In many cases, there are no commercially viable alternatives for the chemical processes or materials we use, so we must develop our own alternatives. This requires investing in new science for developing safer and cleaner processes for making medicine.

Each day, our scientists and engineers work to apply the most up-to-date science to our processes. We encourage our development chemists to learn more about green chemistry concepts and participate in scientific forums and conferences on the subject. We fund graduate student work at McGill University to develop green reaction conditions for a chemical reaction common to several different pharmaceuticals. Lilly is a charter member of the Green Chemistry Institute’s Pharmaceutical Roundtable. This group was formed to solve, through collaboration, the most common and pressing problems associated with improving the HSE aspects of pharmaceutical production processes. Lilly also uses InnoCentive’s website to post specific, challenging problems to a community of hundreds of

scientists and engineers around the world—who can apply their knowledge and creativity to help develop solutions.

Environmental Impacts of Products and Services

The public has become increasingly aware of how pharmaceuticals can impact the environment. Lilly is one of the leading companies in the Pharmaceutical Research and Manufacturers of America (PhRMA) working to provide guidance on disposal of unused products in a manner that minimizes environmental impact. Very low levels of ingredients of certain drug products have been detected in water by scientists at various locations around the world due to improved testing technologies. Reported concentrations of drug substances in water are extremely low, ranging from parts per trillion to parts per billion. Lilly has been proactive in promoting a science-based examination of the issue and supports efforts to address existing gaps in knowledge associated with the very low concentrations of these substances in water. We are partnering with PhRMA and working with scientific experts to better understand and analyze the impact of trace levels of pharmaceuticals on the environment.

Auditing Suppliers and Third-Party Contractors

Lilly has relationships with many third-party suppliers, including those that assist in the development and manufacturing of Lilly products. With this partnering comes responsibility to ensure our alliance companies have implemented employee health, safety and environmental programs.

Lilly assesses suppliers and third-party operations against HSE criteria during the selection process and throughout the business relationship. Alliance partners are reviewed using a two-stage process. The first-stage review provides a basic understanding of the company’s environmental, health and safety programs. The second stage provides for a risk-based review related to the material being handled. For suppliers of critical materials or those that handle manufacturing steps of higher HSE risk, on-site visits are

Corporate Citizenship > Performance > Environmental Performance > Product Life Cycle

Product Life Cycle

Page 44: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

made. Lilly encourages its suppliers to build the necessary HSE capabilities.

In addition to HSE performance, the use of a supplier’s product by Lilly is reviewed for possible health, safety, or environmental issues. Lilly is a member of the U.S. EPA Green Supplier Network forum for the pharmaceutical sector. This forum promotes the identification of environmental issues that affect the business performance of the supplier. Lilly believes that supporting the goal

for suppliers to continually improve their environmental performance will result in improved business and HSE performance for both parties.

As part of the HSE criteria, Lilly requires both key suppliers and alliance partner companies to have appropriate emergency management capabilities to ensure business continuity. In addition, alliance partners are reviewed annually for their safety and environmental compliance performance.

Corporate Citizenship > Performance > Social Performance > Responsibility Toward Employees

Responsibility Toward Employees

“Make sure that your families are happy.”

This statement was made in 1970 by Eli Lilly, president of the company and grandson of the founder. Mr. Eli, as he was called, was addressing a group of new Lilly employees and espousing a key principle of the Lilly culture: employee satisfaction. A full quarter-century before “family friendly” became a laudable description in corporate America, it was already fully ingrained in the Lilly culture.

We continue to uphold the Lilly tradition of creating the best working environment possible. We have been recognized globally for our efforts in this regard. In 2004, Lilly was named as one of the best places to work by publications in Belgium, Brazil, France, Germany, Italy, Mexico, the Netherlands, Spain, the United Kingdom, and the United States, among others.

Breakdown of Work Force

In 2004, we had more than 44,000 employees worldwide who have access to our flexible work arrangements such as full-time, part-time, flextime, flex week, job share, and telecommuting. View a detailed version of Lilly’s global presence (138k PDF).

We hired approximately 3,500 new employees worldwide in 2004, and our turnover rate is below the industry

average (industry data obtained from the Saratoga Institute).

