•Alimta is protected by a vitamin regimen patent (2021) plus pediatric exclusivity (May 2022). See Item 8, “Financial Statements and Supplementary Data - Note 16, Contingencies,” for information regarding our settlement agreement with Eagle Pharmaceuticals, Inc. (Eagle) and its impact on our exclusivity for Alimta.

•~~Baqsimi is protected by data protection (July 2022).~~

•~~Cyramza is protected by a compound patent and biologics data protection (2026).~~

Therapeutic Area

Product

Protection

Territory

Expiry Date

Immunology products

Ebglyss

compound patent

major European countries

2024

Japan

2024

data protection

major European countries

2033

Japan

2034

Olumiant

compound patent

U.S.

2032

major European countries

2032

Japan

2033

data protection

major European countries

2027

Japan

2025

Omvoh

compound patent

U.S.

2037

major European countries

2038

Japan

2039

biologics data protection

U.S.

2035

data protection

major European countries

2033

Japan

2031

Taltz

compound patent

U.S.

2030

major European countries

2031

Japan

2030

biologics data protection

U.S.

2028

data protection

major European countries

2027

Japan

2024

Neuroscience products

Emgality

compound patent

U.S.

2033

major European countries

2033

Japan

2035

biologics data protection

U.S.

2030

data protection

major European countries

2028

Japan

2029

Reyvow®

compound patent

U.S.

2030

Japan

2028

data protection

major European countries

2032

Japan

2032

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

•* Jardiance and the related combination product, ~~Glyxambi, is protected by a~~Glyxambi.

The following product candidates are the most relevant that are currently under regulatory review. Upon approval, we expect relevant compound patent ~~(2028).~~

and data protections to apply:

•~~Olumiant is protected by a compound patent (2032).~~

•~~Retevmo is protected by a compound patent (2037) and by data protection (2025).~~

•~~Reyvow is protected by a compound patent (2025, not including possible patent extension).~~

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

•~~Trulicity is protected by a compound patent (2027) and by biologics data protection (2026).~~

•~~Verzenio is protected by a compound patent (2031) and by data protection (2022).~~

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

•~~Alimta is protected by patents covering its use to treat cancer in major European countries and in Japan (June 2021).~~

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

•Cyramza is protected by a compound patent (2028) and by data protection (2024) in major European countries. Additionally, Cyramza is protected by a compound patent (2026) and by data protection (2023) in Japan.

•Emgality is protected by a compound patent (2033) and by data protection (2028) in major European countries, and by a compound patent (2031, not including possible patent extension) and by data protection (2029) in Japan.

•~~Jardiance is protected by a compound patent in major European countries (2029) and Japan (2030).~~

•~~Olumiant is protected by a compound patent (2032) and by data protection (2027) in major European countries, and by a compound patent (2033) and by data protection (2025) in Japan.~~

•Reyvow is protected by a compound patent (2023, not including possible patent extension) in major European countries. Reyvow is also protected by a compound patent (2023, not including possible patent extension) in Japan.

•~~Retsevmo~~® ~~is protected by a compound patent (2037) and by data protection (2031) in major European countries. Retevmo is protected by a compound patent in Japan (2037, not including possible patent extension).~~

•~~Taltz is protected by a compound patent (2031) and data protection (2027) in major European countries and a compound patent (2030) and data protection (2024) in Japan.~~

•~~Trulicity is protected by a compound patent (2029) and by data protection (2024) in major European countries and by a compound patent (2029) and by data protection (2023) in Japan.~~

•~~Verzenio is protected by a compound patent (2033) and data protection (2028) in major European countries and by a compound patent (2034) and data protection (2026) in Japan.~~

~~Reyvow~~Donanemab has been submitted for regulatory review in ~~certain major European countries for~~ the ~~acute treatment of migraine, where it is expected to be protected by data protection upon approval (10 years). Additionally, Reyvow has been submitted for regulatory review in Japan for~~U.S., the ~~acute treatment of migraine, where it is expected to be protected by data protection upon approval (8 years).~~

~~Retevmo has been submitted for regulatory review in~~EU and Japan for the treatment of ~~lung cancer, where it is expected to be protected by data protection upon approval (8 years).~~early Alzheimer's disease.

~~Tanezumab is protected by a compound patent (2023, not including possible patent extension) in the U.S. Additionally, tanezumab~~•Lebrikizumab has been submitted for regulatory review in the U.S. for the treatment of ~~osteoarthritis pain, where it is expected~~moderate to ~~be protected by data protection upon approval (12 years).~~severe atopic dermatitis.

•Pirtobrutinib has been submitted for regulatory review in Japan for the treatment of certain patients with relapsed or refractory mantle cell lymphoma.

Worldwide, we sell all of our major products under trademarks consisting of our product names, logos, and unique ~~product~~product appearances ~~(e.g., the appearance of our Trulicity autoinjector) which~~that we consider in the aggregate to be important to our operations. Trademark protection varies throughout the ~~world, with protection continuing in some countries as long as the mark is used, and in other countries as long as it is registered. Registrations are normally for fixed but renewable terms.~~world. Trademark protection ~~often~~typically extends beyond the patent and data protection for a product.

1112

We also rely in some circumstances on trade secrets and other unpatented know-how. We seek to protect our confidential information in part through confidentiality agreements with our employees, corporate partners, collaborators, and vendors. These agreements may be breached, and we cannot be certain that we have adequate remedies. If our trade secrets or confidential information become known or are independently discovered by competitors, or if we enter into disputes over ownership of inventions, our business and results of operations could be adversely affected.

Patent Licenses and Collaborations

~~Most~~Some of our ~~major~~ products are ~~not~~ subject to significant license and collaboration agreements. For information on our license and collaboration agreements, ~~including our agreement with Incyte Corporation related to Olumiant,~~ see Item 8, "Financial Statements and Supplementary ~~Data -~~ Data—Note 4,4: Collaborations and Other Arrangements."

Patent Challenges

In the U.S., the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act, authorizes the FDA to approve generic versions of innovative pharmaceuticals (other than ~~biologics, which are discussed below in more detail)~~biologics) when the generic manufacturer ~~has not conducted safety and efficacy studies but~~ files an Abbreviated New Drug Application (ANDA). In an ANDA, the generic manufacturer must demonstrate only “bioequivalence” between the generic version and the NDA-approved drug—not safety and efficacy. Establishing bioequivalence is generally straightforward and inexpensive for the generic company.

Absent a patent challenge, the FDA cannot approve an ANDA until after certain of the ~~innovator’s~~innovator's patents expire. However, after the innovator has marketed its product for four years, a generic manufacturer may file an ANDA alleging that ~~one or more or all of~~ the ~~patents~~patent(s) listed in the ~~innovator’s NDA~~innovator's New Drug Application (NDA) are invalid, unenforceable or not infringed. This allegation is commonly known as a “Paragraph IV certification.” If the innovator responds by filing suit against the generic manufacturer, the FDA is then prohibited from approving the generic company’s application for a 30-month period (which can be shortened or extended by the trial court judge hearing the patent challenge). If one or more of the NDA-listed patents are challenged, the first filer(s) of a Paragraph IV certification may be entitled to a 180-day period of market exclusivity over all other generic manufacturers.

Generic manufacturers use ~~Paragraph IV certifications~~this process extensively to challenge patents on innovative pharmaceuticals. In addition, generic companies have shown willingness to launch ~~“at~~"at risk,”" i.e., after receiving ANDA approval but before final resolution of their patent challenge. We are currently in Hatch-Waxman litigation involving Alimta with a single generic manufacturer. For more information on Hatch-Waxman litigation involving the company, see Item 8, “Financial Statements and Supplementary Data - Note 16, Contingencies.”

Under the BPCIA, the FDA cannot approve an application for a biosimilar product until data protection expires, 12 years after initial marketing approval of the innovator biologic, and an application may not be submitted until four years following the date the innovator biologic was first approved. However, the BPCIA does provide a mechanism for a prospective biosimilar competitor to challenge the validity of an ~~innovator’s~~innovator's patents as early as four years after initial marketing approval of the innovator biologic.

The patent litigation scheme under the BPCIA, and the BPCIA itself, is complex and continues to be interpreted and implemented by the FDA, as well as by courts. Courts have held that biosimilar applicants are not required to engage in the BPCIA patent litigation scheme and patent holders retain the right to bring suit under normal patent law procedures if a biosimilar applicant attempts to commercialize a product prior to patent expiration. Further, in the U.S., the increased likelihood of generic and biosimilar challenges to innovators’ intellectual property has increased the risk of loss of innovators’ market exclusivity. See also “- Competition - Biosimilars.”

In addition, there is a procedure in U.S. patent law, known as inter partes review (IPR), which allows any member of the public to file a petition with the USPTO seeking the review of any issued U.S. patent for validity. IPRs are conducted before Administrative Patent Judges in the USPTO using a lower standard of proof than used in federal district ~~court. In addition, the~~court and challenged patents are not accorded the presumption of ~~validity as they are in federal district court.~~validity. Generic drug companies and even some investment firms have engaged in the IPR process in attempts to invalidate our patents. 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.

Outside the U.S., the legal doctrines and processes by which pharmaceutical patents can be challenged vary widely. In recent years, we have experienced an increase in patent challenges from generic manufacturers in many countries outside the U.S.

For more information on ~~administrative~~patent challenges and litigation involving our intellectual property rights, see Item 1A, "Risk Factors—Risks Related to Our Business—Our long-term success depends on intellectual property protection; if our intellectual property rights are invalidated, circumvented, or weakened, our business will be adversely affected." and Item 8, ~~“Financial~~"Financial Statements and Supplementary ~~Data -~~ Data—Note ~~16,~~16: Contingencies.”"

1213

Government Regulation of Our Operations

Our operations are regulated extensively by numerous ~~national, state, and local~~government agencies.

Regulation of Products

The lengthy process of laboratory and clinical testing, data analysis, manufacturing development, and regulatory review necessary for governmental approvals of our products is extremely costly and can significantly delay product introductions and revenue generation. In addition, our operations are subject to complex federal, state, local, and foreign laws and regulations concerning relationships with healthcare providers and suppliers, pricing and reimbursement for our products, the environment, occupational health and safety, data privacy and ~~data privacy.~~security, and other matters. Evolving regulatory priorities have intensified governmental scrutiny of our operations and those of other healthcare intermediaries, including with respect to current Good Manufacturing Practices (cGMP), quality assurance, and similar regulations. Regulatory oversight of the pharmaceutical industry entails judgment and interpretation, which can result in inconsistent administration of laws and regulations by health authorities. Compliance with the laws and regulations affecting the manufacture and sale of current products and the discovery, development, and introduction of new products and uses has and will continue to require substantial effort, expense, and capital investment.

Of particular importance to our business is regulation by the FDA in the U.S. Pursuant to laws and regulations that include the Federal Food, Drug, and Cosmetic Act (FDCA), the FDA has jurisdiction over all of our products and devices in the U.S. and administers requirements covering the testing, safety, effectiveness, manufacturing, quality control, distribution, labeling, marketing, promotion, advertising, dissemination of information, and post-marketing surveillance of those ~~products.~~products and devices. The FDA holds broad discretion under the FDCA and other statutes to interpret the conditions and evidence necessary for timely approval of our drugs and devices.

Following approval, our products remain subject to regulation by various government and regulatory agencies in connection with labeling, import, export, sale, storage, recordkeeping, advertising, promotion, and safety reporting. We conduct extensive post-marketing surveillance of the safety of the products we ~~sell.~~sell and comply with notification requirements related to safety and efficacy, product supply, and other aspects of our products and operations. The FDA may withdraw approval of a product if compliance with regulatory requirements and standards is not maintained or if problems occur after a product reaches the ~~market.~~market, including as may be identified through market surveillance or third-party studies involving our products. The FDA may also mandate labeling changes to products at any point in a product's life cycle based on new safety information or as part of a labeling change to a particular class of products. In addition, the FDA strictly regulates marketing, labeling, advertising, and promotion of products ~~that are placed on the market.~~to prescribers and patients. Pharmaceutical products may be promoted only for ~~the~~ approved indications and in accordance with the provisions of the approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses.

