Eli Lilly (LLY) 10-K risk factor changes: FY2023 vs FY2022

It is possible that our business, financial condition, liquidity, cash flows, [removed: or] results of [removed: operations] [added: operations, reputation, and prospects] could be materially adversely affected by any of these risks.

Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial could also adversely affect our [removed: business] [added: business, financial condition, liquidity, cash flows, results of operations, reputation,] and [removed: reputation.][added: prospects.]

Risks Related to Our [removed: Business][added: Business and Industry]

There are many difficulties and uncertainties inherent in pharmaceutical research and development, the introduction of new [removed: products,] [added: products] and [added: indications,] business development activities to enhance [added: or refine] our product [removed: pipeline.][added: pipeline, and commercialization of our products.]

There is a high rate of failure inherent in [removed: new] drug discovery and development.

As a result, most funds invested in research [added: and development] programs will not generate financial returns.

New product candidates that appear promising in development [added: or prior to being acquired] may fail to reach the market or may have only limited commercial success because of efficacy or safety concerns, inability to obtain or maintain necessary regulatory approvals or payer reimbursement or coverage, [added: failure to obtain placement on guidelines or recommendations published by third-party organizations that are commensurate with clinical data,] the application of pricing controls, limited scope of approved uses, label changes, changes in the relevant treatment standards or the availability of [removed: new] [added: newer, better,] or [removed: better] [added: more cost-effective] competitive products, difficulty or excessive costs to manufacture, [added: insufficient infrastructure to support detection, diagnostic] or [added: other requisites for treatment, ineffectiveness in reaching healthcare professionals, including digitally given the increase in virtual engagements, or] infringement of the patents or intellectual property rights of others.

[removed: Delays, uncertainties, unpredictabilities,] [added: Delay, uncertainty, unpredictability,] and [removed: inconsistencies] [added: inconsistency] in drug approval processes across markets and agencies can result in delays in product launches, lost market [removed: opportunity, potential] [added: opportunities,] impairment of inventories, and other negative impacts.

In addition, it can be very difficult to predict revenue growth rates [removed: of] [added: of,] or variability in demand [removed: for] [added: for,] new products and [removed: indications.][added: indications, which in some cases leads to difficulty meeting product demand or, on the other hand, excess inventory and related financial charges.]

We cannot state with certainty when or whether our products [added: and indications] now under development will be approved or launched; whether, if initially granted, such approval will be maintained; whether we will be able to develop, license, or otherwise acquire additional product [removed: candidates] [added: candidates, indications] or products; or whether our [removed: products,] [added: products and indications,] once launched, will be commercially successful.

[removed: We] [added: Through internal innovation and business development we] must maintain a continuous flow of successful new products and [removed: successful new] indications or line extensions [removed: for existing products, both through our internal efforts and our business development activities,] sufficient both to cover our substantial research and development costs and [added: investments and] to replace revenues that are lost as profitable products become subject to pricing controls, lose intellectual property exclusivity, or are displaced by competing products or therapies.

Failure to [removed: do so in the short-term or long-term] [added: timely replenish our product portfolio and pipeline] would have a material adverse effect on our business, results of operations, cash flows, and financial position.

We engage in various forms of business development activities to enhance [added: or refine] our product pipeline, including licensing arrangements, co-development agreements, co-promotion arrangements, [added: distribution and promotion agreements,] joint ventures, acquisitions, [removed: and] equity [removed: investments.][added: investments, and divestitures.]

[removed: There are] substantial risks associated with identifying successful business development targets and consummating related transactions.

Increased focus on business combinations in our industry, including by the Federal Trade Commission and competition authorities in Europe and other jurisdictions, and heightened competition for attractive targets has and could continue to delay, [removed: jeopardize] [added: jeopardize,] or increase the costs of our business development activities.

We also may fail to generate the expected revenue and pipeline enhancement from business development activities due to [removed: developments outside our control, including] [added: limited diligence opportunities,] unsuccessful clinical trials, issues related to the quality, integrity, or broad applicability of data, regulatory impediments, and [added: manufacturing or] commercialization challenges.

[added: Accordingly, business] development transactions may not be completed in a timely manner (if at all), may not result in successful development outcomes or successful commercialization of any product, [removed: and] may give rise to legal proceedings or regulatory [removed: scrutiny.][added: scrutiny, and may result in charges that negatively impact our financial position or results of operations in any given period.]

For [removed: non-biologic products, loss of exclusivity (whether by expiration of legal rights or by termination thereof as a consequence of litigation) typically results in the entry of one or more generic competitors, leading to a rapid and severe decline in revenues, especially in the U.S. For biologics (such as Humalog, Humulin, Erbitux, Cyramza, Trulicity, Taltz, and Emgality),] [added: biologics,] loss of exclusivity may or may not result in the near-term entry of competitor versions (i.e., biosimilars) due to many factors, including development timelines, manufacturing challenges, and/or uncertainties regarding the regulatory [removed: pathways for] approval [removed: of the competitor versions.][added: pathways.]

[removed: Changes proposed by the USPTO to limit the number of, and differences between, patents obtained could also affect the scope of patent protection for our products in the U.S.] Also in the U.S., in addition to the process for challenging patents set forth in the BPCIA, which applies to biologic products, the Hatch-Waxman Act provides generic companies substantial incentives to seek to invalidate our patents covering [added: small molecule] pharmaceutical products.

As a result, we expect that our U.S. patents on major pharmaceutical products, including biologics, will continue to be routinely challenged in litigation [added: and may not be upheld.]

[removed: Recently, the] [added: The] USPTO issued an interim procedure regarding the use of discretionary denials of IPR proceedings when there is parallel district court litigation.

In addition, intellectual property protection in certain jurisdictions outside the U.S. is weak and we face [removed: additional] [added: heightened] risks to our intellectual property [removed: rights,] [added: rights in these jurisdictions,] including competition with generic or counterfeit versions of our products [added: at or] relatively shortly after launch.

To compete successfully, we must continue to deliver to the market innovative, cost-effective products [added: through internal innovation or business development] that meet important medical [removed: needs.][added: needs, provide improved outcomes for patients, and deliver value to payers.]

Our product revenues [removed: can be] [added: and prospects are] adversely affected by the introduction by competitors of branded products that are [added: first to market, have better marketplace access, have greater brand recognition or are] perceived as superior by the marketplace, by generic or biosimilar versions of our branded products, and by generic or biosimilar versions of other products in the same therapeutic class as our branded products.

Our revenues [removed: can] [added: are] also [removed: be] adversely affected by treatment innovations, including new [added: or superior] modalities, that eliminate or minimize the need for treatment with our drugs.

Given the importance [added: to us] of [added: marketed] biologic products [removed: to] [added: and those in] our clinical-stage pipeline, such regulation could have a material adverse effect on our business.

In addition, we rely on our ability to attract, engage, and retain highly qualified and skilled [added: scientific, technical, management, and other] personnel in order to compete effectively.

Our failure to compete effectively for talent could negatively affect sales of our current and any future [added: approved products and indications, and could result in material financial, legal, commercial, or reputational harm to our business.]

[removed: approved products, and] [added: Any of these outcomes] could result in material financial, legal, commercial, or reputational harm to our business.

[removed: A great deal of] [added: Important] confidential information owned by [removed: us or] [added: us,] our business [removed: partners] [added: partners,] or other third parties is stored in our information systems, networks, and facilities or those of third parties.

We also rely, to a large extent, on the efficient and uninterrupted operation of complex information technology systems, infrastructure, [added: cloud technologies,] and hardware (together, IT systems), some of which are within our control and some of which are within the control of third parties, to accumulate, process, store, and transmit large amounts of confidential information and other data.

We are subject to a variety of [removed: continuously] evolving and developing laws and regulations around the world related to privacy, data protection, and data security.

Our failure, or the failure of our third-party service providers, to protect and maintain the security, confidentiality, integrity, and availability of our (or their) IT systems and [removed: our] confidential information and other data could significantly harm our reputation as well as result in significant costs, including those related to fines, [added: penalties,] litigation, and obligations to comply with applicable data breach laws.

IT systems are [added: inherently] vulnerable to system inadequacies, [added: inadequate controls or procedures,] operating failures, [added: unauthorized access,] service interruptions or failures, security breaches, malicious intrusions, [added: theft, exfiltration, ransomware,] or cyber-attacks from a variety of sources, which may remain [removed: undetected for significant periods of time.]

[removed: Such vulnerabilities,] [added: Vulnerabilities,] inadequacies, or failures are in many cases more acute for IT systems associated with recently acquired businesses, and we may be unable to [added: entirely] address such vulnerabilities, inadequacies, or failures immediately after acquiring a [removed: business.][added: business or ever.]

As a result, our newly acquired businesses [removed: could be] [added: are in some cases] more vulnerable to [removed: potential] [added: failures,] interruptions, breaches, intrusions, [added: theft, exfiltration,] or attacks.

Cyber-attacks come in many forms, including the deployment of harmful malware, exploitation of vulnerabilities (including those of third-party software or systems), denial-of-service attacks, the use of social engineering, and other means to compromise the confidentiality, integrity, and availability of [removed: our] IT systems, confidential information, and other data.

Breaches resulting in the compromise, disruption, degradation, manipulation, loss, theft, [added: exfiltration,] destruction, or unauthorized disclosure or use of confidential information, or the unauthorized access to, disruption of, [removed: or] interference [removed: with] [added: with, or attack of,] our IT systems, products and services, can occur in a variety of ways, including negligent or wrongful conduct by employees or others with permitted access to our systems and information, or wrongful conduct by hackers, competitors, [removed: certain governments or] [added: governments,] nation-states, [added: state-sponsored] or [removed: other] [added: affiliated groups,] current or former company [removed: personnel.][added: personnel, and other actors.]

Unassociated third parties present further risks, including by propagating misinformation related to our products, business, and [removed: industry.][added: industry, including through social media.]

[removed: The] [added: We and others in the] healthcare industry [removed: has] [added: have] been and [removed: continues] [added: continue] to be [removed: a target] [added: targets] for cyber-attacks, and the number of threats has increased over time.

To bring a product from the discovery phase to market takes considerable time and entails significant cost.

We may also fail to allocate research and development resources efficiently, fail to pursue or invest sufficiently in product candidates or indications that may have been successful, or fail to optimally balance trial design, conduct, and speed to accomplish desired outcomes.

Our dependence on, or focus in, one or more key products or product classes may exacerbate this risk.

In addition, the growth of our business and revenue base increases the risk that products developed or acquired by us may not provide adequate value to sustain further long-term growth.

There are

Additionally, business development activity focused on new modalities may entail additional risks and costs.

Alternatively, actual or perceived failure of robust generic and biosimilar competition could propel governments to adopt additional policies and legislation that threaten our intellectual property, pricing of our products, or other aspects of our business.

Our ability to attract and retain talent in our increasingly competitive environment is further complicated by evolving employment trends.

We have experienced increased scrutiny on the pricing of current and potential diabetes, obesity, and Alzheimer's products due to payer concern over projected growth in these markets and, for certain of these drugs, the anticipated duration of treatment.

We have also observed scrutiny of pricing and access disparities across jurisdictions.

For example, in August 2023, HHS selected Jardiance, which is part of our collaboration with Boehringer Ingelheim, as one of the first ten medicines subject to government-set prices effective in 2026.

Given our product portfolio, we expect additional significant products will be selected in future years, which would have the effect of accelerating revenue erosion prior to exclusivity expiry.

The effect of reducing prices and reimbursement for certain of our products would significantly impact our business and consolidated results of operations.

Within the U.S., state level transparency initiatives, importation rules, reporting requirements, and mandated programs, including the establishment of drug affordability boards with the power to set upper payment limits on certain drugs in state-regulated plans, have also increased administrative costs, in some cases, compromised confidential business practices and otherwise detrimentally impacted our business.

Certain states have also undertaken efforts to codify 340B contract pharmacies into statute which would increase the cost of 340B programs.

In addition, government price reporting and payment regulations are complex, and require ongoing assessment of the methods by which we calculate and report pricing.

Calculation methodologies are inherently subjective and are subject to review and challenge by government agencies.

If agencies disagree with our calculations, or the methodologies and assumptions underlying them, we may need to restate previously reported data and could be subject to financial and legal liability, which may be significant.

In addition, changes to calculation methodologies could adversely affect our financial position or consolidated results of operations in any given period.

New safety or efficacy data

Relatedly, safety or efficacy concerns raised about a product in the same class or with the same mechanism of action as one of our products or product candidates could be imputed and have an adverse impact on the availability or commercial viability of our products or approval of product candidates.

Challenges to U.S. retail pharmacies due to pharmacy benefit manager reimbursement pressures, among other things, have resulted in financial difficulties for some pharmacies that may impact patient experiences, lead to determinations by certain pharmacies to not carry one or more of our significant products or threaten the viability of these pharmacies, which could negatively impact our business and results of operations.

Pharmacy benefit manager practices have come under increased scrutiny from U.S. policymakers at the federal and state level who have proposed legislation intended to address concerns regarding the impact that these intermediaries have on drug pricing and patients’ out of pocket costs.

If promulgated, such legislation could have resultant implications, costs, or consequences for our business and how we interact with these entities.

Risks Related to Our Intellectual Property

For non-biologic products, loss of exclusivity (whether by expiration of legal rights or by termination thereof as a consequence of litigation) typically results in the entry of one or more generic competitors, leading to a rapid and severe decline in revenues, especially in the U.S. Generic pharmaceutical companies have in some cases introduced a generic product before resolution of any related patent litigation.

Patents held by third-parties have also contributed, and may in the future contribute, to a decision by us to not pursue all potential indications for a product candidate.

Patents relating to pharmaceutical products are often obtained early in the development process.

Given the limited duration of patent and data protection, the speed with which we develop products, complete clinical testing, receive regulatory approval, supply commercial product to the market, and obtain public and private payer access are important factors in recouping our development costs and generating financial returns, particularly given regulatory and market dynamics that have and may continue to put pressure on pricing, exclusivity periods, and competition.

Delays in achieving these milestones in some cases limits our ability to capitalize on the innovative medicines that we develop or acquire.

For example, a proposal by the European Commission to revise the EU's general pharmaceutical legislation threatens the predictability and length of certain pharmaceutical intellectual property incentives, including by a two-year reduction of data package protection.

Changes proposed by the USPTO and by certain bills in Congress to limit the number of, and differences between, patents obtained could also affect the scope of patent protection for our products in the U.S.