Recording Accidents/Illnesses

We follow and apply the U.S. Occupational Safety and Health Administration (OSHA) Recording and Reporting Occupational Injuries and Illnesses Standards globally. Corporate data regarding accidents, illnesses, injuries, and lost workdays within the company are tracked continuously and collected and analyzed once per quarter. Absenteeism is tracked locally.

An analysis of work-related injuries in 2004 revealed significant improvements from the traditional causes of work-related injuries at Lilly and identified ergonomic injuries as the most frequent workplace injury globally. Ergonomic injuries are the leading cause of injuries in administrative and research areas and are an important factor in manufacturing and sales as well.

The reduction of ergonomic injuries became a focus in 2004 and continues as such in 2005. Lilly’s comprehensive ergonomic injury reduction program includes employee awareness, individual work station assessment, corrective actions, and early reporting of ergonomic injuries to reduce injury severity. An incentive to identify and correct the causes of ergonomic injuries was further enhanced by the

Page 45: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

establishment of a proactive corporate health and safety matching fund initiative.

These ongoing efforts will improve workplace safety for Lilly employees worldwide. We have instituted a new goal for 2010 to reduce serious ergonomic injuries by 50 percent compared to 2003.

We also collect data on the number of collisions per million miles for the sales fleet in the United States. In 2004, the number of collisions decreased by 27 percent compared to 2001 (although there was a slight increase from 2003-2004). We attribute the overall decrease in vehicle accidents to ongoing and increased training, and to our efforts to redefine the role of management in motor vehicle safety. Under our newly established goals for 2010, Lilly is seeking to achieve a one-third reduction in collisions per million miles in our top 10 sales affiliates, compared with a baseline to be established in 2005.

Joint Health & Safety Committees with Workers

Each of our plants is expected to have a health and safety committee that is composed of both management and non-management personnel. Employees are encouraged to report health and safety practices that they feel could be improved. The committees work to find solutions to the reported practices and then implement those solutions.

Training and Development

Continued training for all levels of our staff is a high priority for us. We have been recognized by Fortune magazine for the training we offer our employees. In 2004, Lilly employees around the globe accrued 1.6 million training hours.

Development of employees has always been important at Lilly—it is part of our core value of respect for people, and we strive to offer our employees opportunities to enrich their working experiences. Lilly University—a collection of global training organizations across the company—provides access to a variety of internal training options, including both online courses and classroom-based training. Topics range from technical, job-specific training to more transferable skills such as performance management, career planning, presentation skills, and project management. As a result, all Lilly employees have access to, and are encouraged to use, programs that enhance their skills, their employability, and ultimately their success in the workplace. In addition, continued training is provided to supervisors to assist them with leading people and managing the business.

Employee Benefits

Our benefits strategy is to design competitive programs that enable us to attract and retain talented people

with the skills and expertise necessary to achieve our company objectives. We aim to develop compensation and benefit programs that meet the needs of employees while balancing what is in the best long-term interests of shareholders, customers, and the public in general. The global benefits philosophy at all of our affiliates is to provide top quality benefits that are market competitive in our industry. Benefits that are provided globally by Lilly include retirement/leaving service and medical/health, life, and disability insurance. In addition, Lilly offers some nontraditional programs to enhance work/life balance, such as flextime, flex week, part-time, and telecommuting flexible work arrangements.

In the United States, for example, many affiliates offer on-site amenities such as dry cleaning, a credit union, convenience store, cafeterias, coffee shops, and child development centers. Generous leave structures are also available that include maternity leave, paternity leave, marriage leave, education leave, and three-year family leave. We also offer adoption services and encourage

0.0

0.5

1.0

1.5

2.0

Lilly global

Lilly USA

’04’03’02’01

Serious injury and illness (per 100 employees)

0.0

0.1

0.2

0.3

0.4

0.5

0.6

Lilly global

Lilly USA

’04’03’02’01

Lost-time cases(per 100 employees)

0

2

4

6

8

10

12

Lilly global

Lilly USA

’04’03’02’01

Lost work days(per 100 employees)

Because of new OSHA reporting rules for lost work days in 2002, industries such as Lilly experienced an increase in their total lost work days. Prior to 2002, OSHA reporting for lost work days counted only scheduled days of work. New OSHA rules for 2002 calculate lost work days by using calendar days (including weekends, for instance), thus increasing the number of days for each lost-work day case. Therefore, statistics on lost work days in 2002 through 2004 are not directly comparable to those for prior years.