~~The FDA extensively regulates all aspects of manufacturing quality for pharmaceuticals under its current Good Manufacturing Practices (cGMP) regulations.~~ Outside the U.S., our products and operations are subject to similar regulatory requirements, notably by the EMA in Europe, ~~and~~ the Ministry of Health, Labor and Welfare in ~~Japan.~~Japan, and the National Medical Products Administration in China. Specific regulatory requirements vary from country to country. Regulatory and compliance requirements, ~~and~~as well as approval processes outside the U.S., may differ from those in the U.S. and may involve additional costs, uncertainties, and ~~uncertainties.~~risks.

The FDA and other regulatory agencies outside the U.S. extensively regulate all aspects of manufacturing quality for pharmaceuticals under their cGMP regulations. Regulators assess compliance with these regulations by inspecting the equipment, facilities, laboratories, and processes used in the manufacturing and testing of our products prior to marketing approval with periodic reinspection thereafter; this may include inspection of our third-party business partners. We make substantial investments of capital and operating expenses to implement comprehensive, company-wide quality systems and controls in our manufacturing, product development, and process development operations in an effort to ~~ensure~~maintain sustained compliance with cGMP and ~~similar~~other regulations. ~~However,~~Nonetheless, manufacturing quality and other aspects of pharmaceutical regulatory compliance is heavily scrutinized and results in ~~the event we fail to adhere to these requirements, we become subject to potential~~ government investigations, ~~interruptions in production,~~regulatory and legal actions, product recalls and seizures, fines and penalties, interruption of production leading to product shortages, import bans or denials of import certifications, delays or denials in new product approvals or line extensions or supplemental approvals of current products pending resolution of any issues, any of which have and ~~reputational harm.~~could adversely affect our business and reputation. Certain of our products, devices and components are manufactured by third parties, and their failure to comply with these regulations has and could in the future adversely affect us, including through failure to supply product to us or delays in approvals of new ~~product approvals.~~ products or indications. For example, in 2023 we received complete response letters based on FDA observations made during inspections of manufacturing facilities rather than any issues related to efficacy or safety. These resulted in certain delays in the approval of new products.

Any determination by the FDA or other regulatory authorities of manufacturing or other deficiencies could adversely affect our ~~business.~~

~~We are also subject~~business and reputation. For more information on product regulation challenges, see Item 1A, "Risk Factors—Risks Related to ~~a variety of federal, state,~~Our Operations—Reliance on third-party relationships and ~~local environmental, health and safety, and other laws and regulations that may~~outsourcing arrangements could adversely affect our ~~research, development or production efforts.~~

business."

Emergency Use Authorizations

The Secretary of Health and Human Services may issue an Emergency Use Authorization (EUA) to authorize unapproved medical products, or unapproved uses of approved medical products, to be manufactured, marketed, and sold in the context of an actual or potential emergency that has been designated by the government. ~~After an emergency has been announced, the Secretary~~For example, certain of ~~Health and Human Services may authorize EUAs~~our products were previously made available for the ~~use~~treatment of specific products based on criteria established by statute, including that the product at issue may be effective in diagnosing, treating, or preventing serious or life-threatening diseases when there are no adequate, approved, and available alternatives. An EUA is subject to additional conditions and restrictions, such as the obligation to provide facts sheets for healthcare providers administering the product and those to whom it is administered, adverse event monitoring and reporting, and recordkeeping and reporting requirements by product manufacturers. The FDA may also establish additional discretionary conditions of authorization that the FDA deems necessary or appropriate to protect the public health, including conditions related to product distribution, product administration and data collection and analysis concerning the safety and effectiveness of the product. In issuing an EUA, the FDA considers the totality of available scientific evidence regarding quality, safety and efficacy, including the known and potential risks of such products and the adequacy and availability of approved alternatives, among other factors. An EUA is not a substitute for obtaining FDA approval, licensure, or clearance for use of a product.COVID-19 under respective EUAs. An EUA terminates when the emergency determination underlying the EUA terminates, and EUAs can be revoked under other circumstances, the timing of which may occur unexpectedly or be difficult to predict.

Outside the U.S., the emergency use of medical products is subject to regulatory processes and requirements that vary and differ from those in the U.S.

The COVID-19 pandemic has been designated as a national emergency in the U.S. On the basis of such determination, the Secretary of Health and Human Services declared that circumstances exist justifying the authorization of emergency use of drugs and biologics during the COVID-19 pandemic. The FDA has granted EUAs for bamlanivimab, bamlanivimab and etesevimab administered together, and baricitinib in combination with remdesivir, and similar actions have been taken by other regulators in certain jurisdictions outside the U.S. We intend to submit bamlanivimab and etesevimab administered together to the FDA for approval in the second half of 2021.

Other Laws and Regulations

The marketing, promotional, and pricing practices of pharmaceutical manufacturers, as well as the manner in which manufacturers interact with purchasers, prescribers, and patients, are subject to various other U.S. federal and state laws, as well as analogous foreign laws and regulations, including the federal anti-kickback statute, the False Claims Act, antitrust laws, and state laws governing kickbacks, false claims, unfair trade practices, and consumer protection. These laws are administered by, among others, the Department of Justice, the Office of Inspector General of the U.S. Department of Health and Human Services (HHS), the Federal Trade Commission, the Office of Personnel Management, and state attorneys general. ~~Over the past several years, state~~State, federal, and ~~federal~~foreign governments, ~~have increased~~agencies, and other regulatory bodies are active in their oversight, enforcement activities, and ~~intra-agency~~ coordination with respect to pharmaceutical ~~companies. Further, several claims brought by these agencies against us and other~~ companies, ~~under these and other laws have~~which has resulted in intensified scrutiny, litigation costs, corporate criminal sanctions, and ~~very~~ substantial civil ~~settlements.~~

~~In December 2020,~~settlements in the Office of Inspector General of the U.S. Department of Health and Human Services and the Centers for Medicare & Medicaid Services issued final rules expanding and modifying existing, and adding new, regulatory “safe harbors” and exceptions, respectively, under the anti-kickback statute and the Ethics in Patient Referrals Act. We are currently evaluating the impact, if any, these regulatory amendments will have upon becoming effective on our consolidated results of operations, liquidity, and financial position, which is uncertain at this time.pharmaceutical industry.

The U.S. Foreign Corrupt Practices Act of 1977 (FCPA) prohibits certain individuals and entities, including U.S. publicly traded companies, from promising, offering, or giving anything of value to foreign officials with the corrupt intent of influencing the foreign official for the purpose of helping the company obtain or retain business or gain any improper advantage. The FCPA also imposes specific recordkeeping and internal controls requirements on U.S. publicly traded companies. As noted above, ~~outside the U.S.,~~ our business is heavily regulated and therefore involves significant interaction with ~~foreign officials.~~officials outside the U.S. Additionally, in many countries outside the U.S., healthcare providers who prescribe pharmaceuticals are employed by the government and purchasers of pharmaceuticals are government entities; therefore, our interactions with these prescribers and purchasers are subject to regulation under the FCPA.

In addition to the U.S. application and enforcement of the FCPA, the various jurisdictions in which we operate and supply our products have laws and regulations aimed at preventing and penalizing corrupt and anticompetitive behavior. In recent years, several jurisdictions have enhanced their laws and regulations in this area, increased their enforcement activities, and/or increased the level of cross-border coordination and information sharing.

We are, and could in the future become, subject to administrative and legal proceedings and actions, which could include claims for civil penalties (including treble ~~damages under the False Claims Act)~~damages), criminal sanctions, and administrative remedies, including exclusion from U.S. federal and other ~~health care~~healthcare programs. It is possible that an adverse outcome in future actions could have a material adverse impact on our consolidated results of operations, liquidity, and financial ~~position.~~position in any given period.

We are also subject to a variety of federal, state, local, and ~~local~~foreign environmental, health and safety, and other laws and regulations that may affect our research, development, or production efforts.

Regulations and Private Payer Actions Affecting Pharmaceutical Pricing, Reimbursement, and Access

U.S.

There continues to be considerable public and government scrutiny of pharmaceutical ~~pricing, and measures to address the perceived high cost of pharmaceuticals are being considered at various levels of state and federal government.~~pricing. In addition, U.S. government ~~action~~actions to reduce federal spending on entitlement programs, including Medicare and Medicaid, may affect payment for our products or services associated with the provision of our products. ~~Additionally, there~~

In August 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (IRA). Among other measures, the IRA requires HHS to effectively set prices for certain single-source drugs and biologics reimbursed under Medicare Part B and Part D. Generally, these government prices apply nine years (for medicines approved under an NDA) or thirteen years (for medicines approved under a Biologics License Application (BLA)) following initial FDA approval and will be set at a price that is likely to represent a significant discount from existing average prices to wholesalers and direct purchasers. While the law specifies a ceiling price, it does not set a minimum or floor price. 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 expiry of exclusivities. The effect of reducing prices and reimbursement for certain of our products would significantly impact our business and consolidated results of operations.

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 (CGDP) with a new manufacturer discount program. Beginning in January 2025, the 70 percent CGDP discount will be replaced by a 10 percent manufacturer discount for all Medicare Part D beneficiaries that have met their deductible and incurred out of pocket drug costs below a $2,000 threshold and a 20 percent discount for beneficiaries that have incurred out of pocket drug costs above the $2,000 threshold under the Part D benefit redesign. Manufacturers that fail to comply with the IRA may be subject to various penalties, including civil monetary penalties, which could be significant.

The IRA has ~~been heightened~~and will meaningfully influence our business strategies and those of our competitors. In particular, the nine-year timeline to set prices for medicines approved under an NDA reduces the attractiveness of investment in small molecule innovation. The IRA can cause changes to development approach, and timing and investments at-risk. The full impact of the IRA on our business and the pharmaceutical industry, including the implications to us of a competitor's product being selected for price setting, remains uncertain.

Heightened governmental scrutiny ~~recently~~ over the manner in which drug manufacturers ~~set prices for~~price their marketed products ~~which~~and the practices of pharmacy benefit managers and other supply chain entities has also resulted in several U.S. Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, require advance notice of list price increases, establish upper payment limits or other restrictions by drug affordability review boards, allow the importation of drugs from other countries, address pharmacy benefit manager practices, and reform government program reimbursement methodologies for drug products. ~~The~~Restrictive or unfavorable pricing, coverage, or reimbursement determinations for our medicines or product candidates by governments, regulatory ~~priorities of~~agencies, courts, or private payers could also adversely impact our business and financial results. Additional policies, regulations, legislation, or enforcement, including those proposed or pursued by the ~~current~~ U.S. ~~presidential administration~~Congress, the U.S. executive branch and regulatory authorities worldwide, could ~~further~~ intensify these efforts ~~which could have a material adverse~~and adversely impact on our ~~business.~~business and consolidated results of operations.

In the U.S., we are required to provide rebates to the federal government and ~~respective~~ state governments on their purchases of our pharmaceuticals under various federal and state healthcare programs, including state Medicaid and Medicaid Managed Care programs ~~(minimum~~(a minimum of 23.1 percent plus adjustments for price increases above the consumer price index over time) and discounts to private entities who treat patients in certain types of ~~health care~~healthcare facilities intended to serve low-income and uninsured patients (known as 340B ~~facilities)~~covered entities). ~~No rebates are required at this time in the Medicare Part B (physician and hospital outpatient) program where reimbursement is set on an “average sales price plus 4.3 percent” formula.~~ Additionally, an annual fee is imposed on pharmaceutical manufacturers and importers that sell branded prescription drugs to specified government programs. ~~Since 2019,~~

Changes to the ~~Bipartisan Budget Act has required manufacturers of brand-name drugs, biologics, and biosimilars to provide~~340B program or the Medicaid programs could have a ~~discount of 70 percent~~material adverse impact on our business. For example, continued expansion of the ~~cost~~340B program and growth of ~~branded prescription drugs~~entities claiming entitlement to 340B pricing, including in ways that may be inconsistent with the statutory scheme, impacts our revenue on an increasing percentage of sales. Changes to the calculation of rebates under the Medicaid program could also increase our Medicaid rebate obligations and decrease the prices charged to 340B covered entities.