In addition, in December 2023, the U.S. presidential administration released a proposed framework that would permit the federal government to consider the price of a drug developed using federal funds as a factor in determining whether it may exercise "march-in rights" and license it to a third party to manufacture.

A comment period on the proposal runs through February 6, 2024, and we are not able to predict whether a final rule will be adopted in accordance with the proposed framework.

We also face challenges from the distribution of counterfeit and illegally compounded versions of our genuine drugs, including as related to our products with GLP-1 receptor agonist activity.

Counterfeits, and in some cases illegally compounded drugs, fraudulently claim to be, or claim to contain, genuine branded medicines.

Counterfeit and illegally compounded drugs may not have the same safety, quality, and effectiveness as approved drugs, and may pose serious health risks to patients.

Our reputation and business could suffer harm from counterfeit or illegally compounded drugs and our actions to stop or prevent illegal sales of such drugs may be costly or ineffective.

Risks Related to Our Operations

undetected for significant periods of time.

Certain of these risks could also adversely affect the company's reputation.

To bring a drug from the discovery phase to market can take over a decade and often costs in excess of $2 billion.

Accordingly, business

For example, following the expiration of patent exclusivity for Alimta in Europe and Japan in June 2021, we have faced generic competition that has rapidly and severely eroded revenue from prior levels, and we expect such competition will continue to erode revenue from current levels in these markets.

In addition, as a result of the entry of multiple generics in the U.S. following the expiration of patent and pediatric exclusivity for Alimta in in the first half of 2022, we began facing, and expect to continue to face, generic competition that has rapidly and severely eroded revenue from prior levels, and we expect will continue to erode revenue from current levels.

Certain other significant products no longer have effective exclusivity through patent protection or data protection.

Generic pharmaceutical companies could also introduce a generic product before resolution of any related patent litigation.

For example, potential reforms to pharmaceutical legislation in the European Union may threaten the predictability and length of certain pharmaceutical intellectual property incentives.

and may not be upheld.

In the U.S., the FDA has issued several "interchangeability" designations for biosimilar products, and is expected to continue doing so in the future.

These designations could – subject to state law requirements – enable pharmacies to substitute biosimilars for innovator biological products.

Our ability to attract and retain talent in our increasingly competitive environment may be further complicated by evolving employment trends, including as related to increased preferences for remote or flexible work arrangements; public health outbreaks, epidemics, or pandemics, such as the COVID-19 pandemic; political, social, civil, or cultural unrest; emergence or escalation of, and responses to, war and unrest; or the threat of or perceived potential for any of the foregoing events.

regulations around the world and could damage public trust in our company.

- Public health outbreaks, epidemics, or pandemics, such as the COVID-19 pandemic, have adversely impacted and may in the future adversely impact our business and operations.

Actual or threatened public health outbreaks, epidemics, or pandemics, such as the COVID-19 pandemic, have adversely impacted and may in the future adversely impact our business and operations.

The

COVID-19 pandemic has adversely impacted and may continue to adversely impact our business and operations across markets to varying and fluctuating degrees, including as a result of:

- Cost inflation and strain on global transportation, manufacturing, and labor markets, which have negatively impacted development, manufacturing, supply, distribution, and sales of our medicines, including through increased costs to provide, and in some cases disruptions in supply or shortages of, our medicines.

- Fewer in-person interactions among patients and healthcare providers and our employees with healthcare professionals in certain markets.

- Risks related to our COVID-19 therapies, including heightened regulatory scrutiny of our manufacturing practices, quality assurance, and similar regulations; restrictions on administration that limit widespread and timely access to our therapies, and risks related to handling, return, and/or refund of product after delivery by us; concerns related to expedited authorization of restricted distribution of products with less than typical safety and efficacy data; and fluctuations in, or elimination of, demand for our COVID-19 therapies, including based on the availability of superior or competitive therapies, preventative measures such as vaccines and antiviral medicines, mutations of the virus impacting effectiveness, revocations or restrictions on EUAs, reaching endemic status in different jurisdictions, reduced government and payer funding for COVID-19 therapies, the unpredictable nature of pandemics, and other developments.

These and other risks related to the COVID-19 pandemic and other actual or threatened public health outbreaks, epidemics, or pandemics could affect other aspects of our business or intensify other risks inherent in our business.

The degree to which the COVID-19 pandemic could continue to affect us and other actual or threatened public health outbreaks, epidemics, or pandemics could affect us, will depend on developments that are highly uncertain and beyond our knowledge or control, including the duration and severity of the public health threat, the actions taken to reduce its transmission, the introduction and spread of new variants, the degree and extent of government restrictions on economic activity, government spending, and access to healthcare, and the speed with which, and extent to which, economic and operating conditions recover.

Should the COVID-19 pandemic, or any other actual or threatened public health outbreak, epidemic, or pandemic, as well as any associated or resulting cost of inflation, supply chain disruption, labor market impact, recession, depression, or other negative contingency, continue for a prolonged period, these risks could be exacerbated, causing further impact on our business and operations.

In particular, if one or more of our significant products are selected under the IRA, the resulting price reduction and reimbursement could negatively impact our business and consolidated results of operations.

We

continue to experience additional pricing pressures, rebates, clawbacks, and other changes in reimbursement policies and programs resulting from the financial strain of the COVID-19 pandemic, periods of global economic downturn or uncertainty, and the emergence or escalation of, and responses to, war or unrest (including the Russia-Ukraine war).

Significant uncertainty currently exists regarding tax proposals introduced by the current U.S. administration and Congress, including modifications to certain aspects of the Tax Cuts and Jobs Act of 2017, such as the potential repeal or deferral of the provision requiring capitalization of research and development expenses.

In addition, regulatory issues concerning compliance with cGMP, quality assurance, evolving standards, and increased scrutiny around excipients and potential impurities such as nitrosamines, and

Regulatory compliance and processes in jurisdictions outside the U.S. may also be less predictable and result in additional costs, uncertainties, and risks.

Management's discussion and analysis of results of operations and financial condition is intended to assist the reader in understanding and assessing significant changes and trends related to our [removed: company's] results of operations and financial position.

Various risks and uncertainties, including those discussed in "Forward-Looking Statements" and Item 1A, "Risk Factors," may cause our actual results, financial position, and cash generated from operations to differ [removed: materially] from these forward-looking statements.

| | | | Year Ended December [removed: 31] [added: 31,] | | | | | | | | | | | | Percent Change | | |

| Revenue | | | $ | [removed: 28,541.4] [added: 34,124.1] | | | | | $ | [removed: 28,318.4] [added: 28,541.4] | | | | | [removed: 1] [added: 20] | | |

| Gross margin | | | [removed: 21,911.6] [added: $] | [added: 27,041.9] | | | | | [removed: 21,005.6] [added: $] | [added: 21,911.6] | | | | | [removed: 4] [added: 23] | | |

| Gross margin as a percent of revenue | | | [removed: 76.8] [added: 79.2] | | % | | | | [removed: 74.2] [added: 76.8] | | % | | | | | | |

| Research and development | | | $ | [removed: 7,190.8] [added: 9,313.4] | | | | | $ | [removed: 6,930.7] [added: 7,190.8] | | | | | [removed: 4] [added: 30] | | |

| Marketing, selling, and administrative | | | [removed: 6,440.4] [added: 7,403.1] | | | | | | [removed: 6,431.6] [added: 6,440.4] | | | | | | [removed: —] [added: 15] | | |

| Asset impairment, restructuring, and other special charges | | | [removed: 244.6] [added: 67.7] | | | | | | [removed: 316.1] [added: 244.6] | | | | | | [removed: (23)] [added: (72)] | | |

| Other—net, (income) expense | | | [removed: 320.9] [added: (96.7)] | | | | | | [removed: 201.6] [added: 320.9] | | | | | | [removed: 59] [added: NM] | | |

| Net income | | | [removed: 6,244.8] [added: 5,240.4] | | | | | | [removed: 5,581.7] [added: 6,244.8] | | | | | | [removed: 12] [added: (16)] | | |

| Earnings per share - diluted | | | [removed: 6.90] [added: 5.80] | | | | | | [removed: 6.12] [added: 6.90] | | | | | | [removed: 13] [added: (16)] | | |

Revenue [added: outside the U.S.] increased [removed: in 2022] [added: 63 percent,] driven by increased [removed: volume, largely] [added: demand, partially] offset by lower realized prices and the unfavorable impact of foreign exchange rates.

[added: | | | | 2023 | | | | | |] 2022 [added: | | | | | | | | |]

[removed: - We] [added: Acquired IPR&D charges] recognized [removed: $908.5 million] [added: in 2023 primarily related to acquisitions] of [removed: acquired IPR&D] [added: DICE, Versanis, Emergence,] and [added: Mablink and from a business] development [removed: milestones that] [added: transaction with Beam Therapeutics Inc. Acquired IPR&D charges recognized in 2022] included the buy-out of substantially all future obligations that were contingent upon the occurrence of certain events linked to the success of our mutant-selective PI3kα inhibitor and a purchase of a Priority Review Voucher.

[removed: - We recognized] [added: Asset impairment, restructuring, and other special] charges [removed: of $244.6 million] [added: recognized in 2022] primarily related to an intangible asset impairment for GBA1 Gene Therapy [removed: (PR001)] due to changes in estimated launch timing.

[removed: Cost of Sales (See] [added: See] Note [removed: 6] [added: 5] to the consolidated financial [removed: statements)][added: statements for additional information.]

Our long-term success depends on our ability to continually discover or acquire, develop, and commercialize innovative [removed: new] medicines.

We currently have approximately [removed: 45] [added: 50] new medicine candidates in clinical development or under regulatory review, and a larger number of projects in the discovery phase.

The following [removed: certain] [added: select] new molecular entities (NMEs) [added: and new indication line extension (NILEX) products] are currently in Phase II or Phase III clinical trials or have been submitted for regulatory review or have [added: recently] received regulatory approval in the [removed: U.S., Europe,] [added: United States (U.S.), European Union (EU),] or Japan.

The [removed: following] table reflects the status of [removed: certain NMEs,] [added: these NMEs and NILEX products,] including certain other developments, up to the time of the filing of this Annual Report on Form 10-K:

| Compound | | | [removed: Indication] [added: Indication/Study] | | | Status | | | Developments | | | | | |

| [removed: Basal Insulin-Fc | | |] Type [removed: 1 and] 2 diabetes | | | Phase III | | | Phase III trials initiated in [removed: 2022 and] 2023. | | | | | | [added: | | |]

| [removed: ANGPTL3 siRNA] [added: Lepodisiran] | | | Cardiovascular disease | | | Phase II | | | Phase II trial [removed: initiated in 2022.] [added: is ongoing.] | | | | | |

| [removed: LP(a) Inhibitor] [added: Muvalaplin] | | | Cardiovascular disease | | | Phase II | | | Phase II trial [removed: initiated in 2022.] [added: is ongoing.] | | | | | |

| [removed: LP(a) siRNA] [added: Solbinsiran] | | | Cardiovascular disease | | | Phase II | | | Phase II trial [removed: initiated in 2022.] [added: is ongoing.] | | | | | |

| Orforglipron | | | Obesity | | | Phase [removed: II] [added: III] | | | Phase [removed: II] [added: III] trials [removed: were recently completed.] [added: initiated in 2023.] | | | | | |

| [removed: Retatrutide] [added: P2X7 Inhibitor] | | | [removed: Obesity] [added: Pain] | | | Phase II | | | Phase II trials were [removed: recently] completed. | | | | | |

| [removed: Lebrikizumab(1)] [added: Lebrikizumab(3) (Ebglyss®)] | | | Atopic dermatitis | | | [removed: Submitted] [added: Approved] | | | [added: Approved in the EU in 2023 and in Japan in 2024.] Submitted in the U.S. [removed: and Europe] in 2022. [added: We received a complete response letter from the FDA in 2023. We anticipate regulatory action by the end of 2024.] Phase III trials are ongoing. | | | | | |

| [removed: CXCR1/2 Ligands Monoclonal Antibody] [added: Eltrekibart] | | | Hidradenitis suppurativa | | | Phase II | | | Phase II trial is ongoing. | | | | | |

| Donanemab | | | Early Alzheimer's disease | | | [removed: Complete Response Letter] [added: Submitted] | | | [removed: Granted U.S. Food and Drug Administration (FDA) Breakthrough Therapy designation(2).] Submitted [removed: in the U.S.] [added: for approval] in [removed: 2022 under] the [removed: accelerated approval pathway. In January 2023,] [added: U.S.,] the [added: EU, and Japan in 2023. Granted] FDA [removed: issued a complete response letter for the accelerated approval submission.] [added: Breakthrough Therapy designation(4).] Phase III trials are ongoing. | | | | | |

| Remternetug | | | Early Alzheimer's disease | | | Phase III | | | Phase III trial [removed: initiated in 2022.] [added: is ongoing.] | | | | | |

| [removed: GBA1 Gene Therapy (PR001) | | |] Parkinson's disease | | | Phase II | | | Granted FDA Fast Track [removed: designation(3).] [added: designation(2).] Phase II trial is ongoing. | | | | | | [added: | | |]

| GRN Gene Therapy [removed: (PR006)] | | | Frontotemporal dementia | | | Phase II | | | Granted FDA Fast Track [removed: designation(3).] [added: designation(2).] Phase II trial is ongoing. | | | | | |

| [removed: Pirtobrutinib (JaypircaTM) | | |] Mantle cell lymphoma | | | [removed: Approved(4)] [added: Approved(5)] | | | FDA granted accelerated [removed: approval(4)] [added: approval(5)] in the U.S. in [removed: January] 2023. [added: Approved in the EU in 2023. Submitted in Japan in 2023.] Phase III trial is ongoing. | | | | | | [added: | | |]

| [added: Pirtobrutinib (Jaypirca®) | | |] Chronic lymphocytic leukemia | | | [removed: Phase III] [added: Approved(5)] | | | [added: FDA granted accelerated approval(5) in the U.S. in 2023.] Phase III trials are ongoing. | | | | | | [removed: | | |]

| [removed: Thyroid] [added: Imlunestrant | | | Adjuvant breast] cancer | | | [removed: Approved(4)] [added: Phase III] | | | Phase III trial is ongoing. | | | | | | [removed: | | |]

[removed: (1)] [added: (3)] In collaboration with Almirall, S.A. in Europe.