U.S. fleet safety(collisions per million miles driven)

0

2

4

6

8

10

12

pharmaceutical industry benchmark

Lilly USA

’04’03’02’01*

* Data for 2004 will be included when they become available

Page 46: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

our employees to participate in one or more of our many volunteer programs.

The personal health of our employees is very important to us. We expect the very best from our employees, and we strive to give them the very best in return. We offer medical coverage that significantly exceeds national standards, and employees are able to obtain Lilly-manufactured and marketed drugs at no cost. In the U.S., employees receive medical care at no cost at five on-site ambulatory care facilities maintained by Lilly. In addition to coordinating care for work-related illness or injury, services at these sites include screening mammography, gynecological exams, personal lab services, travel

immunizations, flu shots, physical therapy, and emergency care. Additionally, employees can use the employee assistance program that provides confidential assessment and referral to licensed mental health providers for three visits per year.

We encourage our employees to pursue further education by providing educational assistance programs. In the U.S., for example, tuition for job-related coursework is reimbursed 100 percent (up to $5,250 per year for undergraduate courses and up to $7,000 per year for graduate courses). In addition, U.S. employees can be reimbursed for 50 percent (up to $100) of the fees paid for any non-job-related “enrichment” courses they attend.

This section of our report discusses Lilly’s policies and practices related to the following aspects of human rights:

Diversity

The Lilly corporate values reflect the importance we place on diversity. Included in these values is a respect for all people worldwide; integrity that functions on the very highest standards of honesty, ethical behavior, and exemplary moral character; and excellence, which is reflected in our continued desire for improvement.

Diversity within our company is something we respect and strongly encourage. The company has initiated the Diversity Leadership Council, composed of 20 leaders within the company and led by the senior vice president for corporate strategy. A key objective of the Diversity Leadership Council is to bring integration, alignment, and accountability to Lilly’s diversity strategy for the work force and marketplace. We have developed a statement that promotes diversity internally and in our business

relationships. In addition, we have developed diversity performance objectives for senior leaders, and we offer an optional diversity training program for all employees.

We have an excellent record of purchasing from minority suppliers. Our Supplier Diversity Development initiative helps to create and support minority suppliers in local communities and encourages us to continue purchasing from these suppliers.

Discrimination and Harassment

Our Equal Opportunity policy was written and implemented to ensure that we offer all applicants and employees equal opportunities that are reflective of their individual performances, and we proudly uphold this Lilly policy. Our equal employment opportunity staff and human resources personnel are on hand for any consultation or assistance that is necessary for this policy to be carried out correctly.

Corporate Citizenship > Performance > Social Performance > Upholding Human Rights

Upholding Human Rights

Page 47: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

We have a strict policy against harassment in the workplace. Physical, verbal, or sexual harassment will not be tolerated while in the workplace or participating in workplace activities. This commitment also carries through to the reporting of such conduct or harassment. All employees are equally responsible for reporting harassing conditions; any such reports are kept confidential and no action is taken against the reporting employee. Our employees are required to adhere to these principles.

These policies are further detailed in The Red Book, which must be read, signed, and respected by our employees.

Child and Forced Labor

The member states of the International Labor Organization have recognized that ending commercial exploitation of children must be one of humankind’s top priorities. Yet, in spite of international efforts to stop child labor, millions of children throughout the world continue to work, often in terrible conditions. Preventing child labor is everyone’s responsibility. Lilly does not use or support the use of child

labor anywhere in the world, and we fully abide by all child labor laws and standards. Additionally, we do not use any forced or compulsory labor and we adhere to all state and federal fair labor laws.

Internal Grievance System

Our company maintains an internal grievance system, and the policies that we have developed for grievances or appeal practices are outlined in our employee handbook. The rights of our employees are upheld by the detailed policies and standards in our Red Book.

Security Training

Our security personnel participate in ongoing, extensive training to protect employees. Topics covered include our corporate values, conflict resolution, professional standards, and conduct in the workplace. Additionally, security personnel are trained in valuing diversity and avoiding harassment in the workplace.