We have implemented a Contract Pharmacy Limited Distribution System applicable to sales through the 340B program, which generally limits distribution of 340B-priced product to: (i) covered entities and their child sites; (ii) contract pharmacies wholly owned by the covered entity; or (iii) if a covered entity lacks an in-house outpatient pharmacy, a single contract pharmacy designated by a covered entity to establish a 340B bill to/ship to arrangement. Our Contract Pharmacy Limited Distribution System contains certain exceptions that permit broader contract pharmacy usage, including for ~~Medicare Part D participants who~~"penny priced" insulin products, provided that the covered entity passes through all discounts to eligible patients at the point of sale and meets other conditions. We believe our Contract Pharmacy Limited Distribution System complies with the 340B statute, but it remains subject to ongoing inquiries and litigation that could have a material impact on our business, as discussed in Item 8, "Financial Statements and Supplementary Data—Note 16: Contingencies." Other aspects of the 340B program, including the proper definitions of "patient" and "child site" under the 340B statute, are inalso subject to ongoing litigation by other parties, the ~~“doughnut hole” (the coverage gap in Medicare prescription drug coverage), an increase from~~resolution of which could impact the ~~previous 50 percent discount.~~growth and scope of the 340B program.

Rebates are also negotiated in the private sector. We pay rebates to private payers ~~who~~that provide prescription drug benefits to seniors covered by Medicare and to private payers ~~who~~that provide prescription drug benefits to their customers. These rebates are affected by the introduction of competitive products and generics in the same class. Our approach to the rebates we offer to private payers ~~who~~that provide prescription drug benefits to seniors covered by Medicare may be impacted by ~~recent~~the 2020 regulatory amendments ~~included in~~to the anti-kickback ~~statute final rule that will become effective on~~statute's discount safe harbor, which have been stayed until at least January 1, ~~2023.~~2032.

For a discussion of risks related to how we price our products, see Item 1A, "Risk Factors—Risks Related to Our Business—We face litigation and investigations related to our products, how we price or commercialize our products, and other aspects of our business, which could adversely affect our business, and we are self-insured for such matters."

Outside the U.S.

Globally, public and private payers are increasingly restricting access to pharmaceuticals based on assessments of comparative effectiveness and value, including through the establishment of formal health technology assessment processes. In addition, third-party organizations, including professional associations, academic institutions, and non-profit entities associated with payers, ~~are conducting~~conduct and ~~publishing~~publish comparative effectiveness and cost/benefit analyses on medicines, the impact of which ~~are uncertain at this time.~~can influence pharmaceutical access and pricing.

In most international markets, we operate in an environment of government-mandated cost-containment programs, which may include price controls, international reference pricing (to other ~~countries’~~countries' prices), discounts and rebates, therapeutic reference pricing (to other, often generic, pharmaceutical choices), regulatory hurdles, restrictions on physician prescription levels, and mandatory generic substitution. WeIn these markets, healthcare services and the determination of pricing and reimbursement for pharmaceutical products are impacted by government control at the point of care or as the primary payer.

The European Commission published its draft General Pharmaceutical Legislation in April 2023. While certain elements in the European Commission draft could expedite regulatory timelines, we anticipate that the overall market and patient impact would be negative if the legislation is approved as drafted. Implementation timing is unknown at this time. Health care cost containment remains a focus in the EU, among other jurisdictions. Most countries in the EU attempt to contain drug costs by engaging in some form of reference pricing in which authorities examine pre-determined internal or external markets for published prices of a product or national class of drugs. Member states also have the power to restrict the range of pharmaceutical products for which their national health insurance systems provide reimbursement and may ~~experience additional~~condition access on agreement of a reimbursement price or completion of cost-effectiveness or other gating studies.

In Japan, our products generally are subject to government-mandated annual price reductions. The government may also order re-pricings for specific products or classes of products if certain criteria are met, including exceeding product use thresholds.

China has introduced and implemented reforms to accelerate access to innovative products and reduce costs. To drive patient access, we seek inclusion of many of our branded products on China's National Reimbursement Drug List, a list of drugs fully or partially reimbursed by China’s national basic health insurance. In exchange for broad access, these products are generally subject to negotiation of significant price concessions. China also utilizes a value-based procurement program process for products that have generic substitutes. Products that we choose to tender through this process are similarly subject to price reductions. Our performance in China may be significantly impacted by the country's evolving pharmaceutical regulatory environment, including access, intellectual property protection, regulatory enforcement and compliance, and trade policies.

Governments in many emerging markets are also focused on limiting health care costs and have enacted price controls and measures impacting intellectual property. Reforms in our product markets, including those that may stem from periods of uneven economic growth or downturns or uncertainty, or as a result of high inflation, emergence, or escalation of, and responses to, international tension and conflicts, or government budgeting priorities, may continue to result in added pressure on pricing ~~pressures resulting from the financial strain of the COVID-19 pandemic on government-funded healthcare systems around the world.~~and reimbursement for our products.

We cannot predict the extent to which our business may be affected by ~~these~~current or ~~other~~ potential future legislative, regulatory, or payer developments. However, in general we expect to see continued focus on regulating pricing, resulting in additional state, federal, and international legislative and regulatory developments that could have further negative effects on pricing and reimbursement for our ~~products.~~products as well as overall operations.

See Item 7, ~~“Management's~~"Management's Discussion and ~~Analysis - Results of Operations -~~ Analysis—Executive ~~Overview -~~ Overview—Other ~~Matters -~~ Matters—Trends Affecting Pharmaceutical Pricing, Reimbursement, and ~~Access”~~Access" for additional information regarding recent legislative, administrative, and other pricing initiatives and their impact on our results.

Research and Development

Our commitment to research and development dates back more than 140 years. We invest heavily in research and development because we believe it is critical to our long-term competitiveness. At the end of ~~2020,~~2023, we employed approximately ~~7,600~~10,000 people in pharmaceutical research and development activities, including a substantial number of physicians, scientists holding graduate or postgraduate degrees, and highly skilled technical personnel.

Our internal pharmaceutical research focuses primarily on the areas of metabolism (including diabetes, ~~oncology,~~obesity and cardiovascular), immunology, ~~neurodegeneration,~~neuroscience, and ~~pain. During 2020, we also focused on researching and developing potential treatments for COVID-19.~~oncology. In addition to discovering and developing new medicines, we seek to expand the value of existing products through new uses, formulations, and therapeutic approaches, including complementary delivery devices or diagnostic tools, that can provide additional value to patients.

To supplement our internal efforts, we collaborate with others, including academic institutions and research-based pharmaceutical and biotechnology companies. We use the services of physicians, hospitals, medical schools, and other research organizations worldwide to conduct clinical trials to establish the safety and effectiveness of our medicines. We ~~actively~~also invest in external research and technologies that we believe complement and strengthen our own efforts. These investments can take many forms, including, among others, licensing arrangements, co-development agreements, co-promotion arrangements, joint ventures, acquisitions, and equity investments.

Pharmaceutical development is time-consuming, expensive, and risky. Very few of the candidates discovered by researchers ultimately become approved medicines. The process from discovery to regulatory approval can take over a decade. Candidates can fail at any stage of the process, and even late-stage candidates sometimes fail to receive regulatory approval or achieve commercial success. In addition, novel modalities can present more challenging or lengthy development timelines. The following describes in more detail the research and development process for pharmaceutical products:

Phases of New Drug Development

•Discovery Phase

In the discovery phase, scientists identify, design, and synthesize promising candidates by analyzing their effect on biological targets thought to play a role in disease. Targets are often unproven and only candidates that have the desired effect on the target and meet other design criteria move to the next phase of development, which includes the initiation of studies in animals to support regulatory and safety requirements for clinical research in humans. The discovery phase can take years and the probability of any one candidate becoming a medicine is extremely low.

1618

•Early Development Phase

Early development includes initial testing for safety and efficacy and early analyses of manufacturing requirements. Safety testing is initially performed in laboratory tests and animals, as necessary. In general, the first human tests (often referred to as Phase I) are conducted in small groups of subjects to assess safety and evaluate the potential dosing range. Subsequently, larger populations of patients are studied (Phase II) to identify ~~initial~~ signs of efficacy while continuing to assess safety. In parallel, scientists work to identify safe, effective, and economical manufacturing processes. Long-term animal studies continue to test for potential safety issues. Of the candidates that enter the early development phase, approximately 10 percent move to the late development phase. The early development phase varies but can take several years to complete.

•Late Development Phase

Late phase development projects (typically Phase III) have met initial safety requirements and shown initial evidence of efficacy in earlier studies. As a result, these candidates generally have a higher likelihood of success and trials include larger patient populations to demonstrate safety and efficacy in the disease. These studies are designed to demonstrate the benefit and risk of the potential new medicine and may be compared to competitive therapies, placebo, or both. Phase III studies are generally conducted globally, are costly, and are designed to support regulatory filings for marketing approval. The duration of Phase III testing varies by disease and may take ~~two to four~~ years.

•Submission Phase

Once a potential new medicine is submitted to regulatory agencies, the time to final marketing approval can vary from several months to several years, depending on the disease state, the strength and complexity of available data, the degree of unmet need, and the time required for the regulatory agency(ies) to evaluate the submission, which can depend on prioritization by regulators and other factors. There is no guarantee that a potential medicine will receive marketing approval, or that decisions on marketing approvals or indications will be consistent across geographic areas.

We believe our investments in research, both internally and in collaboration with others, have resulted in a robust pipeline of potential new medicines and new treatment indications in all stages of development. We currently have approximately 45 candidates in clinical development or under regulatory review, and a larger number of projects in the discovery phase. See Item 7, ~~“Management's~~"Management's Discussion and ~~Analysis - Results of Operations -~~ Analysis—Executive ~~Overview -~~ Overview—Late-Stage Pipeline,”" for more information on ~~certain of~~ our late-stage product candidates.

Raw Materials and Product Supply

Most of the principal materials we use in our manufacturing operations are available from more than one source. However, ~~we obtain~~ certain raw or intermediate materials ~~primarily~~are procured from ~~only one~~a single source. We ~~generally~~ seek to maintain sufficient inventory to provide reliability of production and manage unforeseen supply ~~the market until an alternative source of supply could be implemented,~~variability. However, various developments have led, and may in the ~~event one of these suppliers was unable~~future lead, to ~~provide the materials~~interruption or ~~product. However, in the event of an extended failure of a supplier or significant unanticipated increases in demand on a supplier, it is possible that we could experience an interruption~~shortages in supply until we ~~established~~establish new sources, implement alternative processes, bring new manufacturing facilities online, or pause or discontinue product sales in ~~some cases, implemented alternative processes.~~one or more markets.

The majority of our revenue comes from products produced predominantly in our own facilities. Our principal active ingredient manufacturing occurs at sites we own in the U.S., including Puerto Rico, and Ireland. Finishing operations, including formulation, filling, assembling, delivery device manufacturing, and packaging, take place at a number of sites throughout the world. To support anticipated demand for our current and prospective products, we have undertaken significant manufacturing expansion initiatives. During 2023, commercial production commenced at our Research Triangle Park manufacturing site in Durham, North Carolina. Further investments to increase our manufacturing capacity include planned sites in Concord, North Carolina, Limerick, Ireland, Alzey, Rhineland-Palatinate, Germany, and two in Lebanon, Indiana. We also utilize and are expanding arrangements with third parties for certain active ingredient manufacturing, filling, finishing operations, and ~~finishing operations.~~

for device or component production and assembly.

We manage our supply chain (including our own facilities, contracted arrangements, and inventory) in a way that is intended to allow us to meet ~~all expected~~ product demand while maintaining flexibility to reallocate manufacturing capacity to improve efficiency and respond to changes in supply and demand. To maintain ~~a stable~~ supply of our products, we use a variety of techniques, including comprehensive quality systems, inventory management, and back-up sites.