[removed: (2)] [added: (4)] Breakthrough Therapy designation is designed to expedite the development and review of potential medicines that are intended to treat a serious condition where preliminary clinical evidence indicates that the treatment may demonstrate substantial improvement over available therapy on a clinically significant endpoint.

[removed: (4)] [added: (5)] Continued approval may be contingent on verification and description of clinical benefit in confirmatory Phase III trials.

The following table summarizes certain financial information:

Revenue increased in 2023 driven by increased volume and higher realized prices.

The increase in revenue in 2023 was primarily driven by sales of Mounjaro®, Verzenio®, and Jardiance®, as well as the sales of the rights for the olanzapine portfolio, including Zyprexa®, and for Baqsimi®, partially offset by the absence of revenue from COVID-19 antibodies and lower sales of Alimta® following the entry of multiple generics in the first half of 2022.

Net income and earnings per share decreased in 2023, driven primarily by higher acquired in-process research and development (IPR&D) charges and increased research and development expenses, marketing, selling, and administrative expenses, and income taxes, partially offset by increased revenue.

See "Results of Operations" for additional information.

| Diabetes, Obesity, and Other Cardiometabolic Diseases | | | | | | | | | | | | | | |

| Cardiovascular outcomes in type 2 diabetes | | | Phase III | | | Phase III trial is ongoing. | | | | | | | | |

| Morbidity and mortality in obesity | | | Phase III | | | Phase III trial is ongoing. | | | | | | | | |

| Higher doses | | | Phase II | | | Phase II trial initiated in 2023. | | | | | | | | |

| Nonalcoholic steatohepatitis | | | Phase II | | | Announced in 2024 that a Phase II trial met its primary endpoint. | | | | | | | | |

| Insulin Efsitora Alfa | | | Type 1 and type 2 diabetes | | | Phase III | | | Phase III trials are ongoing. | | | | | |

| Retatrutide | | | Obesity, osteoarthritis, OSA | | | Phase III | | | Phase III trials initiated in 2023. | | | | | |

| Type 2 diabetes | | | Phase II | | | Phase II trial was completed. | | | | | | | | |

| Bimagrumab | | | Obesity | | | Phase II | | | Acquired in the acquisition of Versanis Bio, Inc. (Versanis) in 2023. Phase II trial is ongoing. | | | | | |

| Mazdutide | | | Obesity | | | Phase II | | | Phase II trial initiated in 2023. | | | | | |

| Volenrelaxin | | | Heart failure | | | Phase II | | | Phase II trial initiated in 2023. | | | | | |

| Mirikizumab | | | Crohn's Disease | | | Phase III | | | Announced in 2023 that a Phase III trial met the co-primary and all major secondary endpoints compared to placebo. Phase III trials are ongoing. | | | | | |

| DC-806 | | | Psoriasis | | | Phase II | | | Acquired in the acquisition of DICE Therapeutics, Inc. (DICE) in 2023. Phase II trial is ongoing. | | | | | |

| KV1.3 Antagonist | | | Psoriasis | | | Phase II | | | Phase II trial initiated in 2024. | | | | | |

| Ocadusertib (RIPK1 inhibitor) | | | Rheumatoid arthritis | | | Phase II | | | Phase II trial initiated in 2023. | | | | | |

| Ucenprubart | | | Atopic dermatitis | | | Phase II | | | Phase II trial initiated in 2023. | | | | | |

| GBA1 Gene Therapy | | | Gaucher disease Type 1 | | | Phase II | | | Phase II trial initiated in 2023. | | | | | |

| OTOF Gene Therapy | | | Hearing loss | | | Phase II | | | Phase II trial initiated in 2024. | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Compound | | | Indication/Study | | | Status | | | Developments | | | | | |

| | | | | | | | | | | | | | | |

| Olomorasib | | | KRAS G12C-mutant NSCLC | | | Phase II | | | Phase II trial initiated in 2023. | | | | | |

| Abemaciclib | | | Prostate cancer | | | Discontinued | | | In 2024, Phase III trials did not meet primary endpoints or were terminated for futility. | | | | | |

There is a high rate of failure inherent in drug discovery and development.

To bring a product from the discovery phase to market takes considerable time and entails significant cost.

We may also fail to allocate research and development resources efficiently, fail to pursue or invest sufficiently in product candidates or indications that may have been successful, or fail to optimally balance trial design, conduct, and speed to accomplish desired outcomes.

See Item 1, "Business—Patents, Trademarks, and Other Intellectual Property Rights" for additional discussion of the impacts of trends involving intellectual property on our business and results.

In August 2023, the HHS selected Jardiance, which is part of our collaboration with Boehringer Ingelheim, as one of the first ten medicines subject to government-set prices effective in 2026.

Other IRA provisions require drug manufacturers to provide rebates for Medicare Part B and Part D medicines under certain circumstances.

Also, the Part D benefit redesign will replace the Part D Coverage Gap Discount Program with a new manufacturer discount program.

The IRA can cause changes to development approach and timing and investments at-risk.

Outside the U.S., we have implemented actions to manage demand amid tight supply, including measures to minimize impact to existing Trulicity patients.

We have also progressed efforts to bring tirzepatide to patients via different delivery presentations outside the U.S., such as single-use vials and multi-use pens.

We expect to continue to experience disruptions in our supply of incretin products and for demand and supply considerations to influence the timing of tirzepatide launches in new markets, if approved.

For example, in 2023 we began production at our Research Triangle Park site in North Carolina and expect to continue significant capacity expansion over time as we increase production at this site and others.

The following table summarizes our key operating results:

| | | | | | | | | | | | | | | | | | |

| | | | 2022 | | | | | | 2021 | | | | | | | | |

| Acquired in-process research and development (IPR&D) and development milestones | | | 908.5 | | | | | | 970.1 | | | | | | (6) | | |

Research and development expenses increased in 2022, driven primarily by higher development expenses for late-stage assets, partially offset by lower development expenses for COVID-19 antibodies and the favorable impact of foreign exchange rates.

Marketing, selling, and administrative expenses in 2022 remained relatively flat compared to 2021 as increased costs associated with launches of new products and indications were offset by the favorable impact of foreign exchange rates.

The following highlighted items affect comparisons of our 2022 and 2021 financial results:

Acquired IPR&D and Development Milestones (Note 3 to the consolidated financial statements)

Asset Impairment, Restructuring, and Other Special Charges (Note 5 to the consolidated financial statements)

Other-Net, (Income) Expense (Note 18 to the consolidated financial statements)

- We recognized $410.7 million of net investment losses on equity securities.

2021

- We recognized a net inventory impairment charge related to our COVID-19 antibodies of $339.7 million.

As part of our response to the COVID-19 pandemic, and at the request of the United States (U.S.) and international governments, we invested in large-scale manufacturing of COVID-19 antibodies at risk, in order to ensure rapid access to patients around the world.

As the COVID-19 pandemic evolved during 2021, we incurred a net inventory impairment charge primarily due to the combination of changes to demand from U.S. and international governments, including changes to our agreement with the U.S. government, and near-term expiry dates of COVID-19 antibodies.

- We recognized $970.1 million of acquired IPR&D and development milestones that included charges resulting from business development transactions with Foghorn Therapeutics Inc. (Foghorn), Rigel Pharmaceuticals, Inc. (Rigel), and Precision Biosciences, Inc. (Precision).

- We recognized charges of $316.1 million primarily related to an impairment of a contract-based intangible asset from our acquisition of Loxo Oncology, Inc. (Loxo), an intangible asset impairment resulting from the sale of the rights to Qbrexza®, as well as acquisition and integration costs associated with the acquisition of Prevail Therapeutics Inc. (Prevail).

- We recognized a debt extinguishment loss of $405.2 million related to the repurchase of debt.

- We recognized $176.9 million of net investment gains on equity securities.

| Diabetes | | | | | | | | | | | | | | |

| Type 2 diabetes | | | | | | | | | | | | | | |

| Mirikizumab | | | Ulcerative colitis | | | Submitted | | | Submitted in the U.S., Europe, and Japan in 2022. | | | | | |

| Crohn's Disease | | | Phase III | | | Phase III trials are ongoing. | | | | | | | | |

| BTLA MAB Agonist | | | Systemic lupus erythematosus | | | Phase II | | | Phase II trial initiated in 2022. | | | | | |

| Rezpegaldesleukin | | | Systemic lupus erythematosus | | | Phase II | | | Phase II trial is ongoing. | | | | | |

| Solanezumab | | | Preclinical Alzheimer's disease | | | Phase III | | | Phase III trial is ongoing. | | | | | |

| P2X7 Inhibitor | | | Pain | | | Phase II | | | Phase II trials initiated in 2022. | | | | | |

| TRPA1 Antagonist | | | Pain | | | Phase II | | | Phase II trials are ongoing. | | | | | |

| B-cell malignancies | | | Phase II | | | Phase II trial is ongoing. | | | | | | | | |

| Selpercatinib (Retevmo®) | | | Lung cancer | | | Approved(4) | | | Phase III trials are ongoing. | | | | | |

| Imlunestrant | | | Adjuvant Breast Cancer | | | Phase III | | | Phase III trial initiated in 2022. | | | | | |

(3) Fast Track designation is designed to facilitate the development and expedite the review of medicines to treat serious conditions and fill an unmet medical need.

Our pipeline also contains several new indication line extension (NILEX) products.

The following certain NILEX products for use in the indication described are currently in Phase II or Phase III clinical trials or have been submitted for regulatory review or have received regulatory approval in the U.S., Europe, or Japan.

The following table reflects the status of certain NILEX products, including certain other developments, up to the time of the filing of this Annual Report on Form 10-K:

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Diabetes | | | | | | | | | | | |

| Nonalcoholic steatohepatitis | | | Phase II | | | Phase II trial is ongoing. | | | | | |

| Oncology | | | | | | | | | | | |

We manufacture and distribute our products through facilities in the United States (U.S.), including Puerto Rico, and [removed: 7 other countries.][added: in Europe and Asia.]

Our products are sold in approximately [removed: 110] [added: 105] countries.

[removed: *•Basaglar®*, in] [added: | Diabetes, Obesity and Other Cardiometabolic products | | | *Basaglar®* | | | In] collaboration with Boehringer Ingelheim, a long-acting human insulin analog for the treatment of diabetes. [added: | | |]

[removed: - *Humalog*®, *Humalog] [added: | *Humalog®, Humalog] Mix [removed: 75/25,* *Humalog U-100,* *Humalog U-200,* *Humalog] [added: 75/25, Humalog U-100, Humalog U-200, Humalog] Mix [removed: 50/50*, *insulin lispro,* *insulin] [added: 50/50, insulin lispro, insulin] lispro [removed: protamine*,] [added: protamine,] and [removed: *insulin] [added: insulin] lispro mix [removed: 75/25,* human] [added: 75/25* | | | Human] insulin analogs for the treatment of diabetes. [added: | | | | | |]

[removed: -] [added: |] *Humulin*®, *Humulin 70/30, Humulin N, Humulin R,* and *Humulin [removed: U-500*, human] [added: U-500* | | | Human] insulins of recombinant DNA origin for the treatment of diabetes. [added: | | | | | |]

[removed: - *Jardiance*®, in] [added: | *Jardiance*® | | | In] collaboration with Boehringer Ingelheim, for the treatment of type 2 diabetes; to reduce the risk of cardiovascular death in adult patients with type 2 diabetes and established cardiovascular disease; [removed: and] to reduce the risk of cardiovascular death and hospitalizations for heart failure in [removed: adults.][added: adults; and to reduce the risk of sustained decline in estimated glomerular filtration rate (eGFR), end-stage kidney disease, cardiovascular death and hospitalization in adults with chronic kidney disease (CKD) at risk of progression. | | | | | |]

[removed: - *Mounjaro*®, a] [added: | *Mounjaro*® | | | A] glucose-dependent insulinotropic polypeptide and glucagon-like peptide-1 receptor agonist, for the treatment of adults with type 2 diabetes in combination with diet and exercise to improve glycemic control. [added: | | | | | |]

[removed: - *Trulicit*y®, for] [added: | *Trulicit*y® | | | For] the treatment of type 2 diabetes in adults and pediatric patients 10 years of age and [removed: older,] [added: older;] and to reduce the risk of major adverse cardiovascular events in adult patients with type 2 diabetes and established cardiovascular disease or multiple cardiovascular risk factors. [added: | | | | | |]

[removed: - *Alimta*®, for] [added: | Oncology products | | | *Alimta*® | | | For] the first-line treatment, in combination with two other agents, of advanced non-small cell lung cancer (NSCLC) for patients with non-squamous cell histology and no epidermal growth factor receptor or anaplastic lymphoma kinase genomic tumor aberrations; for the first-line treatment, in combination with another agent, of advanced non-squamous NSCLC; for the second-line treatment of advanced non-squamous NSCLC; as monotherapy for the maintenance treatment of advanced non-squamous NSCLC in patients whose disease has not progressed immediately following chemotherapy treatment; and in combination with another agent for the treatment of malignant pleural mesothelioma. [added: | | |]

[removed: - *Cyramza*®, for] [added: | *Cyramza*® | | | For] use as monotherapy or in combination with another agent as a second-line treatment of advanced or metastatic gastric cancer or gastro-esophageal junction adenocarcinoma; in combination with another agent as a second-line treatment of metastatic NSCLC; in combination with another agent as a second-line treatment of metastatic colorectal cancer; as a monotherapy as a second-line treatment of hepatocellular carcinoma; and in combination with another agent as a first-line treatment of adult patients with metastatic NSCLC with activating epidermal growth factor receptor mutations. [added: | | | | | |]

[removed: - *Erbitux*®, indicated] [added: | *Erbitux*® | | | Indicated] both as monotherapy and in combination with another agent for the treatment of certain types of colorectal cancers; and as monotherapy, in combination with chemotherapy, or in combination with radiation therapy for the treatment of certain types of head and neck cancers. [added: | | | | | |]

[removed: - *Jaypirca*TM, for] [added: | *Jaypirca*® | | | For] the treatment of adult patients with relapsed or refractory mantle cell lymphoma (MCL) after at least two lines of systemic therapy, including a BTK [added: inhibitor; and for the treatment of adult patients with chronic lymphocytic leukemia or small lymphocytic lymphoma who have received at least two prior lines of therapy, including a BTK inhibitor and a BCL-2] inhibitor. [added: | | | | | |]