Corporate Citizenship > Performance > Social Performance > Code of Business Conduct

Code of Business Conduct

We maintain a code of conduct (known as The Red Book: Code of Business Conduct) that applies to all employees worldwide, requiring them to display proper business conduct, avoid conflicts of interest, comply with laws, and protect company assets. Because we are a U.S.-based com-pany, our business conduct policies often reflect a blend of the requirements of United States law and those of other countries in which we operate. Activities conducted and employees working in various countries around the world must comply at all times with applicable laws, even if those laws are more stringent than those established by The Red Book and our global policies. Conversely, employees throughout the world must comply with our global policies, even if they are more stringent than local laws.

All employees are required to read and understand The Red Book and to report suspected violations of law or company policies, unless a country-specific law indicates otherwise. A hotline number is published in The Red Book to enable

employees to report suspected violations anonymously. Discrimination or retaliation is prohibited against employees who report suspected violations in good faith.

Our chief executive officer and all members of financial management must also sign the Code of Ethical Conduct for Lilly Financial Management, a supplemental code that recognizes the unique responsibilities of these individuals in ensuring proper financial reporting and internal controls.

Bribery and Conflicts of Interest

We do not tolerate bribery on any level within our company. If any employee is found guilty of accepting or offering a bribe, disciplinary action will be taken, which may include discharge from our company. Employees may use the hotline or other channels to report any suspicious activity.

Page 48: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

Employees are responsible for reporting any possible conflicts of interest that may arise during their employment. Included in these conflicts of interest is owning a significant interest in any other business that is associated, aims to be associated, or competes with Lilly. Doing business with any relative or family member is considered a conflict of interest, as is employment with any other firm related to or in competition with Lilly.

Political Lobbying and Contributions

Our employees must comply with The Red Book: Code of Business Conduct section on “Dealing with Government Officials and Political Parties.” This section details appropriate employee conduct as it relates to the following topics: • political financial support• payments to officials or employees of a government or

public international organization • interaction with government officials (initiated by

company employees or vice versa)

Lilly corporate political donations are made based on a budget for such contributions. This budget is determined annually. Throughout the year, members of the company’s government affairs organization bring forward specific recommendations for company contributions. The chief financial officer and general counsel of the company must approve corporate contributions made in the United States. The general counsel for international operations approves financial support given outside the United States.

Lilly employees in the U.S. may choose to make voluntary contributions to the Eli Lilly and Company Political Action Committee (PAC), an entity funded solely by employee contributions. Lilly PAC donations are made in accordance with a budget, which is determined annually by the Lilly PAC Board. Lilly PAC support is divided equally between federal and state level, and allocated among various candidates according to specific recommendations from the company’s government affairs organization and employee PAC members.

In addition to The Red Book, the following processes are in place to ensure compliance with political contribution laws:• Internal processes related to corporate and PAC political

financial support are documented. • The PAC governing board meets bi-annually (employees

outside of government affairs compose a majority of the governing board).

• Computer software tracks PAC and corporate political financial support to ensure that we do not exceed contribution limits.

• Internal audit personnel conduct an annual review of corporate political support, and independent public accountants conduct an annual audit of PAC contributions.

• All required disclosures of corporate and PAC political financial support are made to the federal election commission and state election commissions, typically on a quarterly basis. All disclosures required outside the United States are also made in accordance with local law.

In 2004, Lilly gave $1,344,444 in political financial support in the United States through corporate contributions and the Lilly PAC. In addition, Lilly belongs to trade associations. Lilly support to the trade associations may be used by the associations to support candidates for political office, or political parties, officials, or committees.

In the United States, the company does not refund or reimburse employees who make personal contributions to the PAC, or directly to political parties or candidates. However, in the U.S., the company does provide eligible employees with the opportunity to contribute to political campaigns through the company PAC.

The following procedures are in place to manage compliance with federal and state laws as they relate to political lobbying:• A summary of state political contribution laws is supplied

to each public affairs manager.• Public affairs managers must file and document state-

required lobbying reports in a timely manner. • Prior to submitting the biannual filings required by the

Federal Lobby Disclosure Act, the director of federal affairs verifies accuracy of reported lobbying activities.

• Lobbyists are required to comply with applicable gift ban requirements as they apply to government representatives.

A list of 2004 contributions is available in PDF format (549k).

Anti-Trust and Competition Laws

Anti-trust and competition laws and regulations vary by country, but regulations similar to those that apply in the U.S. regulate business carried out in most foreign countries. The U.S. Foreign Corrupt Practices Act also applies to ac-tivities outside the U.S. Violations of such laws can have se-vere consequences to both individuals and the company. In The Red Book, we outline several situations that may arise pertaining to anti-trust and competition laws so employees are able to recognize these situations and refrain from en-gaging in them. Employees are encouraged to consult with a company attorney about any questionable situations.