However, pharmaceutical production processes are complex, highly regulated, and vary widely from product to product. Shifting or adding manufacturing capacity ~~can be~~is a very lengthy process requiring significant capital expenditures, process modifications, and regulatory approvals. Accordingly, ~~if we were to experience~~developments such as unanticipated demand, unplanned plant shutdowns, manufacturing or quality assurance difficulties at one of our ~~own~~ facilities ~~significant~~or contracted facilities, failure or refusal of a ~~contract~~ supplier or ~~significant unanticipated~~contract manufacturer to supply contracted quantities, increases in demand ~~we could experience an~~on a supplier, or difficulties in predicting or variability in demand for our products and those of our competitors have led, and may in the future lead, to interruption or higher costs in the supply of certain products, or product shortages, ~~until production could be resumed~~ or ~~expanded.~~

~~In addition, COVID-19 could also~~pauses or discontinuations of product sales in one or more markets. For example, we have ~~an adverse impact on~~experienced challenges in meeting strong demand for our incretin products in recent periods, partially due to the limited availability of competitor therapies, and expect tight supply to persist while additional manufacturing ~~operations,~~capacity is operationalized. Further, cost and wage inflation, availability of adequate capacity in global transportation, supply chain complexities, including consolidation therein, labor market issues, international tension and ~~distribution systems, which could impact~~conflicts, uneven economic growth or downturns, an increase in overall demand in our ~~ability to produce and distribute our~~industry for certain products and ~~affect~~materials, and public health outbreaks, epidemics, or pandemics, such as the ~~ability~~COVID-19 pandemic, have caused, and in the future may cause, delays or disruptions in and/or increased costs related to distribution of ~~third parties on which we rely to fulfill their obligations to us,~~our medicines, the construction or acquisition of manufacturing capacity, procurement activity, and ~~could increase our expenses.~~supplier or contract manufacturer arrangements, as well as other general business impacts. For more information on the additional risks we face in connection with any difficulties, disruptions, and shortages in the manufacturing, distribution, and sale of our products, see Item 1A, "Risk ~~Factors -~~ Factors—Risks Related to Our ~~Business - The COVID-19 pandemic and efforts~~Business—Manufacturing, quality, or supply chain difficulties, disruptions, or shortages could lead to reduce its spread have impacted, and may in future periods negatively impact, our business and operations.” and Item 7, “Management's Discussion and Analysis - Results of Operations - Executive Overview - COVID-19 Pandemic.”product supply problems."

Quality Assurance

Our success depends in great measure on customer confidence in the quality of our products and in the integrity of the data that support their safety and effectiveness. Product quality ~~arises from~~requires a total commitment to quality in all parts of our operations, including research and development, purchasing, facilities planning, manufacturing, distribution, and dissemination of information about our medicines.

Quality of production processes involves strict control of ingredients, equipment, facilities, manufacturing methods, packaging materials, and labeling. We perform tests at various stages of production processes and on the final product in an effort to ensure that the product meets all applicable regulatory requirements and our internal standards. These tests may involve chemical and physical chemical analyses, microbiological testing, testing in animals, or a combination thereof. Additional assurance of quality is provided by quality assurance groups that audit and monitor all aspects of quality related to pharmaceutical manufacturing procedures and systems in company operations and at third-party suppliers.

Executive Officers of the Company

The following table sets forth certain information regarding our current executive officers.

The term of office for each executive officer expires on the date of the annual meeting of the board of directors, to be held on May ~~3, 2021~~6, 2024 in connection with the company's annual meeting of shareholders, or on the date his or her successor is chosen and qualified. No director or executive officer has a ~~“family relationship”~~"family relationship" with any other director or executive officer of the company, as that term is defined for purposes of this disclosure requirement. There is no understanding between any executive officer or director and any other person pursuant to which the executive officer was selected.


Name	Age	Titles and Business Experience
David A. Ricks	5356	~~Chairman,~~Chair, President, and Chief Executive Officer (CEO) (since 2017). Previously, Mr. Ricks held various leadership roles with Lilly, including senior vice president and president, Lilly Bio-Medicines. Mr. Ricks has 2427 years of service with Lilly.
Anat Ashkenazi	4851	~~Senior~~Executive Vice President and Chief Financial Officer (since 2021). Previously, Ms. Ashkenazi held various leadership roles with Lilly, including senior vice president, controller and chief financial officer, Lilly Research Laboratories, and vice president, finance and chief financial officer, Lilly Diabetes and Lilly global manufacturing and quality. Ms. Ashkenazi has 1922 years of service with Lilly.
~~Melissa S. Barnes~~Eric Dozier	5257	~~Senior~~Executive Vice President, ~~Enterprise Risk Management,~~Human Resources and ~~Chief Ethics and Compliance Officer~~Diversity (since ~~2013)~~2022). Previously, ~~Ms. Barnes~~Mr. Dozier held various leadership roles with Lilly, including senior vice president, ~~deputy general counsel. Ms. Barnes~~chief commercial officer for Loxo@Lilly, and vice president, global ethics and compliance officer. Mr. Dozier has 26 ~~years of service with Lilly.~~
~~Stephen F. Fry~~	55	~~Senior Vice President, Human Resources and Diversity (since 2011). Previously, Mr. Fry held various leadership roles with Lilly, including vice president, human resources. Mr. Fry has 33~~ years of service with Lilly.
Anat Hakim	5154	~~Senior~~Executive Vice President, General Counsel and Secretary (since 2020). Prior to joining Lilly, Ms. Hakim was senior vice president, general counsel and secretary of WellCare Health Plans, Inc. (WellCare) from 2016 to 2018, and executive vice president, general counsel and secretary of WellCare from 2018 to 2020. Prior to joining WellCare, she served as divisional vice president and associate general counsel of intellectual property litigation at Abbott Laboratories from 2010 to 2013 and divisional vice president and associate general counsel of litigation from 2013 to 2016. Ms. Hakim has ~~one year~~four years of service with Lilly.
~~Patrik Jonsson~~Edgardo Hernandez	5449	~~Senior~~ Executive Vice President and President, ~~Lilly USA, and Chief Customer Officer~~Manufacturing Operations (since ~~2020)~~2021). Previously, Mr. ~~Jonsson~~Hernandez held various leadership roles with Lilly, including senior vice president, global parenteral drug product, delivery devices and regional manufacturing, and vice president, Fegersheim operations. Mr. Hernandez has 19 years of service with Lilly.
Patrik Jonsson	57	Executive Vice President and President, Lilly Diabetes and Obesity and President, Lilly USA (since 2024). Mr. Jonsson has held various leadership roles with Lilly, including, most recently, as Executive Vice President and President, Lilly Immunology and Lilly USA, and Chief Customer Officer. Previously, he served as senior vice president and president, Lilly Bio-Medicines and president and general manager, Lilly Japan. Mr. Jonsson has ~~30 years of service with Lilly.~~
~~Michael B. Mason~~	54	Senior Vice President and President, Lilly Diabetes (since 2020). Previously, Mr. Mason held various leadership roles with Lilly, including senior vice president, connected care and insulins and vice president of U.S. Diabetes. Mr. Mason has 3133 years of service with Lilly.
Johna L. Norton	5457	~~Senior~~Executive Vice President, Global Quality (since 2017). Previously, Ms. Norton held various leadership roles with Lilly, including vice president, global quality assurance API manufacturing and product research and development. Ms. Norton has 3033 years of service with Lilly.
~~Myles O'Neill~~Diogo Rau	6249	~~Senior~~Executive Vice President and Chief Information and Digital Officer (since 2021). Prior to joining Lilly, Mr. Rau was senior director of information systems and technology for retail and online stores of Apple Inc. from 2011 to 2021. Prior to his tenure at Apple, he served as a partner at McKinsey & Company. Mr. Rau has three years of service with Lilly.
Daniel Skovronsky, M.D., Ph.D.	50	Executive Vice President, Chief Scientific Officer and President, Lilly Research Laboratories and Lilly Immunology (since 2024). Prior to assuming his current role, Dr. Skovronsky served as Executive Vice President, Chief Scientific and Medical Officer, and President, Lilly Research Laboratories since 2018. Dr. Skovronsky has held other leadership roles with Lilly, including as senior vice president, clinical and product development and vice president, diabetes research. Dr. Skovronsky has 13 years of service with Lilly.
Jacob Van Naarden	39	Executive Vice President and President, ~~Manufacturing Operations~~Loxo@Lilly (since ~~2018)~~2021). Previously, Mr. ~~O’Neill~~Van Naarden served as chief executive officer-Loxo Oncology at Lilly, and chief operating officer-Loxo Oncology at Lilly. Mr. Van Naarden joined Lilly in 2019 when the company acquired Loxo Oncology, Inc., where he was the chief operating officer. In previous roles, Mr. Van Naarden worked in various biotechnology investing, operating, and advisory capacities, including positions with HealthCor Management, Aisling Capital, and Goldman Sachs. Mr. Van Naarden has five years of service with Lilly.
Alonzo Weems	53	Executive Vice President, Enterprise Risk Management, and Chief Ethics and Compliance Officer (since 2021). Previously, Mr. Weems held various leadership roles with Lilly, including vice president and deputy general counsel for corporate legal functions, general counsel for Lilly USA, and general counsel for biomedicines and diabetes. Mr. Weems has 26 years of service with Lilly.
Anne White	55	Executive Vice President and President, Lilly Neuroscience (since 2021). Previously, Ms. White held various leadership roles with Lilly, including senior vice president ~~of global parenteral drug product, delivery devices,~~ and ~~regional manufacturing. Mr. O’Neill has 18 years of service with Lilly.~~
~~Leigh Ann Pusey~~	58	~~Senior Vice President, Corporate Affairs and Communications (since 2017). Prior to joining Lilly, Ms. Pusey was~~ president, ~~and chief executive officer of the American Insurance Association from 2009 to 2017. Ms. Pusey has three years of service with Lilly.~~
~~Aarti Shah, Ph.D.~~	56	Senior Vice President and Chief Information and Digital Officer (since 2018). Previously, Dr. Shah held various leadership roles with Lilly, including senior vice president information technology and chief information officer and global brand development leader. Dr. Shah has 27 years of service with Lilly.
~~Daniel M. Skovronsky, M.D., Ph.D.~~	47	Senior Vice President, Chief Scientific Officer, and President, Lilly Research Laboratories (since 2018). Previously, Dr. Skovronsky held various leadership roles with Lilly, including senior vice president, clinical and product development. Dr. Skovronsky has 10 years of service with Lilly.
~~Anne E. White~~	52	~~Senior Vice President and President,~~ Lilly Oncology, ~~(since 2018). Previously, Ms. White held various leadership roles with Lilly, including~~ vice president of Portfolio Management, Chorus, and Next Generation Research and Development. Ms. White has 2528 years of service with Lilly.
Ilya Yuffa	4649	~~Senior~~Executive Vice President and President, Lilly ~~Bio-Medicines~~International (since ~~2020)~~2021). Previously, Mr. Yuffa held various leadership roles with Lilly, including senior vice president and president, Lilly Bio-Medicines, vice president of U.S. Diabetes, general manager of Italy Hub, and vice president, global ethics and compliance officer since 2014. Mr. Yuffa has 2427 years of service with Lilly.
~~Alfonso Zulueta~~	58	Senior Vice President and President, Lilly International (since 2014). Previously, Mr. Zulueta held various leadership roles with Lilly, including president of emerging markets and of Lilly Japan. Mr. Zulueta has 32 years of service with Lilly.

1921

Human Capital Management

Our core values—integrity, excellence, and respect for people—shape our approach to attracting, retaining, engaging, and developing a diverse and highly skilled and ethical workforce, which is critical to executing our strategy. We believe the strength of our workforce significantly contributes to our financial performance and enables us to make life better for people around the world. For instance, most of the products we sell today were discovered or developed by our own scientists, and our long-term success depends on our ability to continually discover or acquire, develop, and commercialize innovative ~~new~~ medicines. We believe that fostering a positive culture that values the contributions of our talented colleagues helps drive our success.

We are committed to creating a safe, supportive, ethical, and rewarding work environment through strategic focus on our human capital management process, fairness and nondiscrimination in our employment practices, robust training and development opportunities, and competitive pay and benefits. We believe our dedication to promoting diversity, equity, and inclusion ~~(D&I)~~ within our company reflects our values and is a key driver of business success and growth.

We regularly conduct ~~anonymous~~confidential employee surveys to seek feedback from our workforce on a variety of topics. These results are reviewed and analyzed by our leaders ~~in order~~ to ~~implement changes~~identify opportunities to adjust our policies and benefits ~~designed~~ to improve our employees' ~~well-being.~~experience. As a result of our efforts, we believe that we have a highly performing, cohesive workforce and that our employee relations are good.

At the end of ~~2020,~~2023, we employed approximately ~~35,000~~43,000 people, including approximately ~~19,500~~23,000 employees outside the U.S. Our employees include approximately ~~7,600~~10,000 people engaged in research and development activities.

Strategy and Oversight

~~In order~~We are committed to ~~build~~fairness and nondiscrimination in our employment practices, and we deeply value diverse backgrounds, skills, and ~~inclusive teams, our CEO and executive committee set expectations for inclusive leadership and hold leaders accountable for achieving results.~~global perspectives. Because dedication to human capital management is also a core component of our corporate governance, our board of directors regularly engages with management and facilitates a system of reporting designed to monitor human capital management initiatives and progress as part of the overarching framework that guides how we attract, retain, engage, and develop a workforce that aligns with our values and mission.