[removed: - *Retevmo*®, for] [added: | *Retevmo*® | | | For] the treatment of metastatic NSCLC with a rearranged during transfection (RET) gene fusion in adult patients; for the treatment of advanced metastatic medullary thyroid cancer with a RET mutation who require systemic therapy in adult and pediatric patients; for the treatment of advanced or metastatic thyroid cancer with a RET gene fusion in adult and pediatric patients who require systemic therapy and are radioactive iodine-refractory; and for the treatment of adult patients with locally advanced or metastatic solid tumors with a RET gene fusion [removed: that] [added: who] have progressed on or following prior systemic treatment or who have no satisfactory alternative treatment options. [added: | | | | | |]

[removed: - *Tyvyt*®, in] [added: | *Tyvyt*® | | | In] collaboration with Innovent Biologics, Inc., for the treatment of relapsed or refractory classic Hodgkin's lymphoma; for the first-line treatment of non-squamous NSCLC in combination with Alimta and another agent; for the first-line treatment of squamous NSCLC in combination with two other agents; for the first-line treatment of hepatocellular carcinoma in combination with another agent; for the first-line treatment of esophageal squamous cell carcinoma in combination with certain other agents; [removed: and] for the first-line treatment of gastric cancer in combination with two other [added: agents; and, in combination with two other] agents, [added: for patients with epidermal growth factor receptor (EGFR)-mutated non-squamous NSCLC that progressed after EGFR-tyrosine kinase inhibitor therapy,] each in China. [added: | | | | | |]

[removed: - *Verzenio*®, for] [added: | *Verzenio*® | | | For] use as monotherapy or in combination with endocrine therapy for the treatment of HR+, HER2- metastatic breast cancer and in combination with endocrine therapy for treatment of HR+, HER2-, node positive, early breast cancer at high risk of [removed: recurrence and a Ki-67 score at least 20 percent, as determined by a U.S. Food and Drug Administration (FDA) approved test.][added: recurrence. | | | | | |]

[removed: - *Olumiant*®, in] [added: | *Olumiant*® | | | In] collaboration with Incyte Corporation, for the treatment of adults with [removed: moderately-to-severely] [added: moderately to severely] active rheumatoid [removed: arthritis,] [added: arthritis after treatment with one or more tumor necrosis factor (TNF) blockers that did not work well enough or could not be tolerated;] moderate to severe atopic [removed: dermatitis, and] [added: dermatitis;] severe alopecia [removed: areata,] [added: areata;] and for the treatment of hospitalized adults with COVID-19 who require supplemental oxygen, mechanical ventilation, or extracorporeal membrane oxygenation. [added: | | | | | |]

[removed: - *Taltz*®, for] [added: | *Taltz*® | | | For] the treatment of adults and pediatric patients aged 6 years or older with [removed: moderate-to-severe] [added: moderate to severe] plaque [removed: psoriasis,] [added: psoriasis;] adults with active psoriatic [removed: arthritis,] [added: arthritis;] adults with ankylosing [removed: spondylitis,] [added: spondylitis;] and adults with active non-radiographic axial spondyloarthritis. [added: | | | | | |]

[removed: - *Cymbalta*®, for] [added: | Neuroscience products | | | *Cymbalta*® | | | For] the treatment of major depressive [removed: disorder,] [added: disorder;] diabetic peripheral neuropathic [removed: pain,] [added: pain;] generalized anxiety [removed: disorder, fibromyalgia,] [added: disorder; fibromyalgia;] and chronic musculoskeletal pain due to chronic low back pain or chronic pain due to osteoarthritis. [added: | | |]

[removed: - *Emgality®*, for] [added: | *Emgality®* | | | For] migraine prevention and the treatment of episodic cluster headache in adults. [added: | | | | | |]

[removed: *•Cialis*®, for] [added: | Other products and therapies | | | *Cialis*® | | | For] the treatment of erectile dysfunction and benign prostatic hyperplasia. [added: | | |]

[removed: - *Forteo*®, for] [added: | *Forteo*® | | | For] the treatment of osteoporosis in [added: men and] postmenopausal women [removed: and men] at high risk for [added: broken bones or] fracture and for glucocorticoid-induced osteoporosis in men and [removed: postmenopausal] women. [added: | | | | | |]

In addition, we advertise certain products directly to consumers in the U.S., and we maintain websites and other media channels [added: (e.g., social media)] with information about our major products.

[removed: We maintain special business groups to] [added: Our account managers] service wholesalers, pharmacy benefit managers, managed care organizations, group purchasing organizations, government and long-term care institutions, hospitals, and certain retail pharmacies.

We enter into arrangements with these organizations [removed: providing for] [added: to provide] discounts or rebates on our products.

In [added: 2023,] 2022, [removed: 2021,] and [removed: 2020,] [added: 2021,] three wholesale distributors in the U.S.—McKesson Corporation, [added: Cencora, Inc. (formerly] AmerisourceBergen [removed: Corporation,] [added: Corporation),] and Cardinal Health, Inc.—each accounted for a significant percentage of our consolidated revenue.

The products we market and [added: their] distribution [removed: of our products] vary from country to country.

For example, we and Boehringer Ingelheim have a global agreement to develop and commercialize a portfolio of diabetes products, including Trajenta®, Jentadueto®, Jardiance, Glyxambi®, Synjardy®, Trijardy® XR, [added: Basaglar,] and [removed: Basaglar.][added: Rezvoglar®.]

Generic [removed: Pharmaceuticals][added: Pharmaceuticals and Biosimilars]

In [removed: the U.S., Europe, Japan, and other] [added: most major] jurisdictions, the regulatory approval process for pharmaceuticals (other than biological products (biologics)) exempts generics from costly and time-consuming clinical trials to demonstrate their safety and efficacy, allowing generic manufacturers to rely on the safety and efficacy of the innovator product.

Accordingly, when a branded non-biologic pharmaceutical loses its market exclusivity, it normally faces intense price competition from generic forms of the product, which can result in the loss of a significant portion of the [added: branded] product's revenue in a very short period of time.

Further, public and private payers typically encourage the use of generics as alternatives to [removed: brand-name drugs in their healthcare programs.][added: branded products.]

Laws in the U.S. generally allow, and in many cases require, pharmacists to substitute [removed: generic drugs] [added: generics] that have been rated under government procedures to be essentially equivalent to a [removed: brand-name drug.][added: branded product.]

In certain [removed: countries outside the U.S.,] [added: countries,] intellectual property protection is weak, and we must compete with generic [removed: or counterfeit] versions of our products [added: at or] relatively shortly after launch.

[removed: Competition] [added: In addition, competition] for [removed: Lilly's biologics] [added: our biologics, which constitute a substantial portion of our products and pipeline,] may be affected by the approval of follow-on biologics, also known as biosimilars.

Globally, most governments have developed abbreviated regulatory pathways to approve biosimilars as follow-ons to [removed: innovator-developed] [added: innovator] biologics, including the Biologics Price Competition and Innovation Act of 2009 (the BPCIA) in [removed: the U.S. A number of biosimilars have been licensed under the BPCIA, as well as in Europe and Japan.]

[removed: In addition,] [added: For example,] the extent to which a biosimilar, once approved, will be substituted for the innovator biologic in a way that is similar to traditional generic substitution for non-biologic products [removed: is not yet entirely clear, and] will depend on a number of regulatory and marketplace factors that are still developing.

Regulatory interpretation of important aspects of the laws regulating biosimilars continues to [removed: evolve and, therefore,] [added: evolve, and therefore] the impact of these laws on our business remains subject to substantial uncertainty.

While competitors have developed biosimilars that compete with our products, we have [removed: developed, and may continue to develop,] [added: developed] our own [removed: biosimilars.][added: biosimilar and may develop others in the future.]

Health plans, managed care organizations, pharmacy benefit managers, wholesalers, [added: pharmacies,] and other supply chain [removed: stakeholders] [added: entities] have been consolidating into fewer, larger entities, thus enhancing their market power and importance.

Formulary placement can lead to reduced usage of a [removed: drug] [added: product] for the relevant patient population due to coverage restrictions, such as prior authorizations and formulary exclusions, or due to reimbursement limitations that result in higher consumer out-of-pocket cost, such as non-preferred co-pay tiers, increased co-insurance levels, and higher deductibles.

| Therapeutic area | | | Products | | | Certain Indications | | |

| *Zepbound*® | | | For the treatment of adults with obesity or overweight with weight-related comorbidities as an adjunct to a reduced-calorie diet and increased physical activity (marketed under Mounjaro in the European Union (EU) and in various other markets outside the U.S.). | | | | | |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Therapeutic area | | | Products | | | Certain Indications | | |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Therapeutic area | | | Products | | | Certain Indications | | |

| Immunology products | | | *Ebglyss*® | | | For the treatment of adult and adolescent patients 12 years or older with moderate to severe atopic dermatitis in Japan and, in collaboration with Almirall S.A., in Europe. | | |

| *OmvohTM* | | | For the treatment of adults with moderately to severely active ulcerative colitis. | | | | | |

Early market entry and rapid patient access can also be important to achieve product acceptance and success.

Generic pharmaceuticals and biosimilars can pose major competitive challenges to our business.

the U.S. A number of biosimilars have been licensed under the BPCIA, as well as in Europe and Japan.

Supply chain entities have also increasingly imposed utilization management tools to favor the use of generic products or otherwise limit access to our products.

There is a five-year cap on any restoration, and no patent's

Orphan designation entitles a particular use of the drug to seven years of market exclusivity, which runs in parallel with any applicable patents.

Outside the major markets, the adequacy and effectiveness of intellectual property protection for pharmaceuticals vary widely.

International and U.S. free trade agreements like the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs Agreement) administered by the World Trade Organization provide global protection of certain intellectual property rights.

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Therapeutic Area | | | Product | | | Protection | | | Territory | | | Expiry Date | | |

| Diabetes, Obesity and Cardiometabolic products | | | Jardiance | | | compound patent | | | U.S.* | | | 2028 | | |

| major European countries | | | 2029 | | | | | | | | | | | |

| Japan | | | 2030 | | | | | | | | | | | |

| Mounjaro/Zepbound | | | compound patent | | | U.S. | | | 2036 | | | | | |

| major European countries | | | 2037 | | | | | | | | | | | |

| Japan | | | 2040 | | | | | | | | | | | |

| data protection | | | U.S. | | | 2027 | | | | | | | | |

| major European countries | | | 2033 | | | | | | | | | | | |

| Japan | | | 2040 | | | | | | | | | | | |

| major European countries | | | 2029 | | | | | | | | | | | |

| Japan | | | 2029 | | | | | | | | | | | |

| biologics data protection | | | U.S. | | | 2027 | | | | | | | | |

| Japan | | | 2023 | | | | | | | | | | | |

| Oncology products | | | Cyramza | | | compound patent | | | U.S. | | | 2026 | | |

| major European countries | | | 2028 | | | | | | | | | | | |

| Japan | | | 2026 | | | | | | | | | | | |

| Japan | | | 2023 | | | | | | | | | | | |

| major European countries | | | 2038 | | | | | | | | | | | |

| data protection | | | U.S. | | | 2028 | | | | | | | | |

Diabetes products, including:

Oncology products, including:

Immunology products, including:

Neuroscience products, including:

- *Zyprexa®*, for the treatment of schizophrenia, acute mixed or manic episodes associated with bipolar I disorder, and bipolar maintenance.

Other products and therapies, including:

- *Bamlanivimab* and *etesevimab*, administered together, for the treatment of mild-to-moderate COVID-19 in adults and pediatric patients from birth to 12 years old with positive results of direct SARS-CoV-2 viral testing and who are at high risk for progression to severe COVID-19, including hospitalization or death (Emergency Use Authorization (EUA) granted in 2021).

In May 2022, the FDA announced that bamlanivimab and etesevimab are not currently authorized for emergency use for any U.S. region.

- *Bebtelovimab*, for the treatment of mild-to-moderate COVID-19 in adults and pediatric patients (12 years of age and older and weighing at least 40 kilograms) with positive results of direct SARS-CoV-2 viral testing, and who are at high risk for progression to severe COVID-19, including hospitalization or death, and for whom alternative COVID-19 treatment options approved or authorized by the FDA are not accessible or clinically appropriate (EUA granted in 2022).

In November 2022, the FDA announced that bebtelovimab is not currently authorized for emergency use for any U.S. region.

One of the biggest competitive challenges we face is from generic pharmaceuticals.

Biosimilars

A number of our products and potential new medicines in our clinical-stage pipeline are biologics.

In the U.S., the FDA regulates biologics under the Federal Food, Drug and Cosmetic Act, the Public Health Service Act, and implementing regulations.

Approval by the FDA ultimately depends on many factors, including a showing that the biosimilar is "highly similar" to the original product and has no clinically meaningful differences from the original product in terms of safety, purity, and potency.

The patent and regulatory exclusivity for the existing innovator biologic generally must expire in a given market before biosimilars may enter that market.

In the U.S., currently only a biosimilar product that is determined to be "interchangeable" by the FDA will be considered substitutable for the original biologic product without the intervention of the healthcare provider who prescribed the original biologic product.

The FDA requirements for interchangeability are evolving but the FDA has issued several "interchangeable" designations for biosimilar products, including for competitive insulin products, and is expected to continue doing so in the future.

These patents may be issued based upon the filing of international patent applications, usually filed under the Patent Cooperation Treaty (PCT).

Patent applications covering compounds are generally filed during the discovery phase of the drug discovery process, which is described in the "Research and Development" section below.

- Patent term restoration is a statutory right provided to U.S. patent holders that claim inventions subject to review by the FDA.

Patent term restoration is determined by a formula that cannot be calculated until product approval due to the uncertainty of the duration of clinical trials and the time it takes the FDA to review an application.

Also, in Japan, South Korea, Australia, and other jurisdictions, patent terms can be extended up to five years, depending on the length of regulatory review and other factors.

Changes to the laws and regulations governing these protections could result in earlier loss of effective market exclusivity.

- Regulatory authorities in major markets generally grant data package protection for a period of years following new drug approvals in recognition of the substantial investment required to complete clinical trials.

The base period of data package protection depends on the country.

- Under the BPCIA, the FDA has the authority to approve biosimilars.

A competitor seeking approval of a biosimilar must file an application to show its molecule is highly similar to an approved innovator biologic and include a certain amount of safety and efficacy data that the FDA will consider on a case-by-case basis.