We have implemented a program related to compliance with our anti-trust and competition regulations that: • sets clear priorities • communicates policies and practices clearly • provides a confidential telephone hotline for reporting

known and suspected violations • provides leadership from within the company

Page 49: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

Supplier diversity development (SDD) is an Eli Lilly and Company initiative to reinforce our longstanding commitment to equal opportunity by broadening participation of minority-owned, woman-owned, and other diverse and small businesses in the Lilly supplier base to levels more reflective of the diverse business community.

In an environment where strategic sourcing efforts often result in larger, majority-owned companies crowding out smaller niche companies, SDD matches the unique capabilities of our diverse business supplier portfolio with Lilly business needs. Lilly SDD identifies, grows, and develops diverse suppliers, while broadening participation in the supplier base among more established diverse suppliers.

Lilly demonstrates its commitment to diversity across the corporation through the SDD initiative. SDD incorporates a synergistic approach in aligning initiatives from other corporate functions such as corporate work and diversity, community relations, and recruiting to promote diversity across the company. In a global business community, it is clear that companies that value diversity realize new and better relationships, not only with employees but also with customers, suppliers, and investors.

The Value of Supplier Diversity

The SDD initiative often results in discovering suppliers that offer products, services, terms, or capabilities not available from our current pool of majority-owned vendors. Often, it is the smaller niche supplier base that can provide immediate, tangible value to Lilly.

In the global competition for talent, it is imperative that Lilly recruit and retain the best employees available. This talent pool gets broader and more diverse each year, representing different cultures, races, and genders. Retention of such employees increasingly depends on diversity in the community in which they live as well as the company for which they work. As SDD develops diverse suppliers in the communities where we live and work, we

create wealth and employment opportunities that enhance the quality of life for this diverse population.

Eli Lilly and Company’s supplier diversity initiative stems from our commitment to be a good corporate citizen and to provide ever-increasing value to our customers and shareholders. With more information available today to a better informed and inquiring public, it is more important than ever that those publicly stated goals of equal opportunity be demonstrated with action such as the SDD initiative.

Lilly SDD has implemented many best-in-class programs as part of our overall initiative. The Historically Underutilized small Business (HUsB) Coordinators is one such program. Lilly envisioned a forum to bring together organizations in the Central Indiana community focused on advancing small, disadvantaged suppliers. As a result, Lilly established the HUsB Coordinators, a collaboration of supplier diversity professionals seeking to maximize efforts toward a common mission of developing businesses and helping them find contracting opportunities.

Membership is varied with representation from private industry, government agencies, nonprofit organizations and larger, successful minority-owned and woman-owned firms. Each member brings a different focus that overlaps to form a cohesive effort. The synergy created from their joint initiatives has resulted in an increased and greater impact.

Another program, the Supplier Diversity Pharmaceutical Forum, is a smaller collaborative group of diversity representatives from 15 pharmaceutical companies dedicated to creating greater opportunity for diverse suppliers serving the pharmaceutical industry. The forum, which Lilly helped establish in the late 1990s, provides a network for its members to openly share information, benchmark for best practices, and work cooperatively on joint events to benefit diverse and small businesses serving the pharmaceutical industry. The group meets formally on a quarterly basis, but interacts and shares best practices among members on an ongoing basis.

Corporate Citizenship > Performance > Social Performance > Supplier Diversity Development

Supplier Diversity Development

Page 50: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

Recent Successes

In 2004, we not only increased spending with diverse suppliers (both in terms of percentage and dollar amount), but we also increased the number of diverse suppliers that we use. For example, we identified opportunities to increase the amount of work contracted with a particular minority-owned firm for IT work. This resulted in 128

percent growth in spending with this firm from 2003 to 2004. In another example, SDD worked closely with flexible staffing—the organization within Lilly that helps meet the need for contract or outsourced labor—to encourage expanding the number of small or diverse firms in its supplier base. The result was the addition of a minority-owned company and a woman-owned company to our preferred supplier list.