~~Diversity and Inclusion~~

We are committed to fairness and nondiscrimination in our employment practices, and we deeply value diverse backgrounds, skills, and global perspectives. To fulfill our purpose, we believe we must look at challenges from multiple viewpoints and understand the diverse experiences of the patients who depend on us.

~~We believe that fostering D&I begins with understanding. For example, our~~ ~~Employee Journeys~~ research has yielded important insights about the experiences of women, Black/African American, Latinx, Asian, and lesbian, gay, bisexual, transgender, or queer (LGBTQ) employees at Lilly. The results of this research are reviewed by our senior leadership, and we deploy actions and activities in response to these insights to improve our workplace and corporate culture.

Since 2017, we have committed to increasing the number of women, Black/African American, Latinx, and Asian populations in leadership roles, and we actively monitor our progress. From the end of 2017 through the end of 2020, we increased the number of women in management globally from 41 percent to 46 percent. For minority group members (MGM) in the U.S. over the same period, we increased management representation from 16 percent to 22 percent. Across all levels of our workforce, from the end of ~~2017~~2019 through the end of ~~2020,~~2023, we have seen ~~increased~~positive changes in representation for ~~MGMs~~minority group members (MGM) in the ~~U.S.~~United States and women globally. ~~Our focus on D&I is also evident at our executive committee and board~~In addition, 4 of ~~directors. Seven of 15~~13 current members (approximately 4731 percent) of our executive committee (which includes our CEO) are women and ~~two~~3 are ~~MGM, including one MGM woman.~~MGMs. In addition, as of the ~~company’s 15-member~~filing of this Annual Report on Form 10-K, the company's 12-member board of directors includes ~~six~~five women and ~~seven~~five members ~~of underrepresented groups (including MGM as well as LGBTQ individuals).~~

who are MGMs.

Our efforts in D&I and workplace benefits have garnered numerous recognitions, including, in 2020 and early 2021, Top 50 Companies for Diversity by DiversityInc., America’s Best Employers for Diversity by Forbes, America’s Most JUST Companies and Forbes JUST 100 by Forbes and JUST Capital, Perfect Scorerecruitment strategy focuses on the Human Rights Campaign Foundation Corporate Equality Index (2020 and 2021), World’s Most Ethical Companies by Ethisphere, Leading Disability Employer by the National Organization on Disability, Top Employers by Science Magazine, America’s Most Responsible Companies by Newsweek, and 100 Best Companies, Top 75 Companies for Executive Women, Best Companies for Dads, and Best Companies for Multicultural Women by Working Mother Magazine.

~~Employee Development~~

~~We believe talent begins with the hiring process. We therefore require hiring managers~~opportunities to ~~consider a diverse~~expand our pool of candidates to reach more candidates across a variety of dimensions, including but not limited to race, religion, sexual orientation, gender identity, national origin, veteran status, disability status, education, and weexperience. We also strive to provide a diverse panel of interviewers for open positions. We believe that ~~hiring~~recruiting in this way helps ensure that ~~people from all backgrounds~~everyone will have an equal opportunity to advance their careers.

We offer training to enable our employees to perform their duties in our highly regulated industry. We also strive to cultivate a culture that promotes ongoing learning by encouraging employees to seek further education and growth experiences, helping them build rewarding careers. We have ~~introduced online programming to facilitate access to our learning~~implemented development tools and ~~development offerings. Many training courses are designed to improve accessibility~~resources for ~~people with disabilities and other unique needs. Across Lilly, we are working to design learning experiences to be more inclusive and effective.~~

~~To further improve~~all employees, improved our talent programs and processes ~~in 2019, we introduced~~ ~~Explore Your Career, a global framework of tools and resources for our employees. We believe~~ ~~Explore Your Career~~ ~~provides~~to provide broader access to information, and increased transparency ~~about~~regarding career development and advancement at Lilly. ~~In 2018, we introduced~~ ~~Emerge~~, a three-day program led by our CEO that is designed to develop MGM talent at Lilly, and three cohorts comprising Black/African American women, Latinx and Asian women, and MGM men have participated in this enterprise-level program since its inception. Lilly also offers established leadership development programs for women and earlier career multi-cultural talent, as well as leaders at all levels.

Employee resource groups (ERGs) are another important component of developing talent at Lilly. We currently have 10 ERGs representing groups including women, MGMs, LGBTQ individuals, and people with disabilities. ERGs offer our diverse workforce opportunities to build relationships, engage with senior leaders, advance our caring community, and offer unique insights and perspectives to improve our business. Membership in our ERGs continues to grow, with an estimated 11,430 people participating worldwide at the end of 2020.

~~In furtherance of our efforts to create an inclusive workplace, in 2020 we expanded~~ ~~Make it Safe to Thrive~~, an education and awareness program to help employees and leaders understand how individual psychological safety can be created and enhanced, with the goal of ensuring that all employees feel safe to speak up and to share their ideas at work. The program includes live and online training and a monthly video series.

Employee Health and Safety

~~While we have consistently focused on protecting the health and safety of~~We strive to foster a healthy, vibrant work environment, which includes keeping our employees safe. We seek to create a companywide culture where best-in-class safety practices are consistently followed. To do this, we assess and continuously attempt to improve our companywide safety performance to promote the ~~COVID-19 pandemic has emphasized the importance~~well-being of this critical priority. In response to the pandemic, we have taken measures to protect our workforce, maximize social distancing, and inform employees about our policies. For example, we instituted travel restrictions and remote working arrangements for employees whose roles do not require on-site presence. To support employee well-being in the U.S., we enhanced local benefits related to health care, childcare, and time off, and expanded reimbursement for home office ergonomic support expenditures. In the U.S., we provide full coverage for COVID-19 diagnostic testing and treatment, and at our corporate headquarters in Indianapolis, we provide free on-site testing for employees and ~~members of their household. In addition,~~to help safeguard communities where we operate. We believe a holistic approach and dedication to safety helps us be our best as ~~part of~~we deliver on our ~~Make it Safe~~company purpose to ~~Thrive~~ ~~program, we partnered with our ERGs to offer a series of programs highlighting and addressing challenges faced by ERG members during~~improve lives around the ~~COVID-19 pandemic, aiming to build understanding of different experiences and to offer ways to be inclusive.~~world.

2122

Information Available on Our Website

Our company website is www.lilly.com. None of the information accessible on or through our website is incorporated into this Annual Report on Form 10-K. We make available through the website, free of charge, our company filings with the ~~SEC~~Securities and Exchange Commission (SEC) as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC. These include our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, registration statements, and any amendments to those documents. The link to our SEC filings is investor.lilly.com/financial-information/sec-filings.

Paper copies of the company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q that are filed with the SEC are available without charge upon written request to:

ELI LILLY AND COMPANY

c/o General Counsel and Secretary

Lilly Corporate Center

Indianapolis, Indiana 46285

In addition, the ~~Governance portion~~"Governance" section of our website includes our corporate governance guidelines, board of directors and committee information (including committee charters), and our articles of incorporation and bylaws. The link to our corporate governance information is lilly.com/leadership/governance.

We routinely post important information for investors in the “Investors” section of our website, www.lilly.com. We may use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the “Investors” section of our website, in addition to following our press releases, filings with the SEC, public conference calls, presentations, and webcasts. We may also use social media channels to communicate with investors and the public about our business, products and other matters, and those communications could be deemed to be material information. The information contained on, or that may be accessed through, our website or social media channels, is not incorporated by reference into, and is not a part of, this Annual Report on Form 10-K.

Item 1A.Risk Factors

In addition to the other information contained in this Annual Report on Form 10-K, the following risk factors should be considered carefully in evaluating our company. It is possible that our business, financial condition, liquidity, cash flows, or results of operations, reputation, and prospects could be materially adversely affected by any of these risks. ~~Certain of these risks could also adversely affect the company's reputation.~~ Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial could also adversely affect our business, financial condition, liquidity, cash flows, results of operations, reputation, and ~~reputation.~~prospects.

Risks Related to Our Business

•~~The COVID-19 pandemic~~ and ~~efforts to reduce its spread have impacted, and may in future periods negatively impact, our business and operations.~~

The COVID-19 pandemic has substantially burdened healthcare systems worldwide. The focus of resources on COVID-19 and widespread protective measures implemented to control the spread of the pandemic have impacted discovery, research, development, manufacturing, and sales of our medicines as well as those of the broader pharmaceutical industry. Significant delays or unexpected issues, such as higher discontinuation rates or delays accumulating data, affecting the timing, conduct, or regulatory review of our clinical trials, could adversely affect our ability to commercialize some assets in our product pipeline.

Lack of normal access and fewer in-person interactions by patients and our employees with the healthcare system, along with concern about the continued supply of medications, has resulted, and may continue to result, in changes in buying patterns throughout the supply chain, impacting demand for our products and negatively impacting the consolidated operating results of our underlying business. In certain locations in the U.S and around the world with COVID-19 outbreaks, we temporarily halted in-person interactions by our employees with healthcare providers and increased virtual interactions. While in-person interactions have resumed in many locations, we may decide to halt such activity in the future and, in those cases, expect to resume such interactions as it is safe to do so and in compliance with applicable guidance and requirements. The COVID-19 pandemic could also have an adverse impact on our manufacturing operations, global supply chain, and distribution systems, which could impact our ability to produce and distribute our products and affect the ability of third parties on which we rely to fulfill their obligations to us, and could increase our expenses.

We also face unique risks and uncertainties related to our development, manufacture, and uptake of potential treatments for COVID-19, including vulnerability to supply chain disruptions, higher manufacturing costs, difficulties in manufacturing sufficient quantities of our therapies, 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. Expedited authorization processes, including our EUAs for bamlanivimab and bamlanivimab and etesevimab administered together, have allowed restricted distribution of products with less than typical safety and efficacy data, and additional data that become available may call into question the safety or effectiveness of our COVID-19 therapies. Additionally, the availability of superior or competitive therapies, or preventative measures such as vaccines, coupled with the transient nature of pandemics, could negatively impact or eliminate demand for our COVID-19 therapies. In addition, we may be required to accept returns of certain product previously shipped pursuant to EUAs if the relevant EUA is revoked or terminated. Mutations or the spread of other variants of the coronavirus could also render our therapies ineffective. Any of these risks could prevent us from recouping our substantial investments in the research, development, and manufacture of our COVID-19 therapies.

In addition, the conditions created by the COVID-19 pandemic intensify other risks inherent in our business, including, among other things, risks related to drug pricing and access, the conduct of clinical trials, workplace safety and productivity, intellectual property protection, product liability and other litigation, and the impact of adverse global and local economic conditions.

We have experienced negative impacts to our underlying business, including demand for our products, due to the COVID-19 pandemic but the pandemic has not negatively impacted our liquidity position. Given the evolving nature of the virus, the financial impact of the COVID-19 pandemic on our results of operations, financial condition, liquidity, and cash flows in future periods could change, perhaps materially. The degree to which the COVID-19 pandemic affects us will depend on developments that are highly uncertain and beyond our knowledge or control, including, but not limited to, the duration and severity of the pandemic, the actions taken to reduce its transmission, including widespread availability of vaccines, and the speed with which, and extent to which, more stable economic and operating conditions resume. Should the COVID-19 pandemic and any associated recession or depression continue for a prolonged period, our results of operations, financial condition, liquidity, and cash flows could be materially impacted by lower revenues and profitability and a lower likelihood of effectively and efficiently developing and launching new medicines.Industry

•Pharmaceutical research and development is very costly and highly uncertain; we may not succeed in developing, licensing, or acquiring commercially successful products sufficient in number or value to replace revenues of products that have lost or will ~~soon~~ lose intellectual property protection or are displaced by competing products or therapies.

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

There is a high rate of failure inherent in ~~new~~ drug discovery and development. To bring a ~~drug~~product from the discovery phase to market ~~can take over a decade~~takes considerable time and ~~often costs in excess of $2 billion.~~entails significant cost. Failure can occur at any point in the process, including in later stages after substantial investment. As a result, most funds invested in research and development programs will not generate financial returns. New product candidates that appear promising in development 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, 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 ~~new~~newer, better, or ~~better~~more cost-effective competitive products, difficulty or excessive costs to manufacture, insufficient infrastructure to support detection, diagnostic or 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. 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.