Under the data protection provisions of this law, the FDA cannot approve a biosimilar application until 12 years after initial marketing approval of the innovator biologic, subject to certain conditions.

While the term of the pediatric exclusivity begins upon the expiration of the relevant patent, pediatric exclusivity is a regulatory exclusivity—i.e., a bar to generic or biosimilar approval, not a patent right.

Among other benefits, orphan designation entitles the particular use of the drug to seven years of market exclusivity, meaning that the FDA cannot (with limited exceptions) approve another marketing application for the same drug for the same indication until expiration of the seven-year period.

Unlike pediatric exclusivity, the orphan exclusivity period is independent of and runs in parallel with any applicable patents.

Under the Trade-Related Aspects of Intellectual Property (TRIPs) Agreement administered by the World Trade Organization, more than 140 countries have agreed to provide non-discriminatory protection for most pharmaceutical inventions and to assure that adequate and effective rights are available to patent owners.

Certain developing countries limit protection for biopharmaceutical products under their interpretation of "flexibilities" allowed under the TRIPs Agreement.

Thus, some types of patents, such as those on new uses of compounds or new forms of molecules, are not available in certain developing countries.

- Emgality is protected by a compound patent (2033) and biologics data protection (2030).

- Mounjaro is protected by a compound patent (2036) and by data protection (2027).

- Taltz is protected by a compound patent (2030) and by biologics data protection (2028).

Outside the U.S., important patent protection or data protection includes:

*•*Baqsimi*®* is protected by data protection in Japan (2026).

for the fiscal year ended December 31, [removed: 2022][added: 2023]

Aggregate market value of the common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the Registrant's most recently completed second fiscal quarter: approximately [removed: $274,342,000,000.][added: $398,291,000,000.]

Number of shares of common stock outstanding as of February [removed: 17, 2023: 950,296,118][added: 16, 2024: 950,164,452]

Portions of the Registrant's Proxy Statement for the [removed: 2023] [added: 2024] Annual Meeting of Shareholders have been incorporated by reference into Part III of this [removed: report.][added: Annual Report on Form 10-K.]

For the Year Ended December 31, [removed: 2022][added: 2023]

| [Item [removed: 1.](#i909b702f7db044078a8e3e150503788d_16)] [added: 1.](#i5830aedbd27d42838f753cdea13ed5a1_16)] | | | | | | [removed: [Business](#i909b702f7db044078a8e3e150503788d_16)] [added: [Business](#i5830aedbd27d42838f753cdea13ed5a1_16)] | | | | | | [removed: [5](#i909b702f7db044078a8e3e150503788d_16)] [added: [5](#i5830aedbd27d42838f753cdea13ed5a1_16)] | | |

| [Item [removed: 1A.](#i909b702f7db044078a8e3e150503788d_19)] [added: 1A.](#i5830aedbd27d42838f753cdea13ed5a1_19)] | | | | | | [Risk [removed: Factors](#i909b702f7db044078a8e3e150503788d_19)] [added: Factors](#i5830aedbd27d42838f753cdea13ed5a1_19)] | | | | | | [removed: [24](#i909b702f7db044078a8e3e150503788d_19)] [added: [24](#i5830aedbd27d42838f753cdea13ed5a1_19)] | | |

| [Item [removed: 1B.](#i909b702f7db044078a8e3e150503788d_22)] [added: 1B.](#i5830aedbd27d42838f753cdea13ed5a1_22)] | | | | | | [Unresolved Staff [removed: Comments](#i909b702f7db044078a8e3e150503788d_22)] [added: Comments](#i5830aedbd27d42838f753cdea13ed5a1_22)] | | | | | | [removed: [34](#i909b702f7db044078a8e3e150503788d_22)] [added: [36](#i5830aedbd27d42838f753cdea13ed5a1_22)] | | |

| [Item [removed: 2.](#i909b702f7db044078a8e3e150503788d_25)] [added: 2.](#i5830aedbd27d42838f753cdea13ed5a1_25)] | | | | | | [removed: [Properties](#i909b702f7db044078a8e3e150503788d_25)] [added: [Properties](#i5830aedbd27d42838f753cdea13ed5a1_25)] | | | | | | [removed: [34](#i909b702f7db044078a8e3e150503788d_25)] [added: [37](#i5830aedbd27d42838f753cdea13ed5a1_25)] | | |

| [Item [removed: 3.](#i909b702f7db044078a8e3e150503788d_28)] [added: 3.](#i5830aedbd27d42838f753cdea13ed5a1_28)] | | | | | | [Legal [removed: Proceedings](#i909b702f7db044078a8e3e150503788d_28)] [added: Proceedings](#i5830aedbd27d42838f753cdea13ed5a1_28)] | | | | | | [removed: [34](#i909b702f7db044078a8e3e150503788d_28)] [added: [37](#i5830aedbd27d42838f753cdea13ed5a1_28)] | | |

| [Item [removed: 4.](#i909b702f7db044078a8e3e150503788d_31)] [added: 4.](#i5830aedbd27d42838f753cdea13ed5a1_31)] | | | | | | [Mine Safety [removed: Disclosures](#i909b702f7db044078a8e3e150503788d_31)] [added: Disclosures](#i5830aedbd27d42838f753cdea13ed5a1_31)] | | | | | | [removed: [34](#i909b702f7db044078a8e3e150503788d_31)] [added: [37](#i5830aedbd27d42838f753cdea13ed5a1_31)] | | |

| [Item [removed: 5.](#i909b702f7db044078a8e3e150503788d_37)] [added: 5.](#i5830aedbd27d42838f753cdea13ed5a1_37)] | | | | | | [Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity [removed: Securities](#i909b702f7db044078a8e3e150503788d_37)] [added: Securities](#i5830aedbd27d42838f753cdea13ed5a1_37)] | | | | | | [removed: [35](#i909b702f7db044078a8e3e150503788d_37)] [added: [38](#i5830aedbd27d42838f753cdea13ed5a1_37)] | | |

| [Item [removed: 6.](#i909b702f7db044078a8e3e150503788d_43)] [added: 6.](#i5830aedbd27d42838f753cdea13ed5a1_43)] | | | | | | [removed: [\[Reserved\]](#i909b702f7db044078a8e3e150503788d_43)] [added: [\[Reserved\]](#i5830aedbd27d42838f753cdea13ed5a1_43)] | | | | | | [removed: [37](#i909b702f7db044078a8e3e150503788d_43)] [added: [40](#i5830aedbd27d42838f753cdea13ed5a1_43)] | | |

| [Item [removed: 7.](#i909b702f7db044078a8e3e150503788d_46)] [added: 7.](#i5830aedbd27d42838f753cdea13ed5a1_46)] | | | | | | [Management's Discussion and Analysis of Results of Operations and Financial [removed: Condition](#i909b702f7db044078a8e3e150503788d_46)] [added: Condition](#i5830aedbd27d42838f753cdea13ed5a1_46)] | | | | | | [removed: [37](#i909b702f7db044078a8e3e150503788d_46)] [added: [40](#i5830aedbd27d42838f753cdea13ed5a1_46)] | | |

| [Item [removed: 7A.](#i909b702f7db044078a8e3e150503788d_70)] [added: 7A.](#i5830aedbd27d42838f753cdea13ed5a1_70)] | | | | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#i909b702f7db044078a8e3e150503788d_70)] [added: Risk](#i5830aedbd27d42838f753cdea13ed5a1_70)] | | | | | | [removed: [55](#i909b702f7db044078a8e3e150503788d_70)] [added: [56](#i5830aedbd27d42838f753cdea13ed5a1_70)] | | |

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| [Item [removed: 9B.](#i909b702f7db044078a8e3e150503788d_163)] [added: 9B.](#i5830aedbd27d42838f753cdea13ed5a1_163)] | | | | | | [Other [removed: Information](#i909b702f7db044078a8e3e150503788d_163)] [added: Information](#i5830aedbd27d42838f753cdea13ed5a1_163)] | | | | | | [removed: [113](#i909b702f7db044078a8e3e150503788d_163)] [added: [114](#i5830aedbd27d42838f753cdea13ed5a1_163)] | | |

| [Item [removed: 9C.](#i909b702f7db044078a8e3e150503788d_166)] [added: 9C.](#i5830aedbd27d42838f753cdea13ed5a1_166)] | | | | | | [Disclosure Regarding Foreign Jurisdictions that Prevent [removed: Inspections](#i909b702f7db044078a8e3e150503788d_166)] [added: Inspections](#i5830aedbd27d42838f753cdea13ed5a1_166)] | | | | | | [removed: [113](#i909b702f7db044078a8e3e150503788d_166)] [added: [114](#i5830aedbd27d42838f753cdea13ed5a1_166)] | | |

| [Part [removed: III](#i909b702f7db044078a8e3e150503788d_169)] [added: III](#i5830aedbd27d42838f753cdea13ed5a1_169)] | | | | | | | | | | | | | | |

| [Item [removed: 10.](#i909b702f7db044078a8e3e150503788d_172)] [added: 10.](#i5830aedbd27d42838f753cdea13ed5a1_172)] | | | | | | [Directors, Executive Officers, and Corporate [removed: Governance](#i909b702f7db044078a8e3e150503788d_172)] [added: Governance](#i5830aedbd27d42838f753cdea13ed5a1_172)] | | | | | | [removed: [114](#i909b702f7db044078a8e3e150503788d_172)] [added: [115](#i5830aedbd27d42838f753cdea13ed5a1_172)] | | |

| [Item [removed: 11.](#i909b702f7db044078a8e3e150503788d_175)] [added: 11.](#i5830aedbd27d42838f753cdea13ed5a1_175)] | | | | | | [Executive [removed: Compensation](#i909b702f7db044078a8e3e150503788d_175)] [added: Compensation](#i5830aedbd27d42838f753cdea13ed5a1_175)] | | | | | | [removed: [114](#i909b702f7db044078a8e3e150503788d_175)] [added: [115](#i5830aedbd27d42838f753cdea13ed5a1_175)] | | |

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| [Item [removed: 16.](#i909b702f7db044078a8e3e150503788d_196)] [added: 16.](#i5830aedbd27d42838f753cdea13ed5a1_193)] | | | | | | [Form 10-K [removed: Summary](#i909b702f7db044078a8e3e150503788d_196)] [added: Summary](#i5830aedbd27d42838f753cdea13ed5a1_193)] | | | | | | [removed: [117](#i909b702f7db044078a8e3e150503788d_196)] [added: [118](#i5830aedbd27d42838f753cdea13ed5a1_193)] | | |

Forward-looking statements include all statements that do not relate solely to historical or current facts, and generally can be identified by the use of words such as "may," [added: "could," "aim," "seek,"] "believe," "will," "expect," "project," "estimate," "intend," [added: "target,"] "anticipate," "plan," "continue," or similar expressions or future or conditional verbs.

Forward-looking statements inherently involve many risks and uncertainties that could cause actual results to differ [removed: materially] from those expressed in forward-looking statements.

[removed: Where, in any forward-looking statement, we express an expectation or belief as to future results or events, it is] [added: Forward-looking statements are] based on management's current plans and expectations, expressed in good faith and believed to have a reasonable basis.

However, we can give no assurance that any [removed: such] expectation or belief will result or will be achieved or accomplished.

The following include some but not all of the factors that could cause actual results or events to differ [removed: materially] from those anticipated:

- the impact and [added: uncertain] outcome of acquisitions and business development transactions and related [removed: integration] costs;

- the expiration of intellectual property protection for certain of our products and competition from generic [removed: and/or] [added: and] biosimilar [added: products, and risks from the proliferation of counterfeit or illegally compounded] products;

- our ability to protect and enforce patents and other intellectual [removed: property;][added: property and changes in patent law or regulations related to data package exclusivity;]

- market uptake of [removed: recently] launched [removed: products;][added: products and indications;]

- information technology system inadequacies, [added: inadequate controls or procedures, security] breaches, or operating failures;

- unauthorized access, disclosure, misappropriation, or compromise of confidential information or other data stored in our information technology systems, networks, and facilities, or those of third parties with whom we share our [removed: data;][added: data and violations of data protection laws or regulations;]

- the impact of global macroeconomic conditions, [added: including uneven economic growth or downturns or uncertainty,] trade disruptions, [removed: disputes, unrest, war,] [added: international tension, conflicts,] regional dependencies, or other costs, uncertainties and risks related to engaging in business globally;

| [Part I](#i5830aedbd27d42838f753cdea13ed5a1_13) | | | | | | | | | | | | | | |

| [Item 1C.](#i5830aedbd27d42838f753cdea13ed5a1_1653) | | | | | | [Cybersecurity](#i5830aedbd27d42838f753cdea13ed5a1_1653) | | | | | | [36](#i5830aedbd27d42838f753cdea13ed5a1_1653) | | |

| [Part II](#i5830aedbd27d42838f753cdea13ed5a1_34) | | | | | | | | | | | | | | |

- intense competition affecting our products, pipeline or industry;

- the use of artificial intelligence or other emerging technologies in various facets of our operations may exacerbate competitive, regulatory, litigation, cybersecurity and other risks;

- changes in accounting and reporting standards.

| [Part I](#i909b702f7db044078a8e3e150503788d_13) | | | | | | | | | | | | | | |

| [Part II](#i909b702f7db044078a8e3e150503788d_34) | | | | | | | | | | | | | | |

In particular, information appearing under "Business," "Risk Factors," and "Management's Discussion and Analysis of Results of Operations and Financial Condition" includes forward-looking statements.

- changes in patent law or regulations related to data package exclusivity;

- competitive developments affecting current products and our pipeline;

- the impact of public health outbreaks, epidemics, or pandemics, such as the COVID-19 pandemic;

- changes in accounting and reporting standards promulgated by the Financial Accounting Standards Board and the Securities and Exchange Commission (SEC);

Risk Management and Strategy

We manage cybersecurity threats as part of our oversight, evaluation, and mitigation of enterprise-level risks.

We have based our cybersecurity program on industry frameworks with the goal of building enterprise resilience against an evolving landscape of cybersecurity threats and to respond to cybersecurity threats as they materialize.

Our program includes monitoring, identification, assessment, and management components, as well as information and escalation components designed to inform management and the board of directors of prospective risks and developments.

Our information security program encompasses functions dedicated to both proactive and reactive management of cybersecurity threats.