Corporate Citizenship > Performance > Social Performance > Product Responsibility

Product Responsibility

Respect for Privacy

Eli Lilly and Company has operated a Global Privacy Program since 2001. Our privacy program is led by Lilly’s chief privacy officer (CPO) who has global responsibility for privacy compliance. The CPO reports to the law division as well as to the chief compliance officer. As part of our privacy program, we have individuals dedicated full-time to overseeing consumer privacy, employee privacy, and medical privacy, and to coordinating the privacy stewards in our subsidiaries and affiliates located outside of the United States. All have reporting obligations, at least in part, to the CPO. In addition, we have created consumer, medical, and employee/human resources privacy boards composed of Lilly senior management. Policies and procedures have been implemented to provide for security and appropriate use of personal information. Finally, in-depth training on these policies is provided to appropriate personnel.

In 2004, Lilly earned Safe Harbor certification, which enables Lilly to export personal information (e.g. clinical trial patient, investigator, Lilly employee, physician and consumer data) from the European Union and its “assession” countries (EEA) to the U.S. by certifying that the company has adequate privacy safeguards to protect personal data originating from the EEA. Safe Harbor certification recognizes Lilly’s commitment to

handle personal information in a way that protects those individuals’ privacy rights and that adheres to EEA privacy laws.

Lilly had no material privacy compliance issues in 2004.

Product Safety and Labeling Information

Lilly has a strong commitment to understanding and com-municating the safety of our products throughout their de-velopment and as long as they are being used by patients. Our clinical trials are designed to identify potential safety issues before we begin to sell our products. As soon as our products are available to patients, we make an aggressive and continuing effort to understand any and all safety con-cerns as soon as possible. And we continue our efforts as long as our products are being used. We have been tracking the safety of some products for more than 50 years.

Our investment in safety is global and ongoing in every country where we are selling products. We collect information from around the world into a single database so that we have as complete information as possible for our analysis. Much of our safety information is collected regardless of causal association with our products to enable proactive monitoring and to detect potential safety signals. There is a correlation between the amount of sales (patient use) and the number of safety cases that are reported to the

Page 51: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �� –

company. Hundreds of thousands of cases across our entire portfolio have been collected over the decades and are available for this proactive evaluation.

In addition to understanding the safety of our products, we at Lilly are dedicated to effectively communicating this information. One of the ways we communicate is through our product labeling. We make the utmost effort to ensure that our product labeling provides the best available data on the use of our products to doctors, other health care providers, and ultimately to patients. Proposed changes to product labeling may originate from health authorities or from our own safety monitoring. Our quality control systems require that potential safety changes to product labeling be communicated to the corporate labeling group, which then engages appropriate medical, regulatory, and product safety professionals to evaluate the proposed change.

If we believe that a safety signal may have a causal association with a Lilly product, the global products labeling committee (comprised of senior management from regulatory, product safety, medical, quality, and legal) will determine whether to update the product core data sheet. An update to a core data sheet triggers a mandatory labeling submission to add the new term or concept in all countries where that product is marketed. This process applies for both drug and drug/device products.

For device user manuals, the labeling process includes two additional steps. First, user testing is conducted to identify areas of risk for the device product. We then assess whether changes to the user manual can be made to mitigate the identified risk.

Our affiliates’ compliance with mandatory safety concepts is monitored by the corporate labeling group and reported to the global products labeling committee on a quarterly basis.

In addition to ensuring that physicians and patients have the latest safety information as quickly as possible, we have a legal commitment to send our information to regulatory authorities around the world within the required timeframes. We have a global network of safety professionals responsible for our compliance with reporting requirements everywhere we operate, which ultimately allows us to keep our promise to our customers—providing “Answers That Matter” for the safe use of our products.

Principles for Direct-to-Consumer Communications

Given an increasingly complex health care system, we know that patients are seeking more information about diseases and treatments, asking questions, evaluating information, and making choices. We believe that direct-to-customer (DTC) advertising provides many benefits, including raising awareness of diseases and conditions that are often undiagnosed, untreated, or under-treated. As a company responsible for developing new, innovative medicines, we understand we have a duty to provide advertising that is truthful, accurate, and balanced. To that end, we have established the following principles to help serve as a guide when designing and launching DTC communications. 1. We will educate physicians and other health care

professionals about Lilly medications before advertising them to the public.

2. We will involve patients and health care professionals in the advertisement development process to obtain their perspective and input regarding DTC campaigns.