Regulatory agencies ~~continue to~~ establish high hurdles for the efficacy and safety of new ~~products. Delays~~products and ~~uncertainties~~indications. Delay, uncertainty, unpredictability, and inconsistency in drug approval processes across markets and agencies can result in delays in product launches, ~~and~~ lost market ~~opportunity.~~opportunities, impairment of inventories, and other negative impacts. In addition, it can be very difficult to predict revenue growth rates of, or variability in demand for, new ~~products.~~products and 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 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 candidates, indications or products; or whether our products and indications, once launched, will be commercially successful.

WeThrough internal innovation and business development we must maintain a continuous flow of successful new products and ~~successful new~~ indications or ~~brand~~line extensions ~~for existing products, both through our internal efforts and our business development activities,~~ sufficient both to cover our substantial research and development costs and 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 ~~do so in the short-term or long-term~~timely replenish our product portfolio and pipeline would have a material adverse effect on our business, results of operations, cash flows, and financial position. 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.

We engage in various forms of business development activities to enhance or refine our product pipeline, ~~may include~~including licensing arrangements, co-development agreements, co-promotion arrangements, distribution and promotion agreements, joint ventures, acquisitions, ~~strategic alliances, collaborations,~~equity investments, and ~~licensing arrangements.~~divestitures. 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, jeopardize, or increase the costs of our business development activities. In addition, failures or difficulties in integrating or retaining new personnel or the operations of the businesses, products, or assets we acquire (including related technology, commercial operations, compliance programs, information security, manufacturing, distribution, and general business operations and procedures) may affect our ability to realize the expected benefits of business development transactions ~~which~~and may result in our incurrence of substantial asset impairment or restructuring charges. We also may fail to generate the expected revenue and pipeline enhancement from business development activities due to limited diligence opportunities, unsuccessful clinical trials, issues related to the quality, integrity, or broad applicability of data, regulatory impediments, and manufacturing or commercialization challenges. Additionally, business development activity focused on new modalities may entail additional risks and costs. Accordingly, business development transactions may not be completed in a timely manner if(if at ~~all,~~all), may not result in successful development outcomes or successful commercialization of any product, ~~and~~ may give rise to legal proceedings or regulatory ~~scrutiny.~~scrutiny, and may result in charges that negatively impact our financial position or results of operations in any given period.

See Item 1, "Business—Research and Development—Phases of New Drug Development" and Item 7, ~~“Management’s~~"Management's Discussion and ~~Analysis - Results of Operations -~~ Analysis—Executive ~~Overview -~~ Overview—Late-Stage Pipeline,”" for more details about our current product pipeline.

•We and our products face intense competition from multinational pharmaceutical companies, biotechnology companies, and lower-cost generic and biosimilar manufacturers, and such competition could have a material adverse effect on our business.

We compete with a large number of multinational pharmaceutical companies, biotechnology companies, and generic pharmaceutical companies and, in many cases, our products compete against the leading products of one or more of our competitors. To compete successfully, we must continue to deliver to the market innovative, cost-effective products through internal innovation or business development that meet important medical needs, provide improved outcomes for patients, and deliver value to payers. Our product revenues and prospects are adversely affected by the introduction by competitors of branded products that are 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 are also adversely affected by treatment innovations, including new or superior modalities, that eliminate or minimize the need for treatment with our drugs.

Regulation of generic and biosimilar products varies around the world and such regulation is complex and subject to ongoing interpretation and implementation by regulatory agencies and courts. Particularly for biosimilars, health authority guidelines and legislative actions could make it less burdensome for competitor products to enter the market and further incentivize uptake of biosimilars. Given the importance to us of marketed biologic products and those in our clinical-stage pipeline, such regulation could have a material adverse effect on our business. See Item 1, "Business—Competition" and "Business—Research and Development," for more details. 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.

In addition, we rely on our ability to attract, engage, and retain highly qualified and skilled scientific, technical, management, and other personnel in order to compete effectively. To continue to commercialize our products, and advance the research, development, and commercialization of additional modalities, indications, and product candidates, we have expanded, and will likely need to further expand, our workforce, including in the areas of manufacturing, clinical trials management, regulatory affairs, and sales and marketing, both in and outside the U.S. We continue to face intense competition for qualified individuals from numerous multinational pharmaceutical companies, biotechnology companies, academic and other research institutions, as well as employers near our manufacturing and other facilities, which has and may continue to increase our labor costs. Our ability to attract and retain talent in our increasingly competitive environment is further complicated by evolving employment trends. Our failure to compete effectively for talent could negatively affect sales of our current and any future approved products and indications, and could result in material financial, legal, commercial, or reputational harm to our business.

•Our business is subject to increasing government price controls and other public and private restrictions on pricing, reimbursement, and access for our drugs, which could have a material adverse effect on our results of operations, reputation or business.

Public and private payers continue to take aggressive steps to control their expenditures for pharmaceuticals by placing restrictions on pricing and reimbursement for, and patient access to, our medicines. These pressures have negatively affected, and could continue to negatively affect, our consolidated results of operations. Governments and private payers worldwide have intensified their scrutiny of, and actions intended to address, pricing, reimbursement, and access to pharmaceutical products and are demanding greater commercial and clinical value from pharmaceutical companies in the form of strong product differentiation and demonstrated value. 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.

Additional policies, regulations, legislation, or enforcement, including because of the regulatory priorities of the U.S. presidential administration and regulatory authorities worldwide, could adversely impact our business and consolidated results of operations. 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. For more details, see Item 1, "Business—Regulations and Private Payer Actions Affecting Pharmaceutical Pricing, Reimbursement, and Access."

Further, restrictive or unfavorable pricing, coverage, or reimbursement determinations for our medicines or product candidates by governments, regulatory agencies, courts, or private payers, including in relation to the implementation of the IRA, reference pricing, and compulsory licensing, may adversely impact our business and financial results. 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 uneven economic growth or downturns or uncertainty, and the emergence or escalation of, and responses to, international tension and conflicts.

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.

For more details, see Item 1, "Business—Regulations and Private Payer Actions Affecting Pharmaceutical Pricing, Reimbursement, and Access," Item 7, "Management's Discussion and Analysis—Executive Overview—Other Matters—Trends Affecting Pharmaceutical Pricing, Reimbursement, and Access," and Item 8, "Financial Statements and Supplementary Data—Note 16: Contingencies."

•Pharmaceutical products can develop safety or efficacy concerns, which could have a material adverse effect on our revenues, income, and reputation.

Pharmaceutical products receive regulatory approval based on data obtained in controlled clinical trials of fixed duration and defined populations. After approval and launch, the products are used for longer periods of time by much larger numbers of patients, which may lead to identifying new safety or efficacy concerns. We and others (including regulatory agencies and private payers) collect extensive information on the efficacy and safety of our marketed products by continuously monitoring the use of our products in the marketplace. In addition, we or others (including our competitors, in some cases) may conduct post-marketing clinical studies on efficacy and safety of our marketed products. New safety or efficacy data

from both market surveillance and post-marketing clinical studies of our products or those of our competitors may result in product label changes, or other measures that could reduce the product's market acceptance and result in declining sales. 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. Serious safety or efficacy issues that arise after product approval have, and could in the future, result in voluntary or mandatory product recalls or withdrawals from the market. Safety issues have, and could in the future, result in costly product liability claims. Any of these outcomes could result in material financial, legal, commercial, or reputational harm to our business.

•We derive a significant percentage of our total revenue from relatively few products and sell our products through increasingly consolidated supply chain entities, which may subject us to, or exacerbate, various risks.

We derived direct product and/or alliance revenues of more than $2 billion for each of Trulicity, Mounjaro, Verzenio, Taltz and Jardiance (including Glyxambi, Synjardy, and Trijardy XR) that collectively accounted for 63 percent of our total revenues in 2023. In particular, Trulicity and Mounjaro accounted for 36 percent of our total revenues in 2023 and we expect products with GLP-1 receptor agonist activity, including the recently launched Zepbound, to represent a significant and growing portion of our business, revenues, and prospects. Loss of patent protection, changes in prescription rates, material product liability or pricing litigation, unexpected side effects or safety concerns, significant changes in demand, regulatory proceedings and investigations, negative publicity affecting doctor or patient confidence, pressure from existing or new competitive products, counterfeit and illegally compounded drugs, changes in labeling, pricing, and insufficient access, or supply shortages or disruptions for these products or any of our other major products could materially impact our results of operations.

In addition, in the U.S., most of our products are distributed through wholesalers and if one of these significant wholesalers should encounter financial or other difficulties, it might decrease the amount of business the wholesaler does with us or we might be unable to timely collect the amounts that the wholesaler owes us, which could negatively impact our results of operations. See Item 1, "Business—Marketing and Distribution," for more details. 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.

Moreover, the negotiating power of health plans, managed care organizations, pharmacy benefit managers, and other supply chain entities has increased due to consolidation, regulatory, and other market impacts, and they, along with governments, increasingly employ formularies to control costs and encourage utilization of certain drugs, including through the use of formulary inclusion, or favorable formulary placement. Such stakeholders have also increasingly imposed utilization management tools to favor the use of generic products or otherwise limit access to our products. As these practices expand, including due to potential further consolidation of U.S. private third-party payers, we may face difficulty in obtaining or maintaining timely or adequate pricing or formulary placement of our products. We expect that consolidation of supply chain entities will continue to increase competitive and pricing pressures on pharmaceutical manufacturers.

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. For additional information on pricing and reimbursement for our pharmaceutical products, see Item 1, "Business—U.S. Private Sector Dynamics" and "Regulations and Private Payer Actions Affecting Pharmaceutical Pricing, Reimbursement, and Access—U.S."

Risks Related to Our Intellectual Property

•We depend on products with intellectual property protection for most of our revenues, cash flows, and earnings; ~~we have lost or will lose~~the loss of effective intellectual property protection for ~~many~~certain of ~~those~~our products has resulted, and in the ~~next few years, which has resulted and~~future is likely to continue to result, in rapid and severe declines in ~~revenues.~~revenues for those products.

~~A number~~In the ordinary course of their lifecycles, our ~~top-selling~~ products ~~including Alimta and Forteo, have recently lost, or will~~ lose ~~in the next few years,~~ significant patent protection and/or data protection in the U.S., as well as in key ~~countries~~jurisdictions outside the U.S., after a specified period of time. Some products also lose patent protection as a result of successful third-party challenges. We have faced, and remain exposed to, generic competition following the expiration or loss of such intellectual property protection. In particular, we expect that the entry of generic competition for Alimta in the U.S. following the loss of patent exclusivity will cause a rapid and severe decline in revenue for the product and have a material adverse effect on our consolidated results of operations and cash flows.

~~Certain other significant products no longer have effective exclusivity through patent protection or data protection.~~ 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. ~~Historically, outside the U.S., the market penetration~~Generic pharmaceutical companies have in some cases introduced a generic product before resolution of generics following loss of exclusivity has not been as rapid or pervasive as in the U.S.; however, generic market penetration is increasing in many markets outside the U.S., including Japan, Europe, and many countries in emerging markets.any related patent litigation. For biologics, ~~(such as Humalog, Humulin, Erbitux, Cyramza, Trulicity, Taltz, and Emgality),~~ 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 ~~pathways for~~ approval ~~of the competitor versions. Generic pharmaceutical companies could also introduce a generic product before resolution of any related patent litigation.~~pathways.

There is no assurance that the patents we are seeking will be granted or that the patents we hold will be found valid and enforceable if challenged. Moreover, patents relating to particular products, uses, formulations, or processes do not preclude other manufacturers from employing alternative processes or marketing alternative products or formulations that compete with our patented products. 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. In addition, competitors or other third parties may assert claims that our activities infringe patents or other intellectual property rights held by them, or allege a third-party right of ownership in our existing intellectual property. See Item 7, ~~“Management’s~~"Management's Discussion and ~~Analysis - Results of Operations -~~ Analysis—Executive ~~Overview -~~ Overview—Other ~~Matters -~~ Matters—Patent Matters,”" and Item 1, ~~"Business -~~ "Business—Patents, Trademarks, and Other Intellectual Property Rights," for more details.

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.

•Our long-term success depends on intellectual property protection; if our intellectual property rights are invalidated, circumvented, or weakened, our business will be adversely affected.

Our long-term success depends on our ability to continually discover or acquire, develop, and commercialize innovative ~~new~~ medicines. Without strong intellectual property protection, we would be unable to generate the returns necessary to support our significant investments in research and development, as well as the other expenditures required to bring new drugs and indications to the market.

Intellectual property protection varies throughout the world and is subject to change over time, depending on local laws and regulations. Changes to such laws, regulations, and ~~regulations~~enforcement practices could reduce protections for our innovative ~~products.~~ products and indications. 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.