We implement our cybersecurity program internally through established policies, standards, reference architectures, and the use of enterprise security services that focus on emerging and ongoing cybersecurity risks.

Our proactive management of cybersecurity risks entails many actions, including the maintenance of system access restrictions, utilization of data security technology, employee education and training initiatives, and retention of cyber liability insurance, among other measures.

We regularly engage third-party auditors and consultants and leverage our internal audit function to assess various facets of our cybersecurity program.

These engagements include completion of industry-standard assessments or certifications, maturity model reviews, threat simulations, as well as internal reviews to assess the effectiveness of our cybersecurity processes.

We also maintain enterprise-wide processes to oversee and identify risks from cybersecurity threats associated with our use of third-party service providers.

As examples, we generally review current and prospective third-party service providers for unacceptable cybersecurity risks, negotiate contractual provisions that require the establishment of third-party cybersecurity controls, and deploy communications security measures to protect third-party communications.

We assess cybersecurity contingencies within our overall business continuity risk management planning process.

Our Information Security team utilizes various tools to prevent, detect, monitor, and react to cybersecurity threats.

Our Incident Response Playbook outlines processes, roles, responsibilities, engagements, escalations, notifications, and other communications applicable to the assessment, mitigation, and remediation of realized cybersecurity events.

The nature and assessed risk of a realized cybersecurity event dictates the pace and extent of relevant processes, escalations, and communications, including an evaluation of any necessary or required disclosure.

Roles and escalation paths range from within the Information Security team up to the Executive Committee, and the board of directors and its committees, as appropriate.

We describe risks faced by us from identified cybersecurity threats in Item 1A, "Risk Factors—Risks Related to Our Operations— Failure, inadequacy, breach of, or unauthorized access to, our IT systems or those of our third-party service providers, unauthorized access to our confidential information, or violations of data protection laws, could each result in material harm to our business and reputation", "Risk Factors—Risks Related to Our Operations—Manufacturing, quality, or supply chain difficulties, disruptions, or shortages could lead to product supply problems" and "Risk Factors—Risks Related to Our Operations—Reliance on third-party relationships and outsourcing arrangements could adversely affect our business."

Governance

Management, under the supervision of our Chief Information Security Officer (CISO), is directly responsible for assessing and managing cybersecurity risks and otherwise implementing our cybersecurity program, which includes our Incident Response Playbook.

The CISO reports directly to our Chief Information and Digital Officer (CIDO), who is a member of our Executive Committee and leads our information technology, cybersecurity, digital health, and advanced analytics and data science functions.

Our CIDO in turn regularly updates our Executive Committee on cybersecurity matters.

Our CISO and CIDO have significant experience managing global cybersecurity threats across the pharmaceutical, technology, entertainment, and defense industries.

In addition to providing regular updates to the CIDO and his staff, the CISO is a member of our Executive Information Security Governance function (EISG), which meets regularly and is also composed of executive and senior leadership from a variety of functions, including information security, legal, finance, audit, and ethics and compliance to assess and manage cybersecurity developments and risks and our internal programs.

Each of the CIDO, the CISO and the EISG may call upon business and legal stakeholders across our company to manage cybersecurity threats and incidents.

The audit committee of our board of directors is responsible for oversight of the company's programs, policies, procedures, and risk management activities related to information security and data protection.

The audit committee meets regularly with our CIDO and CISO to discuss threats, risks, and ongoing efforts to enhance cyber resiliency, as well as changes to the broader cybersecurity landscape.

In addition, the ethics and compliance committee supports the audit committee and board in oversight of legal and regulatory compliance.

Our board of directors also regularly participates in presentations on cybersecurity and information technology.

In addition to regular presentations, management promptly updates our board of directors regarding significant threats and incidents as they arise.

At December 31, [removed: 2022,] [added: 2023,] we owned [removed: nine] [added: eleven] production, distribution, and corporate administrative sites in the United States (U.S.), including Puerto Rico.

These facilities contain an aggregate of approximately [removed: 8.1] [added: 9.0] million square feet of floor area dedicated to production, distribution, and administration.

Major production sites include Indianapolis, Indiana; Carolina, Puerto Rico; [added: Durham, North Carolina;] and Branchburg, New Jersey.

We [added: also] own production and distribution sites in [removed: seven countries outside the U.S.,] [added: Europe and Asia,] containing an aggregate of approximately [removed: 4.6] [added: 4.7] million square feet of floor area.

In the U.S., our research and development facilities contain an aggregate of approximately [removed: 4.5] [added: 4.9] million square feet of floor area, primarily consisting of owned facilities located in Indianapolis and smaller leased sites primarily in [added: Boston, Massachusetts;] San Diego, California; San Francisco, California; and New York, New York.

Additional U.S. and international production facilities and expansions of production facilities are expected to come online in future periods.

In 2023, we expect production to commence at an additional approximately 0.4 million square foot facility in Durham, North Carolina, with other production facilities and expansions of production facilities expected to come online in future periods.

As of February [removed: 17, 2023,] [added: 16, 2024,] there were approximately [removed: 19,868] [added: 18,871] holders of record of our common stock based on information provided by EQ Shareowner Services, our transfer agent.

The following table summarizes the activity related to repurchases of our equity securities during the fourth quarter ended December 31, [removed: 2022:][added: 2023:]

During the three months ended December 31, [removed: 2022,] [added: 2023,] we did not repurchase any shares under our $5.00 billion share repurchase program authorized in May 2021.

The following graph compares the return on Lilly stock with that of the Standard & Poor's (S&P) 500 Stock Index and our peer group for the years [removed: 2018] [added: 2019] through [removed: 2022.][added: 2023.]

The graph assumes that, on the last business day of [removed: 2017,] [added: 2018,] a person invested $100 each in Lilly stock, the S&P 500 Stock Index, and the peer group's collective common stock.

Value of $100 Invested on Last Business Day of [removed: 2017] [added: 2018] Comparison of Five-Year Cumulative Total Shareholder Return Among Lilly, S&P 500 Stock Index, and Peer Group(1)

[removed: ][added: ]

| | | | | | | Lilly | | | | | | Peer Group | | | | | | [removed: | | | | | |] S&P 500 | | |

| [removed: Dec-17] [added: Dec-18] | | | | | | $ | 100.00 | | | | | $ | 100.00 | | | | | [removed: | | | | | |] $ | 100.00 | |

The peer group used for performance benchmarking aligns with the peer group used for executive compensation purposes for [removed: 2022.][added: 2023.]

| October 2023 | | | — | | | $ | — | | — | | | $ | 2,500.0 | |

| November 2023 | | | — | | | — | | | — | | | 2,500.0 | | |

| December 2023 | | | — | | | — | | | — | | | 2,500.0 | | |

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Dec-19 | | | | | | 116.15 | | | | | | 118.31 | | | | | | 131.49 | | |

| Dec-20 | | | | | | 152.23 | | | | | | 121.00 | | | | | | 155.68 | | |

| Dec-21 | | | | | | 252.82 | | | | | | 145.23 | | | | | | 200.37 | | |

| Dec-22 | | | | | | 339.38 | | | | | | 158.70 | | | | | | 164.08 | | |

| Dec-23 | | | | | | 546.08 | | | | | | 158.45 | | | | | | 207.21 | | |

| October 2022 | | | — | | | $ | — | | — | | | $ | 3,250.0 | |

| November 2022 | | | — | | | — | | | — | | | 3,250.0 | | |

| December 2022 | | | — | | | — | | | — | | | 3,250.0 | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Dec-18 | | | | | | 140.45 | | | | | | 104.95 | | | | | | | | | | | | 95.62 | | |

| Dec-19 | | | | | | 163.13 | | | | | | 124.15 | | | | | | | | | | | | 125.72 | | |

| Dec-20 | | | | | | 213.80 | | | | | | 126.98 | | | | | | | | | | | | 148.85 | | |

| Dec-21 | | | | | | 355.08 | | | | | | 152.56 | | | | | | | | | | | | 191.58 | | |

| Dec-22 | | | | | | 476.65 | | | | | | 167.09 | | | | | | | | | | | | 156.88 | | |

| ELI LILLY AND COMPANY AND [removed: SUBSIDIARIES (Dollars] [added: SUBSIDIARIES (Dollars] in [removed: millions] [added: millions, except per-share data,] and shares in [removed: thousands, except per-share data)] [added: thousands)] | | | | | | Year Ended December 31 | | | | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | |

| Revenue (Note 2) | | | | | | | | | | | | $ | [removed: 28,541.4] [added: 34,124.1] | | | | | $ | [removed: 28,318.4] [added: 28,541.4] | | | | | $ | [removed: 24,539.8] [added: 28,318.4] | |

| Cost of sales | | | | | | | | | | | | [removed: 6,629.8] [added: 7,082.2] | | | | | | [removed: 7,312.8] [added: 6,629.8] | | | | | | [removed: 5,483.3] [added: 7,312.8] | | |

| Research and development | | | | | | | | | | | | [removed: 7,190.8] [added: 9,313.4] | | | | | | [removed: 6,930.7] [added: 7,190.8] | | | | | | [removed: 5,976.3] [added: 6,930.7] | | |

| Marketing, selling, and administrative | | | | | | | | | | | | [removed: 6,440.4] [added: 7,403.1] | | | | | | [removed: 6,431.6] [added: 6,440.4] | | | | | | [removed: 6,121.2] [added: 6,431.6] | | |

| Acquired in-process research and development [removed: and development milestones] (Note 3) | | | | | | | | | | | | [removed: 908.5] [added: 3,799.8] | | | | | | [removed: 970.1] [added: 908.5] | | | | | | [removed: 769.8] [added: 970.1] | | |

| Asset impairment, restructuring, and other special charges (Note 5) | | | | | | | | | | | | [removed: 244.6] [added: 67.7] | | | | | | [removed: 316.1] [added: 244.6] | | | | | | [removed: 131.2] [added: 316.1] | | |

| Other—net, (income) expense (Note 18) | | | | | | | | | | | | [removed: 320.9] [added: (96.7)] | | | | | | [removed: 201.6] [added: 320.9] | | | | | | [removed: (1,171.9)] [added: 201.6] | | |

| | | | | | | | | | | | | [removed: 21,735.0] [added: 27,569.5] | | | | | | [removed: 22,162.9] [added: 21,735.0] | | | | | | [removed: 17,309.9] [added: 22,162.9] | | |

| Income before income taxes | | | | | | | | | | | | [removed: 6,806.4] [added: 6,554.6] | | | | | | [removed: 6,155.5] [added: 6,806.4] | | | | | | [removed: 7,229.9] [added: 6,155.5] | | |

| Income taxes (Note 14) | | | | | | | | | | | | [removed: 561.6] [added: 1,314.2] | | | | | | [removed: 573.8] [added: 561.6] | | | | | | [removed: 1,036.2] [added: 573.8] | | |

| Net income | | | | | | | | | | | | $ | [removed: 6,244.8] [added: 5,240.4] | | | | | $ | [removed: 5,581.7] [added: 6,244.8] | | | | | $ | [removed: 6,193.7] [added: 5,581.7] | |

| Basic | | | | | | | | | | | | $ | [removed: 6.93] [added: 5.82] | | | | | $ | [removed: 6.15] [added: 6.93] | | | | | $ | [removed: 6.82] [added: 6.15] | |

| Diluted | | | | | | | | | | | | $ | [removed: 6.90] [added: 5.80] | | | | | $ | [removed: 6.12] [added: 6.90] | | | | | $ | [removed: 6.79] [added: 6.12] | |

| Basic | | | | | | | | | | | | [removed: 901,736] [added: 900,181] | | | | | | [removed: 906,963] [added: 901,736] | | | | | | [removed: 907,634] [added: 906,963] | | |

| Diluted | | | | | | | | | | | | [removed: 904,619] [added: 903,284] | | | | | | [removed: 911,681] [added: 904,619] | | | | | | [removed: 912,505] [added: 911,681] | | |

| ELI LILLY AND COMPANY AND SUBSIDIARIES (Dollars in millions) | | | | | | Year Ended December 31 | | | | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | |

| Change in foreign currency translation gains (losses) | | | | | | | | | | | | [removed: (248.1)] [added: (25.8)] | | | | | | [removed: 13.5] [added: (248.1)] | | | | | | [removed: 122.1] [added: 13.5] | | |

| Change in net unrealized gains (losses) on [added: available-for-sale] securities | | | | | | | | | | | | [removed: (53.2)] [added: 14.1] | | | | | | [removed: (15.9)] [added: (53.2)] | | | | | | [removed: 14.2] [added: (15.9)] | | |

| [removed: Change in defined benefit pension and retiree health benefit plans (Note 15)] | | | [removed: | | |] [added: Defined Benefit Pension Plans] | | | | | | [removed: 616.9] | | | | | | [removed: 2,699.4] [added: Retiree Health Benefit Plans] | | | | | | [removed: (157.1)] | | |

| Change in [removed: effective portion of] [added: net unrealized gains (losses) on] cash flow hedges | | | | | | | | | | | | [removed: 432.9] [added: 109.5] | | | | | | [removed: 151.6] [added: 432.9] | | | | | | [removed: (152.9)] [added: 151.6] | | |

| Other comprehensive income (loss) before income taxes | | | | | | | | | | | | [removed: 748.5] [added: (678.7)] | | | | | | [removed: 2,848.6] [added: 748.5] | | | | | | [removed: (173.7)] [added: 2,848.6] | | |

| Benefit [removed: (provision)] [added: (expense)] for income taxes related to other comprehensive income (loss) | | | | | | | | | | | | [removed: (250.0)] [added: 196.3] | | | | | | [removed: (695.3)] [added: (250.0)] | | | | | | [removed: 200.9] [added: (695.3)] | | |

| Other comprehensive [removed: income,] [added: income (loss),] net of tax (Note 17) | | | | | | | | | | | | [removed: 498.5] [added: (482.4)] | | | | | | [removed: 2,153.3] [added: 498.5] | | | | | | [removed: 27.2] [added: 2,153.3] | | |

| Comprehensive income | | | | | | | | | | | | $ | [removed: 6,743.3] [added: 4,758.0] | | | | | $ | [removed: 7,735.0] [added: 6,743.3] | | | | | $ | [removed: 6,220.9] [added: 7,735.0] | |

| ELI LILLY AND COMPANY AND SUBSIDIARIES (Dollars in millions, shares in thousands) | | | | | | December 31 | | | | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | |

| Cash and cash equivalents (Note 7) | | | | | | | | | | | | $ | [removed: 2,067.0] [added: 2,818.6] | | | | | $ | [removed: 3,818.5] [added: 2,067.0] | |

| Short-term investments (Note 7) | | | | | | | | | | | | [removed: 144.8] [added: 109.1] | | | | | | [removed: 90.1] [added: 144.8] | | |

| Accounts receivable, net of allowances of [removed: $16.0 (2022)] [added: $14.8 (2023)] and [removed: $22.5 (2021)] [added: $16.0 (2022)] | | | | | | | | | | | | [removed: 6,896.0] [added: 9,090.5] | | | | | | [removed: 6,672.8] [added: 6,896.0] | | |

| Other receivables | | | | | | | | | | | | [removed: 1,662.9] [added: 2,245.7] | | | | | | [removed: 1,454.4] [added: 1,662.9] | | |

| Inventories (Note 6) | | | | | | | | | | | | [removed: 4,309.7] [added: 5,772.8] | | | | | | [removed: 3,886.0] [added: 4,309.7] | | |

| Total current assets | | | | | | | | | | | | [removed: 18,034.5] [added: 25,727.0] | | | | | | [removed: 18,452.4] [added: 18,034.5] | | |

| Investments (Note 7) | | | | | | | | | | | | [removed: 2,901.8] [added: 3,052.2] | | | | | | [removed: 3,212.6] [added: 2,901.8] | | |

| Goodwill (Note 8) | | | | | | | | | | | | [removed: 4,073.0] [added: 4,939.7] | | | | | | [removed: 3,892.0] [added: 4,073.0] | | |

| Other intangibles, net (Note 8) | | | | | | | | | | | | [removed: 7,206.6] [added: 6,906.6] | | | | | | [removed: 7,691.9] [added: 7,206.6] | | |

| Deferred tax assets (Note 14) | | | | | | | | | | | | [removed: 2,792.9] [added: 5,477.3] | | | | | | [removed: 2,489.3] [added: 2,792.9] | | |

| Property and equipment, net (Note 9) | | | | | | | | | | | | [removed: 10,144.0] [added: 12,913.6] | | | | | | [removed: 8,985.1] [added: 10,144.0] | | |

| Other noncurrent assets | | | | | | | | | | | | [removed: 4,337.0] [added: 4,989.9] | | | | | | [removed: 4,082.7] [added: 4,337.0] | | |

| Total assets | | | | | | | | | | | | $ | [removed: 49,489.8] [added: 64,006.3] | | | | | $ | [removed: 48,806.0] [added: 49,489.8] | |

| Short-term borrowings and current maturities of long-term debt (Note 11) | | | | | | | | | | | | $ | [removed: 1,501.1] [added: 6,904.5] | | | | | $ | [removed: 1,538.3] [added: 1,501.1] | |

| Net income | | | | | | | | | | | | $ | 5,240.4 | | | | | $ | 6,244.8 | | | | | $ | 5,581.7 | |

| Change in retirement benefit plans (Note 15) | | | | | | | | | | | | (776.5) | | | | | | 616.9 | | | | | | 2,699.4 | | |

| Prepaid expenses | | | | | | | | | | | | 5,540.8 | | | | | | 2,946.8 | | |

| Other current assets | | | | | | | | | | | | 149.5 | | | | | | 7.3 | | |

| Other current liabilities | | | | | | | | | | | | 3,281.3 | | | | | | 2,845.4 | | |

| Net income | | | | | | | | | | | | | | | | | | | | | 5,240.4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11.0 | | |

| Retirement of treasury shares | | | (2,299) | | | | | | (1.4) | | | | | | | | | | | | (748.6) | | | | | | | | | | | | | | | | | | (2,299) | | | | | | 750.0 | | | | | | | | |

| Other | | | | | | | | | | | | | | | | | | | | | (0.8) | | | | | | | | | | | | | | | | | | | | | | | | (2.5) | | | | | | (44.8) | | |

| Balance at December 31, 2023 | | | 949,781 | | | | | | $ | 593.6 | | | | | $ | 7,250.4 | | | | | $ | 10,312.3 | | | | | $ | (3,013.2) | | | | | $ | (4,327.0) | | | | | 402 | | | | | | $ | (44.2) | | | | | $ | 91.8 | |

| ELI LILLY AND COMPANY AND SUBSIDIARIES (Dollars in millions) | | | | | | Year Ended December 31 | | | | | | 2023 | | | | | | 2022 | | | | | | 2021 | | |

| Net income | | | | | | | | | | | | $ | 5,240.4 | | | | | $ | 6,244.8 | | | | | $ | 5,581.7 | |

| Gains on sale of product rights | | | | | | | | | | | | (1,878.9) | | | | | | (156.5) | | | | | | (216.0) | | |

| Other operating activities, net | | | | | | | | | | | | 295.5 | | | | | | 461.3 | | | | | | 727.4 | | |

| Proceeds from sale of product rights | | | | | | | | | | | | 1,604.3 | | | | | | 95.8 | | | | | | 216.0 | | |

Reclassifications

Development milestone payments related to externally developed IPR&D projects, acquired directly in a transaction other than a business combination, were previously included in cash flows from operating activities in the consolidated statements of cash flows and are now included in purchases of IPR&D in cash flows from investing activities.

The reclassification resulted in an increase to net cash provided by operating activities and net cash used in investing activities of $501.3 million and $105.2 million in 2022 and 2021, respectively.

Accounting Standards Update (ASU) 2023-09, *Income Taxes (Topic 740): Improvements to Income Tax Disclosures*, establishes incremental disaggregation of income tax disclosures pertaining to the effective tax rate reconciliation and income taxes paid.

This standard is effective for fiscal years beginning after December 15, 2024, and requires prospective application with the option to apply it retrospectively.

Early adoption is permitted.

We intend to adopt this standard in our Annual Report on Form 10-K for the year ended December 31, 2025.

We are currently evaluating the potential impact of adopting this standard on our disclosures.

ASU 2023-07, *Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,* requires disclosures about significant segment expenses and additional interim disclosure requirements.

This standard also requires a single reportable segment to provide all disclosures required by ASC 280.

This standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted, and the amendments should be applied retrospectively for all prior periods presented in the consolidated financial statements.

We intend to adopt this standard in our Annual Report on Form 10-K for the year ended December 31, 2024.

We are currently evaluating the potential impact of adopting this standard on our disclosures.

- Revenue related to products we sell pursuant to these arrangements is included in net product revenue at the earlier of when control of the asset transfers to the other party or when the product has no alternative use to us and we have right to payment.

- The net gain or loss related to the sale of rights of a product is included in collaboration and other revenue when control of the asset transfers to the other party.

| | | | 2023 | | | | | | 2022 | | |

| Diabetes and obesity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| *Baqsimi* | | | | | | | | | 645.7 | | | | | | 110.4 | | | | | | 96.4 | | | | | | 31.9 | | | | | | 28.9 | | | | | | 16.8 | | |

| *Zepbound®* | | | | | | | | | 175.8 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |

| *Other diabetes and obesity* | | | | | | | | | 175.0 | | | | | | 158.0 | | | | | | 159.3 | | | | | | 355.2 | | | | | | 338.9 | | | | | | 384.8 | | |

| *Other neuroscience* | | | | | | | | | 134.4 | | | | | | 119.2 | | | | | | 140.7 | | | | | | 371.1 | | | | | | 439.2 | | | | | | 750.3 | | |

(3) Basaglar revenue includes Rezvoglar®.

(5) Zyprexa revenue includes sale of the rights for the olanzapine portfolio.

| Revenue(1): | | | | | | | | | | | | | | | | | | | | | | | | | | |

*POINT Acquisition*

| Prepaid expenses and other current assets | | | | | | | | | | | | 2,954.1 | | | | | | 2,530.6 | | |

| Long-term income taxes payable (Note 14) | | | | | | | | | | | | 3,709.6 | | | | | | 3,920.0 | | |

| Deferred tax liabilities (Note 14) | | | | | | | | | | | | 87.3 | | | | | | 1,733.7 | | |

| Balance at January 1, 2020 | | | 958,056 | | | | | | $ | 598.8 | | | | | $ | 6,685.3 | | | | | $ | 4,920.4 | | | | | $ | (3,013.2) | | | | | $ | (6,523.6) | | | | | 530 | | | | | | $ | (60.8) | | | | | $ | 92.2 | |

| Net income | | | | | | | | | | | | | | | | | | | | | 6,193.7 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 126.6 | | |

| Other | | | | | | | | | | | | | | | (2.2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (35.2) | | |

| Retirement of treasury shares | | | (5,607) | | | | | | (3.5) | | | | | | | | | | | | (1,496.5) | | | | | | | | | | | | | | | | | | (5,607) | | | | | | 1,500.0 | | | | | | | | |

| Other non-cash operating activities, net | | | | | | | | | | | | 304.8 | | | | | | 511.4 | | | | | | 333.9 | | |

| Income taxes payable—increase (decrease) | | | | | | | | | | | | 346.6 | | | | | | (359.7) | | | | | | 322.0 | | |

Accounting Standards Update (ASU) 2021-10, *Government Assistance*, establishes annual disclosure requirements for companies that analogize to a grant or contribution accounting model for government assistance transactions.

We adopted the standard as of January 1, 2022.

The adoption did not impact our financial statement disclosures.

ASU 2020-04, *Reference Rate Reform*, as further modified by ASU 2021-01 and ASU 2022-06, provides for temporary optional expedients and exceptions in applying current GAAP to contracts, hedging relationships, and other transactions affected by the transition from the use of the London Interbank Offered Rate (LIBOR) to an alternative reference rate.

The standard is currently applicable to contracts entered into before January 1, 2025.

We adopted the standard in the first quarter of 2022.

The adoption did not have a material impact on our consolidated financial statements.

- Revenue related to products we sell pursuant to these arrangements is included in net product revenue, while other sources of revenue (e.g., royalties and profit sharing from our partner) are included in collaboration and other revenue.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Revenue—to unaffiliated customers: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Diabetes: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| *Other diabetes* | | | | | | | | | 268.4 | | | | | | 255.7 | | | | | | 258.1 | | | | | | 367.8 | | | | | | 401.6 | | | | | | 344.5 | | |

| *Cymbalta®* | | | | | | | | | 33.7 | | | | | | 38.7 | | | | | | 42.1 | | | | | | 249.6 | | | | | | 542.8 | | | | | | 725.6 | | |

| *Other neuroscience* | | | | | | | | | 85.5 | | | | | | 102.0 | | | | | | 73.2 | | | | | | 189.6 | | | | | | 207.5 | | | | | | 220.9 | | |

| Revenue—to unaffiliated customers(1): | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Goodwill(2) | | | 181.2 | | |

*Dermira Acquisition*

In February 2020, we acquired all shares of Dermira for a purchase price of approximately $849.3 million, net of cash acquired.

Under terms of the agreement, we acquired lebrikizumab, a novel, investigational, monoclonal antibody being evaluated for the treatment of moderate-to-severe atopic dermatitis.

We also acquired Qbrexza® (glycopyrronium) cloth, a medicated cloth approved by the FDA for the topical treatment of primary axillary hyperhidrosis (uncontrolled excessive underarm sweating).

During the year ended December 31, 2021, we sold the rights to Qbrexza.

The fair values recognized related to the assets acquired and liabilities assumed in this acquisition included goodwill of $86.8 million, other intangibles of $1.20 billion primarily related to lebrikizumab, deferred income tax liabilities of $49.5 million, and long-term debt of $375.5 million.

After the acquisition, we repaid $276.2 million of long-term debt assumed as part of our acquisition of Dermira.

Revenue attributable to assets acquired in the Dermira acquisition did not have a material impact on our consolidated statement of operations for the years ended December 31, 2022, 2021, and 2020.

We are unable to provide the results of operations for the years ended December 31, 2022, 2021, and 2020 attributable to Dermira as those operations were substantially integrated into our legacy business.

| Innovent Biologics, Inc. (Innovent) | | | Sintilimab injection, an anti-PD-1 monoclonal antibody immuno-oncology medicine, for geographies outside of China(2) | | | October 2020 | | | | | | Phase III | | | | | | 200.0 | | | | | | | | |

| Petra Pharma Corporation (Petra) | | | Mutant-selective PI3Kα inhibitor that could lead to potential new medicine | | | May 2020 | | | | | | Pre-clinical | | | | | | 174.8 | | | | | | | | |

| Disarm Therapeutics, Inc. | | | Disease-modifying therapeutics program for patients with axonal degeneration | | | October 2020 | | | | | | Pre-clinical | | | | | | 126.3 | | | | | | | | |

(2) In 2022, we terminated our license for sintilimab injection for geographies outside of China and reverted rights to Innovent.

Collaborative activities may include research and development, marketing and selling (including promotional activities and physician detailing), manufacturing, and distribution.

These arrangements often require milestone as well as royalty or profit-share payments, contingent upon the occurrence of certain future events linked to the success of the asset in development, as well as expense reimbursements from or payments to the collaboration partner.

Our management, with the participation of David Ricks, president and chief executive officer, and Anat Ashkenazi, executive vice president and chief financial officer, evaluated our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of December 31, [removed: 2022,] [added: 2023,] and concluded that they were effective.

Mr. Ricks and Ms. Ashkenazi provided a report on behalf of management on our internal control over financial reporting, in which management concluded that the company's internal control over financial reporting is effective at December 31, [removed: 2022] [added: 2023] based on the framework in "Internal Control—Integrated Framework" (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In addition, Ernst & Young LLP, the company's independent registered public accounting firm, issued an attestation report on the company's internal control over financial reporting as of December 31, [removed: 2022.][added: 2023.]

During the fourth quarter of [removed: 2022,] [added: 2023,] there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We rely extensively on information systems and technology to manage our business, including integrated supply chain operations, and global consolidated financial results.

In February 2024, we completed the implementation of a new global enterprise resource planning (ERP) system, which replaced our operating and financial systems.

We recently began our post-implementation activities.

The ERP system is designed to accurately maintain our financial records, support integrated supply chain and other operational functionality, and provide timely information to our management team related to the operation of the business.

During the implementation and post-implementation activities, we have made, and will have to make, changes to certain of our processes and procedures, and we will evaluate quarterly whether the changes materially affect our internal control over financial reporting.

On November 16, 2023, Donald Zakrowski, senior vice president, finance, and chief accounting officer, adopted a sales plan (Plan).