3. We will adhere to FDA standards regarding DTC campaigns. This includes creating advertising that provides clear, accurate, and responsible information that is fair and balanced on both the benefits and risks associated with the medications. In addition, if reminder ads are used, we will provide ways to easily access more information about our medications as well as how to recognize and understand the conditions being treated by them.

4. We will not knowingly create advertising that contains false, misleading, exaggerated, or unbalanced statements or visuals.

5. We will create DTC campaigns that reinforce the physician/patient relationship by encouraging patients to seek additional information and guidance from health care providers.

6. We will protect the confidentiality of patient information generated by the DTC campaign.

7. We will advertise in ways that encourage appropriate use of our products.

8. We will not target our advertising directly to individuals under the age of 18.

9. We will place our advertisements in media environments that avoid controversial content/programming, respect diversity, and align with our company values.

10. In the spirit of “Answers that Matter,” we will provide our customers with feedback mechanisms to express their opinions on the DTC campaigns.

Page 52: Lilly Corporate Citizenship - Socially responsible … · Lilly Corporate Citizenship Website Contents This is the printer-friendly version of Lilly’s Internet-based report on the

– �0 –

Business • Fortune magazine 500 Largest U.S. Corporations: Lilly

climbed to 156th in 2003 based on revenues. • America's Most Admired Companies: In 2004, Lilly

ranked second among the leading U.S. pharmaceutical companies in this Fortune magazine survey of corporate reputation.

• Science magazine Best Companies for Scientists: Lilly finished second among biotech and pharmaceutical companies in 2004.

• InformationWeek 500: Lilly again achieved recognition in this listing of the most innovative business users of technology.

People, Work/Life, Diversity• Fortune magazine 100 Best Companies to Work For: Lilly

appeared on this list for the sixth consecutive year in 2004.

• Working Mother Best Companies to Work For: For the 10th consecutive year, Lilly has been recognized as one of the best companies for working mothers in 2004. Lilly has appeared in the top 10 six times.

• Lilly Netherlands has been recognized among the Best Employers in Holland in 2004 (10th among the 20 companies listed); Lilly was the only pharmaceutical company on the list.

• The Great Place to Work Institute included Lilly Belgium on the list of Best Employers for the second consecutive year in 2004. Lilly Belgium ranked 12th in the top 30 Best Employers in Belgium.

• Lilly France was named "Best Employer/Best Results" and "Best Company to Work For" by Hewitt and the Great Places to Work Institute. Lilly France is ranked number 10 in Europe.

• Lilly France is ranked 4th Best Company in France and top Pharmaceutical Company by leading business publications in France including Dernières Nouvelles d’Alsace, Entreprise & Carrières, Les Echos, Challenges, and Usine Nouvelle.

• Lilly Germany was recognized as one of Germany’s best employers in 2004 and received the “Gender Equality Award” from the Great Places to Work Institute.

• Lilly Germany recently received an award from the Chamber of Commerce for offering an outstanding apprenticeship program. Lilly earned recognition for its strong commitment to the upcoming generation and for being a good corporate citizen by taking on social responsibility.

• Lilly Italy was rated the best pharmaceutical company to work for in Italy according to the results of the 2004 Great Places to Work survey, which was published in Il Sole �� Ore. Lilly was ranked 11th in the Italian general standing, moving up from being ranked 30th in previous years.

• Lilly Spain was ranked among the 100 best companies to work for in Europe, ranking as the second-best employer and the top pharmaceutical company by the Great Places to Work Institute.

• Lilly UK was named as one of the top 100 companies to work for in 2004 by the Sunday Times for the third consecutive year. This award is based largely on employee feedback and recognizes the numerous attributes of working at Lilly, including leadership, culture, career development, and whether employees felt that the company gave something back to the community in which they worked.

• For the second year running, Lilly UK was named among the top 50 places to work in the UK by the Financial Times.

Corporate Citizenship• BusinessWeek magazine Most Philanthropic Companies:

For 2003, Lilly was ranked first for in-kind donations and fifth for overall giving (first among pharmaceutical companies).

• Lilly Mexico has been recognized by Mundo Ejecutivo, or Executive World, Mexico’s most prestigious business magazine, as one of the country’s top 100 companies to model corporate social responsibility.

Corporate Citizenship > Awards and Recognition

Awards and Recognition