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 ~~powerful~~substantial incentives to seek to invalidate our ~~other~~patents covering small molecule pharmaceutical ~~patents.~~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 and may not be upheld. In addition, a separateIPR process currently allows competitors to ~~request review~~seek invalidation of ~~issued~~ patents byat the USPTO without the protections of the BPCIA or Hatch-Waxman Act. ~~Our~~The use of IPR proceedings after the institution of litigation pursuant to the BPCIA or Hatch-Waxman Act is currently a topic of debate among legislators and the future ability of our competitors to use IPR proceedings as an alternative to Hatch-Waxman Act or BPCIA litigation procedures to challenge our patents ~~may be invalidated~~remains uncertain. The USPTO issued an interim procedure regarding the use of discretionary denials of IPR proceedings when there is parallel district court litigation. However, it is not clear how this interim procedure could affect the ability of our competitors to institute IPR proceedings after institution of litigation. If our patents are challenged through this expedited review ~~process. Although such a decision can be appealed to~~process, even if we prevail in demonstrating the ~~courts, in certain circumstances a loss in such a proceeding could result in a competitor entering the market, while a~~validity of our patent, our win provides limited precedential value at the PTAB and no precedential value in federal district court, meaning the same patent can be challenged by other competitors.

We face many generic manufacturer challenges to our patents outside the U.S. as well. The entry of generic competitors typically results in rapid and severe declines in revenues. In addition, competitors or other third parties may claim that our activities infringe patents or other intellectual property rights held by them. If successful, such claims could result in our being unable to market a product in a particular territory or being required to pay significant damages for past infringement or royalties on future sales. In addition, intellectual property protection in certain jurisdictions outside the U.S. is weak and we face heightened risks to our intellectual property rights in these jurisdictions, including competition with generic or counterfeit versions of our products at or relatively shortly after launch. See Item 1, ~~“Business -~~ "Business—Patents, Trademarks, and Other Intellectual Property Rights,”" and Item 8, "Financial Statements and Supplementary ~~Data -~~ Data—Note ~~16,~~16: Contingencies," for more details.

We ~~compete with a large number~~also face challenges from the distribution of ~~multinational pharmaceutical companies, biotechnology companies,~~counterfeit and generic pharmaceutical companies. To compete successfully, we must continue to deliver to the market innovative, cost-effective products that meet important medical needs. Our product revenues can be adversely affected by the introduction by competitors of branded products that are perceived as superior by the marketplace, by generic or biosimilarillegally 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 ~~products,~~medicines. Counterfeit and ~~by generic or biosimilar versions of other products in~~illegally compounded drugs may not have the same ~~therapeutic class~~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 ~~branded products.~~actions to stop or prevent illegal sales of such drugs may be costly or ineffective.

Risks Related to Our ~~revenues can also be adversely affected by treatment innovations that eliminate or minimize the need for treatment with our drugs.~~

Regulation of generic and biosimilar products varies around the world and such regulation is complex and subject to ongoing interpretation and implementation by regulatory agencies and courts. Particularly for biosimilars, recent government proposals could make it easier, less expensive, and less time consuming for competitor products to enter the market, some of which could be substituted for our products by pharmacies. Given the importance of biologic products to our clinical-stage pipeline, such regulation could have a material adverse effect on our business. See Item 1, “Business - Competition” and "Business - Research and Development," for more details.Operations

•Failure, inadequacy, or breach of, or unauthorized access to, our IT systems or those of our ~~business processes regarding confidential information and other data,~~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.

~~A great deal of~~Important confidential information owned by us, or our business partners, or other third parties is stored in our information systems, networks, and facilities or those of third parties. This includes valuable trade secrets and intellectual property, clinical trial information, corporate strategic plans, marketing plans, customer information, and personally identifiable information, such as employee and patient information (collectively, confidential information). We also rely, to a large extent, on the efficient and uninterrupted operation of complex information technology systems, infrastructure, 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 ~~continuously~~ evolving and developing laws and regulations around the world related to privacy, data protection, and data security. Maintaining the security, confidentiality, integrity, and availability of our IT systems and confidential information is vital to our business. 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 confidential information and other data could significantly harm our reputation as well as result in significant costs, including those related to fines, penalties, litigation, and obligations to comply with applicable data breach laws.

IT systems are inherently vulnerable to system inadequacies, inadequate controls or procedures, operating failures, unauthorized access, service interruptions or failures, security breaches, malicious intrusions, theft, exfiltration, ransomware, or cyber-attacks from a variety of ~~sources.~~ sources, which may remain

undetected for significant periods of time. From time to time, we update, transition, acquire, or expand use of our and third-party IT systems, which may result in heightened vulnerability. Some third-party IT systems that are necessary for the operation of our business processes are maintained outside of our control but would impact business operations if compromised as a result of a cyber-attack. In February 2024, we completed the implementation of a new global enterprise resource planning (ERP) system, which replaced our operating and financial systems, and we recently began our post-implementation activities. We cannot assure that the ERP system and our post-implementation activities will be free of significant operating failures, service interruptions, or creation of additional vulnerabilities. See Item 9A, "Controls and Procedures" for more details. Vulnerabilities, inadequacies, or failures are in many cases more acute for IT systems associated with recently acquired businesses, and we may be unable to entirely address such vulnerabilities, inadequacies, or failures immediately after acquiring a business or ever. As a result, our newly acquired businesses are in some cases more vulnerable to failures, interruptions, breaches, intrusions, theft, exfiltration, or attacks.

Cyber-attacks are growing in their frequency, sophistication, and intensity, and are becoming increasingly difficult to detect, mitigate, or prevent. 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 ~~our~~ IT systems, confidential information, and other data. Breaches resulting in the compromise, disruption, degradation, manipulation, loss, theft, exfiltration, destruction, or unauthorized disclosure or use of confidential information, or the unauthorized access to, disruption of, or interference with, or attack of, our IT systems, products and services, can occur in a variety of ways, including ~~but not limited to,~~ negligent or wrongful conduct by employees or others with permitted access to our systems and information, or wrongful conduct by hackers, competitors, ~~certain~~ governments, nation-states, state-sponsored or ~~nation-states, or other~~affiliated groups, current or former company ~~personnel.~~personnel, and other actors. Our third-party partners, including third-party providers of data hosting or cloud services, as well as suppliers, distributors, alliances, and other ~~third-party service providers,~~third parties with whom we may share data, face similar risks, which could affect us directly or indirectly. ~~The~~Unassociated third parties present further risks, including by propagating misinformation related to our products, business, and industry, including through social media. We and others in the healthcare industry ~~has~~have been and ~~continues~~continue to be ~~a target~~targets for cyber-attacks, and the number of threats has ~~only~~ increased ~~during the COVID-19 pandemic.~~over time. Numerous federal agencies that monitor and regulate internet and cyber-crime have issued guidance, alerts and directives warning of software vulnerabilities that require immediate patching, malicious actors targeting ~~healthcare related~~healthcare-related systems and nation-state sponsored hacking designed to steal valuable ~~information, including related to potential COVID-19 treatments.~~

information.

The failure, inadequacy, or ~~inadequacy~~breach of our IT systems or business processes, the compromise, disruption, degradation, manipulation, loss, theft, exfiltration, destruction, or unauthorized access to, disclosure or use of, confidential information, or the unauthorized access to, disruption of, or interference with our products and services that rely on IT systems or business processes, could impair our ability to secure and maintain intellectual property rights; result in a product manufacturing interruption or failure, or in the interruption or failure of products or services that rely on IT systems or business processes; damage our operations, ~~customer~~patient and other relationships, or reputation; undermine integration activities or otherwise delay or prevent the launch of acquired products; result in unfavorable clinical trial results by virtue of incorrect or unreliable data; expose us to ransom payment, other demands, or paralyze our operations; give rise to legal liability and regulatory action under data protection and privacy laws; require disclosure to government authorities and/or regulators; expose us to civil and criminal investigations; and/or cause us to lose trade secrets or other competitive ~~advantages.~~advantages, which effects could endure for a long period of time. Unauthorized disclosure of personally identifiable information could further expose us to significant sanctions for violations of data privacy laws and regulations around the world, subject us to litigation, and ~~could~~ damage public trust in our company. In addition, IT system security in jurisdictions outside the U.S. is weaker and may result in additional costs, uncertainties, and risks.

We are subject to various laws and regulations globally regarding privacy and data protection, including laws and regulations relating to the collection, storage, handling, use, disclosure, transfer, and security of personal information. The legislative and regulatory environment regarding privacy and data protection is continuously evolving and the subject of significant attention by regulators and private parties globally. Regulators are imposing new data privacy and security requirements, including new and greater monetary fines or penalties for privacy violations, and jurisdictions where we operate have passed, or continue to propose, data privacy legislation and/or regulations. For example, we are subject to existing laws in the EU, United Kingdom, China, and U.S., all of which provide for substantial penalties for

noncompliance. Other jurisdictions where we operate have passed, or continue to propose, similar legislation and regulations. Failure to comply with these current and future laws could result in significant penalties and reputational harm and could have a material adverse effect on our business and results of operations.

To date, system inadequacies, inadequate controls or procedures, operating failures, unauthorized access, service interruptions or failures, security breaches, malicious intrusions, theft, exfiltration, ransomware, cyber-attacks, and the compromise, disruption, degradation, manipulation, loss, theft, exfiltration, destruction, or unauthorized disclosure or use of confidential information, or the unauthorized access to, disruption of, interference with, or attack of, our IT systems, products and services have not had a material impact on our ~~consolidated~~business strategy, results of ~~operations.~~operations or financial condition. We maintain cyber liability insurance; however, this insurance may not be sufficient to cover the financial, operational, legal, business, or reputational losses that may result from an interruption or breach of our IT systems. We continue to implement measures in an effort to protect, detect, respond to, and minimize or prevent these risks and to enhance the resiliency of our IT systems; however, these measures may not be successful, and we may fail to detect or remediate system inadequacies, inadequate controls or procedures, operating failures, unauthorized access, service interruptions or failures, security breaches, malicious intrusions, theft, exfiltration, ransomware, cyber-attacks, or other compromises of our systems. Any of these events could result in material financial, operational, legal, ~~commercial,~~business, or reputational harm to our business.

•~~Significant economic downturns or international trade disruptions or disputes could adversely affect our business and operating results.~~

~~While pharmaceuticals have not generally been sensitive to overall economic cycles, prolonged economic slowdowns, including as~~ For a ~~result of COVID-19, could lead to decreased utilization~~discussion of our products, affecting our sales volume. Declining tax revenues attributable to economic downturns increase the pressure on governments to reduce health care spending, leading to increasing government efforts to control drug pricesmanagement of cybersecurity risks, see Item 1C, "Cybersecurity—Risk Management and utilization. Additionally, some customers, including governments or other entities reliant upon government funding, may be unable to pay for our products in a timely manner. Also, if our customers, suppliers, or collaboration partners experience financial difficulties, we could experience slower customer collections, greater bad debt expense,Strategy" and ~~performance defaults by suppliers or collaboration partners. Similarly, in the event of a significant economic downturn, we could have difficulty accessing credit markets.~~

Significant portions of our business are conducted in Europe, including the United Kingdom, Asia, and other international geographies. Trade disputes and interruptions in international relationships, including pandemic diseases, such as COVID-19, could result in changes to regulations governing our products and our intellectual property, or otherwise affect our ability to do business. While we do not expect either circumstance to materially affect our business in a direct manner, these and similar events could adversely affect us, or our business partners or customers.

•~~Pharmaceutical products can develop unexpected safety or efficacy concerns, which could have a material adverse effect on our revenues, income, and reputation.~~

Pharmaceutical products receive regulatory approval based on data obtained in controlled clinical trials of limited duration. After approval, the products are used for longer periods of time by much larger numbers of patients. Accordingly, we and others (including regulatory agencies and private payers) collect extensive information on the efficacy and safety of our marketed products by continuously monitoring the use of our products in the marketplace. In addition, we or others may conduct post-marketing clinical studies on efficacy and safety of our marketed products. New safety or efficacy data from both market surveillance and post-marketing clinical studies may result in product label changes or other measures that could reduce the product's market acceptance and result in declining sales. Serious safety or efficacy issues that arise after product approval could result in voluntary or mandatory product recalls or withdrawals from the market. Safety issues could also result in costly product liability claims. See also “ - The COVID-19 pandemic and efforts to reduce its spread have impacted, and may in future periods negatively impact, our business and operations.”