The Plan was entered into during an open trading window and is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act of 1934 and our policies regarding trading in our securities.

The Plan calls for the sale of up to 3,150 shares of company common stock between March 11, 2024 and November 14, 2024 subject to the terms and conditions of the Plan.

None.

Information relating to our board of directors is found in our Definitive Proxy Statement, to be dated on or about March [removed: 17, 2023] [added: 22, 2024] (Proxy Statement), under "Governance - How We Build an Effective Board" and is incorporated in this Annual Report on Form 10-K by reference.

Information about our compliance with Section 16(a) is found in our Proxy Statement under "Ownership of [removed: Common] [added: Company] Stock - Delinquent Section 16(a) Reports" and is incorporated in this Annual Report on Form 10-K by reference.

The following table presents information as of December 31, [removed: 2022] [added: 2023] regarding the company's compensation plans under which shares of the company's common stock have been authorized for issuance.

| Equity compensation plans approved by security holders | | | — | | | $ | — | | [removed: 49,953,648] [added: 49,082,012] | | |

(1) [removed: 4,175,980] [added: 3,599,883] shares are underlying outstanding equity awards other than options.

| Total | | | — | | | — | | | 49,082,012 | | |

| Total | | | — | | | — | | | 49,953,648 | | |

Information related to the fees and services of our principal independent accountants, Ernst & Young LLP, can be found in the Proxy Statement under "Audit Matters - Item [removed: 4.][added: 3.]

- Consolidated Statements of Operations—Years Ended December 31, [added: 2023,] 2022, [removed: 2021,] and [removed: 2020][added: 2021]

- Consolidated Statements of Comprehensive Income (Loss)—Years Ended December 31, [added: 2023,] 2022, [removed: 2021,] and [removed: 2020][added: 2021]

- Consolidated Balance Sheets—December 31, [removed: 2022] [added: 2023] and [removed: 2021][added: 2022]

- Consolidated Statements of Shareholders' Equity—Years Ended December 31, [added: 2023,] 2022, [removed: 2021,] and [removed: 2020][added: 2021]

- Consolidated Statements of Cash Flows—Years Ended December 31, [added: 2023,] 2022, [removed: 2021,] and [removed: 2020][added: 2021]

The following documents are filed as part of this [removed: report:][added: Annual Report on Form 10-K:]

| [removed: 4.3] [added: 4.4] | | | | | | [Description of the Company's [removed: Common Stock,] [added: 1.625% Notes due 2026 and 2.125% Notes due 2030,] incorporated by reference to Exhibit [removed: 4.3] [added: 4.4] to the Company's Annual Report on Form 10-K for the year ended December 31, [removed: 2019](https://www.sec.gov/Archives/edgar/data/59478/000005947820000057/lly-20191231x10kexhibit43.htm)] [added: 2019](https://www.sec.gov/Archives/edgar/data/59478/000005947820000057/lly-20191231x10kexhibit44.htm)] | | |

| [removed: 4.4] [added: 10.6] | | | | | | [removed: [Description] [added: [Form] of [removed: the Company's 1.625% Notes due 2026](https://www.sec.gov/Archives/edgar/data/59478/000005947820000057/lly-20191231x10kexhibit44.htm) [and 2.125% Notes due 2030,] [added: Non-Compete Payment Agreement](https://www.sec.gov/Archives/edgar/data/59478/000005947823000082/lly-20221231x10kexhibit105.htm)[(1)](https://www.sec.gov/Archives/edgar/data/59478/000005947823000082/lly-20221231x10kexhibit105.htm)[,] incorporated by reference to Exhibit [removed: 4.4] [added: 10.5] to the Company's Annual Report on Form 10-K for the year ended December 31, [removed: 2019](https://www.sec.gov/Archives/edgar/data/59478/000005947820000057/lly-20191231x10kexhibit44.htm)] [added: 2022](https://www.sec.gov/Archives/edgar/data/59478/000005947823000082/lly-20221231x10kexhibit105.htm)] | | |

| 10.2 | | | | | | [Form of Performance Award under the 2002 Lilly Stock [removed: Plan](https://www.sec.gov/Archives/edgar/data/59478/000005947823000082/lly-20221231x10kexhibit102.htm)[(1)](https://www.sec.gov/Archives/edgar/data/59478/000005947823000082/lly-20221231x10kexhibit102.htm)[*](https://www.sec.gov/Archives/edgar/data/59478/000005947823000082/lly-20221231x10kexhibit102.htm)] [added: Plan](https://www.sec.gov/Archives/edgar/data/59478/000005947823000082/lly-20221231x10kexhibit102.htm)[(1)](https://www.sec.gov/Archives/edgar/data/59478/000005947823000082/lly-20221231x10kexhibit102.htm) [incorporated by reference to Exhibit 10.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 2022](https://www.sec.gov/Archives/edgar/data/59478/000005947823000082/lly-20221231x10kexhibit102.htm)] | | |

| 10.3 | | | | | | [Form of Shareholder Value Award under the 2002 Lilly Stock [removed: Plan](https://www.sec.gov/Archives/edgar/data/59478/000005947823000082/lly-20221231x10kexhibit103.htm)[(1)](https://www.sec.gov/Archives/edgar/data/59478/000005947823000082/lly-20221231x10kexhibit103.htm)[*](https://www.sec.gov/Archives/edgar/data/59478/000005947823000082/lly-20221231x10kexhibit103.htm)] [added: Plan](https://www.sec.gov/Archives/edgar/data/59478/000005947824000065/lly-20231231x10kexhibit103.htm)[(1)](https://www.sec.gov/Archives/edgar/data/59478/000005947824000065/lly-20231231x10kexhibit103.htm)[*](https://www.sec.gov/Archives/edgar/data/59478/000005947824000065/lly-20231231x10kexhibit103.htm)] | | |

| 10.4 | | | | | | [Form of Relative Value Award under the 2002 Lilly Stock [removed: Plan](https://www.sec.gov/Archives/edgar/data/59478/000005947823000082/lly-20221231x10kexhibit104.htm)[(1)](https://www.sec.gov/Archives/edgar/data/59478/000005947823000082/lly-20221231x10kexhibit104.htm)[*](https://www.sec.gov/Archives/edgar/data/59478/000005947823000082/lly-20221231x10kexhibit104.htm)] [added: Plan](https://www.sec.gov/Archives/edgar/data/59478/000005947824000065/lly-20231231x10kexhibit104.htm)[(1)](https://www.sec.gov/Archives/edgar/data/59478/000005947824000065/lly-20231231x10kexhibit104.htm)[*](https://www.sec.gov/Archives/edgar/data/59478/000005947824000065/lly-20231231x10kexhibit104.htm)] | | |

| [removed: 10.6] [added: 10.7] | | | | | | [The Lilly Deferred Compensation Plan, as amended](https://www.sec.gov/Archives/edgar/data/59478/000005947814000078/lly-20131231x10kexhibit105.htm)[(1)](https://www.sec.gov/Archives/edgar/data/59478/000005947814000078/lly-20131231x10kexhibit105.htm)[, incorporated by reference to Exhibit 10.5 to the Company's [removed: annual report] [added: Annual Report] on Form 10-K for the year ended December 31, 2013](https://www.sec.gov/Archives/edgar/data/59478/000005947814000078/lly-20131231x10kexhibit105.htm) | | |

| [removed: 10.7] [added: 10.8] | | | | | | [The Lilly Directors' Deferral Plan, as amended](https://www.sec.gov/Archives/edgar/data/59478/000005947817000183/lly-6302017x10qxexhibit10.htm)[(1)](https://www.sec.gov/Archives/edgar/data/59478/000005947817000183/lly-6302017x10qxexhibit10.htm)[, incorporated by reference to Exhibit 10 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2017](https://www.sec.gov/Archives/edgar/data/59478/000005947817000183/lly-6302017x10qxexhibit10.htm) | | |

| [removed: 10.8] [added: 10.9] | | | | | | [The Eli Lilly and Company Bonus Plan, as amended](https://www.sec.gov/Archives/edgar/data/0000059478/000005947821000083/lly-20201231x10kexhibit1014.htm)[(1)](https://www.sec.gov/Archives/edgar/data/0000059478/000005947821000083/lly-20201231x10kexhibit1014.htm)[, incorporated by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the year ended December 31, 2020](https://www.sec.gov/Archives/edgar/data/0000059478/000005947821000083/lly-20201231x10kexhibit1014.htm) | | |

| 10.10 | | | | | | [2007 Change in Control Severance Pay Plan for Select Employees, as [removed: amended](https://www.sec.gov/Archives/edgar/data/0000059478/000005947821000083/lly-20201231x10kexhibit1015.htm)[(1)](https://www.sec.gov/Archives/edgar/data/0000059478/000005947821000083/lly-20201231x10kexhibit1015.htm)[, incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K for the year ended December 31, 2020](https://www.sec.gov/Archives/edgar/data/0000059478/000005947821000083/lly-20201231x10kexhibit1015.htm)] [added: amended](https://www.sec.gov/Archives/edgar/data/59478/000005947824000065/lly-20231231x10kexhibit1010.htm)[(1)](https://www.sec.gov/Archives/edgar/data/59478/000005947824000065/lly-20231231x10kexhibit1010.htm)[*](https://www.sec.gov/Archives/edgar/data/59478/000005947824000065/lly-20231231x10kexhibit1010.htm)] | | |

| 21 | | | | | | [List of [removed: Subsidiaries*](https://www.sec.gov/Archives/edgar/data/59478/000005947823000082/lly-20221231x10kexhibit21.htm)] [added: Subsidiaries*](https://www.sec.gov/Archives/edgar/data/59478/000005947824000065/lly-20231231x10kexhibit21.htm)] | | |

| 23 | | | | | | [Consent of Independent Registered Public Accounting [removed: Firm*](https://www.sec.gov/Archives/edgar/data/59478/000005947823000082/lly-20221231x10kexhibit23.htm)] [added: Firm*](https://www.sec.gov/Archives/edgar/data/59478/000005947824000065/lly-20231231x10kexhibit23.htm)] | | |

| 31.1 | | | | | | [Rule 13a-14(a) Certification of David Ricks, Chair, President, and Chief Executive [removed: Officer*](https://www.sec.gov/Archives/edgar/data/59478/000005947823000082/lly-20221231x10kexhibit311.htm)] [added: Officer*](https://www.sec.gov/Archives/edgar/data/59478/000005947824000065/lly-20231231x10kexhibit311.htm)] | | |

| 31.2 | | | | | | [Rule 13a-14(a) Certification of Anat Ashkenazi, Executive Vice President and Chief Financial [removed: Officer*](https://www.sec.gov/Archives/edgar/data/59478/000005947823000082/lly-20221231x10kexhibit312.htm)] [added: Officer*](https://www.sec.gov/Archives/edgar/data/59478/000005947824000065/lly-20231231x10kexhibit312.htm)] | | |

| 32 | | | | | | [Section 1350 [removed: Certification*](https://www.sec.gov/Archives/edgar/data/59478/000005947823000082/lly-20221231x10kexhibit32.htm)] [added: Certification*](https://www.sec.gov/Archives/edgar/data/59478/000005947824000065/lly-20231231x10kexhibit32.htm)] | | |

| 4.3 | | | | | | [Description of the Company's Common Stock*](https://www.sec.gov/Archives/edgar/data/59478/000005947824000065/lly-20231231x10kexhibit43.htm) | | |

| 10.5 | | | | | | [Form of Restricted Stock Unit Award under the 2002 Lilly Stock Plan](https://www.sec.gov/Archives/edgar/data/59478/000005947824000065/lly-20231231x10kexhibit105.htm)[(1)](https://www.sec.gov/Archives/edgar/data/59478/000005947824000065/lly-20231231x10kexhibit105.htm)[*](https://www.sec.gov/Archives/edgar/data/59478/000005947824000065/lly-20231231x10kexhibit105.htm) | | |

| 97 | | | | | | [Executive Compensation Recovery Policy*](https://www.sec.gov/Archives/edgar/data/59478/000005947824000065/lly-20231231x10kexhibit97.htm) | | |

| | | | | | | | | |

Long-term debt instruments under which the total amount of securities authorized does not exceed 10 percent of our consolidated

assets are not filed as exhibits to this Annual Report.

We will furnish a copy of these agreements to the Securities and Exchange

Commission upon request.

| 10.5 | | | | | | [Form of Non-Compete Payment Agreement](https://www.sec.gov/Archives/edgar/data/59478/000005947823000082/lly-20221231x10kexhibit105.htm)[(1)](https://www.sec.gov/Archives/edgar/data/59478/000005947823000082/lly-20221231x10kexhibit105.htm)[*](https://www.sec.gov/Archives/edgar/data/59478/000005947823000082/lly-20221231x10kexhibit105.htm) | | |

| 10.9 | | | | | | [The Loxo Oncology, Inc. Bonus Plan](https://www.sec.gov/Archives/edgar/data/59478/000005947822000068/lly-20211231x10kexhibit1017.htm)[(1)](https://www.sec.gov/Archives/edgar/data/59478/000005947822000068/lly-20211231x10kexhibit1017.htm)[, incorporated by reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K for the year ended December 31, 2021](https://www.sec.gov/Archives/edgar/data/59478/000005947822000068/lly-20211231x10kexhibit1017.htm) | | |

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February [removed: 22, 2023] [added: 21, 2024] by the following persons on behalf of the Registrant and in the capacities indicated.

Trademarks Used In [removed: This Report][added: this Annual Report on Form 10-K]

Trademarks or service marks owned by Eli Lilly and Company or its affiliates, when first used in each item of this [removed: report,] [added: Annual Report on Form 10-K,] appear with an initial capital and are followed by the symbol ® or ™, as applicable.

Tyvyt® is a [added: registered] trademark of Innovent Biologics (Suzhou) Co., Ltd.

February 21, 2024

Actos® is a registered trademark of Takeda Pharmaceutical Company Limited.

Baqsimi® is a registered trademark of Amphastar Pharmaceuticals, Inc.

Qbrexza® is a registered trademark of Journey Medical Corporation.

Zyprexa® is a registered trademark of Cheplapharm Arzneimittel GmbH.

| | | | | | | | | |

February 22, 2023

| /s/ Jackson Tai | | | | | | Director | | |

| JACKSON TAI | | | | | | | | |

Byetta® is a trademark of Amylin Pharmaceuticals, Inc.