•We face litigation and investigations related to our products and our pricing practices and are self-insured; we could face large numbers of claims in the future, which could adversely affect our business.

We are subject to a substantial number of product liability claims involving various products, as well as litigation and investigations related to the pricing of our products. See Item 8, “Financial Statements and Supplementary Data - Note 16, Contingencies” for more information on our current product liability litigation, as well as pricing litigation, investigations, and inquiries. Because of the nature of pharmaceutical products, we are and could in the future become subject to large numbers of product liability claims for these or other products, or to further litigation or investigations, including related to pricing or other commercial practices. Such matters could affect our results of operations or require us to recognize substantial charges to resolve and, if involving marketed products, could adversely affect sales of the product. Due to a very restrictive market for liability insurance, we are self-insured for product liability losses for all our currently marketed products, as well as for litigation or investigations related to our pricing practices or other similar matters."—Governance."

•Manufacturing, quality, or supply chain difficulties, disruptions, or ~~disruptions~~shortages could lead to product supply problems.

We are in the midst of a significant expansion of our manufacturing capabilities and substantial investment in long-term supply agreements to support current and anticipated demand for our products. Pharmaceutical manufacturing is complex and highly regulated. Manufacturing or quality assurance difficulties at our facilities or ~~contracted facilities, or~~those of our contractors and suppliers, the failure or refusal of a supplier or contract manufacturer to supply contracted quantities, or increases in demand on a supplier with constrained capacity could result in delays and disruptions in the manufacturing, distribution, and sale of our products and/or product shortages, leading to lost ~~revenue. Such difficulties~~revenue or reduced marked opportunities. In select cases, supply constraints may also lead to pauses, discontinuations, or other product availability issues in one or more markets, which could have a material adverse effect on our consolidated results of operations, cash flows, and reputation. Further, cost inflation and global transportation and logistics challenges, as well as tight labor markets, have caused, and in the future may cause, delays in, and/or increase costs related to, distribution of our medicines, the construction or other acquisition of additional manufacturing capacity, procurement activity, and supplier or contract manufacturer arrangements. These disruptions and challenges could result from actual or perceived quality, oversight, or regulatory compliance problems; natural disasters (including increased instances or ~~pandemic disease;~~severity of natural disasters or other events that may be due to climate change), public health outbreaks, epidemics, or pandemics; periods of uneven economic growth or downturns; emergence or escalation of, and responses to international tension and conflicts; equipment, mechanical, data, or ~~information technology~~IT system vulnerabilities, such as system inadequacies, inadequate controls or procedures, operating failures, unauthorized access, service interruptions or failures, security breaches, malicious intrusions, theft, exfiltration, ransomware or other cyber-attacks from a variety of sources; labor shortages; challenges and complexities in manufacturing new drug modalities; contractual disputes with our suppliers and contract manufacturers; vertical integration by competitors within our supply chain; or inability to obtain single-source or other raw or intermediate materials. ~~In addition, given~~Regional or single source dependencies may in some cases accentuate risks related to manufacturing and supply. For example, we, and the ~~difficulties~~pharmaceutical industry generally, depend on China-based partners for integral chemical synthesis, reagents, starting materials, and ingredients. Finding alternative suppliers if and as necessary due to geopolitical developments or otherwise may not be feasible or could take a significant amount of time and involve significant expense due to the nature of our products and the need to obtain regulatory approvals which would cause disruptions to patients and detrimentally impact our business.

Difficulties in predicting ~~sales~~or variability in demand for our products and those of ~~new products~~our competitors and the very long lead times necessary for the expansion and regulatory qualification of pharmaceutical manufacturing capacity ithave resulted, and in the future may result, in difficulty meeting demand, or disruptions, shortages, and higher costs in the supply of, our products. For example, we have experienced challenges

in meeting demand for our incretin products in recent periods, partially due to the limited availability of competitor therapies, and expect tight supply to persist while additional manufacturing capacity is ~~possible~~operationalized. Despite our ongoing efforts to meet significant expected demand by obtaining additional internal and contracted manufacturing capacity, there can be no assurances that such capacity increases will be realized as expected. Delays or challenges in operationalizing additional manufacturing capacity would limit our ability to capitalize on demand for our products. Conversely, unexpected events that limit demand for our products would undermine our ability to realize the full benefit of significant capital expenditures that we have incurred, and expect to continue to incur, to augment manufacturing capacity and may also subject us to contractual payment obligations, which may be significant. The foregoing risks and uncertainties could ~~have difficulty meeting unanticipated demand for new products.~~negatively impact our consolidated results of operations and reputation. See Item 1, ~~“Business -~~ "Business—Raw Materials and Product Supply,”" and Item 7, "Management's Discussion and Analysis—Financial Condition and Liquidity" for more details.

•Reliance on third-party relationships and outsourcing arrangements could adversely affect our business.

We rely on third parties, including suppliers, distributors, alliances, and collaborations with other pharmaceutical and biotechnology companies, and third-party service providers, for selected aspects of product and clinical development, manufacturing, commercialization, hosting of, and support for, ~~information technology~~IT systems, product distribution, and certain financial transactional processes. ~~For example,~~As examples, we outsource the day-to-day management and oversight of some of our clinical trials to contract research ~~organizations.~~ organizations, certain active ingredient manufacturing, finishing operations, and device or component production and assembly to contract manufacturing organizations, and the distribution of our products through logistics providers. In some cases, product or indication approvals depend on the outcome of regulatory inspections of third parties on which we rely. For example, in September 2023, the FDA issued a complete response letter for our lebrikizumab BLA for the treatment of moderate to severe atopic dermatitis. In the letter, the FDA cited findings that arose during a multi-sponsor inspection of a third-party, contract manufacturing organization that included the monoclonal antibody drug substance for lebrikizumab. We may encounter similar difficulties in the future, which could delay or prevent product launches and otherwise negatively affect our business, results, and reputation.

Outsourcing ~~these functions~~ involves many risks, including the risk that ~~the~~ third parties may not perform to our standards or legal ~~requirements;~~requirements, including applicable requirements for diversity in clinical trials; may not produce reliable results; may not perform in a timely manner; may not maintain the confidentiality, integrity, and availability of confidential and proprietary information relating to us, our clinical trial subjects, or patients; may experience disruption or fail to perform due to ~~information technology~~IT system vulnerabilities, ~~breaches, cyber-attacks, or~~such as inadequacies, inadequate controls or ~~procedures;~~procedures, operating failures, unauthorized access, service interruptions or failures, security breaches, malicious intrusions, theft, exfiltration, ransomware or other cyber-attacks; may be unable to satisfy their commitments to us in which case we may not be able to achieve acceptable alternative sourcing; or may fail to perform at all. The foregoing risks may be heightened in jurisdictions outside the U.S., where we may have fewer alternative providers as well as face additional costs, uncertainties, and risks. Failure of ~~these~~ third parties to meet their contractual, regulatory, confidentiality, privacy, security, or other obligations to us, our clinical trial subjects, and our patients could have a material adverse effect on our business.

~~Risks Related to Government Regulation~~

•Our use of artificial intelligence (AI) or other emerging technologies could adversely impact our business ~~is subject~~and financial results.

We have begun to ~~increasing government price controls~~deploy AI and other ~~public~~emerging technologies in various facets of our operations and ~~private restrictions on pricing, reimbursement, and access for our drugs, which could have a material adverse effect on our reputation or business.~~

~~Public and private payers~~we continue to ~~take aggressive steps~~explore further use cases for AI. The rapid advancement of these technologies presents opportunities for us in research, manufacturing, commercialization, and other business endeavors but also entails risks, including that AI-generated content, analyses, or recommendations we utilize could be deficient, that our competitors may more quickly or effectively adopt AI capabilities, or that our use of AI or other emerging technologies exacerbates regulatory, cybersecurity and other significant risks.

Effective development, management, and use of AI technologies is novel and complex, and there are technical challenges associated with achieving desired levels of accuracy, efficiency, and reliability. The algorithms and models utilized in AI systems may have limitations, including biases, errors, or inability to ~~control their expenditures for pharmaceuticals~~handle certain data types or scenarios or to render explainable outputs. Furthermore, there are risks associated with the fact that the platforms providing AI models are in many cases owned and operated by ~~placing restrictions on pricing~~emerging companies with less contractual and ~~reimbursement for, and patient access to, our medications.~~compliance sophistication. These ~~pressures could continue to negatively affect our future revenues and net income.~~factors may undermine

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~~We expect governments~~our ability to effectively utilize AI or create competitive disadvantages should our competitors more skillfully make use of AI capabilities. Further, if we are unable to effectively manage the use of AI technologies by our employees, our confidential information, intellectual property, or reputation could be put at risk.

The emergence of AI and ~~private payers worldwide~~other technologies, particularly generative AI, may exacerbate other risks, including those related to ~~intensify their scrutiny~~regulation, litigation, compliance issues, ethical concerns, confidentiality, and data privacy or security. For example, regulatory uncertainty related to AI or other emerging technologies may require significant resources to adjust business practices to comply with developing laws. Several governmental authorities have already proposed or enacted laws and other guidance governing AI, such as the proposed EU Artificial Intelligence Act. These and other developing obligations may prevent or make it harder for us to conduct or enhance our business using AI, or lead to regulatory fines, penalties, or other liability. Further, use of AI technologies could lead to unintended consequences, such as cybersecurity risks or unintended biases, impact our ability to protect our confidential data and ~~actions intended~~intellectual property, and expose us to ~~address, pricing, reimbursement,~~intellectual property infringement claims by third parties.

Risks Related to Doing Business Internationally

•Uneven economic growth or downturns or international trade and ~~access to pharmaceutical products. Additional regulations, legislation,~~other global disruptions, geopolitical tensions, or ~~enforcement, including as a result of the current U.S. presidential administration,~~disputes could adversely ~~impact~~affect our ~~revenue. However,~~business and operating results.

Economic slowdowns could lead to decreased utilization of our products, affecting our sales. Declining tax revenues and increased government spending on other programs attributable to uneven economic growth or downturns increase the pressure on governments to reduce healthcare spending, leading to increased control of drug prices or lower utilization. Additionally, some customers, including governments or other entities reliant upon government funding and cash-pay patients, may be unable to pay for our products fully or in a timely manner. Also, if our customers, suppliers, or collaboration partners experience financial difficulties, we ~~cannot predict~~could experience slower customer collections, greater bad debt expense, and performance defaults by suppliers or collaboration partners. Similarly, uneven economic growth or downturns could limit our ability to access capital markets.

In addition, significant portions of our business are conducted in Europe, Asia, and other international geographies. Trade and other global disputes and interruptions, including related to tariffs, trade protection measures, import or export licensing requirements, the ~~likelihood, nature,~~imposition of trade sanctions or ~~extent of current~~similar restrictions by the U.S. or other governments, international tension and ~~future~~conflicts, as well as cost inflation, strains on global transportation, manufacturing, and labor markets, and public health ~~care reform efforts. We also may experience potential additional pricing pressures resulting from the financial strain of~~outbreaks, epidemics, or pandemics, such as the COVID-19 pandemic, affect our ability to do business. For example, tensions between the U.S. and China have led to a series of tariffs and sanctions being imposed by the U.S. on ~~government-funded~~imports from China mainland, as well as other business restrictions. If geopolitical tensions were to increase and disrupt our operations in, or related to, China, such disruption would significantly impact our business. As a further example, the financial impact of higher energy prices, defense spending, and inflation due, in part, to geopolitical and economic disruptions, has further exacerbated financial pressures on governments with single-payer or government funded healthcare systems, ~~around the world.~~

leading to increased impetus for increases in rebates, clawbacks, and other reforms to reimbursement systems, particularly in Europe. These and similar events have adversely affected, and may continue to adversely affect, us, our business partners, and our customers. For more details, see Item 1, ~~“Business -~~ "Business—Regulations and Private Payer Actions Affecting Pharmaceutical Pricing, Reimbursement, and ~~Access,”~~Access."

In addition to developments related to our business or financial results, or those of our competitors, uneven economic growth, downturns, or other negative global developments, could also undermine our growth or result in significant and ~~Item 7, “Management’s Discussion~~sudden declines in the trading price of our common stock and ~~Analysis - Results of Operations - Executive Overview - Other Matters - Trends Affecting Pharmaceutical Pricing, Reimbursement, and Access.”~~market capitalization.

•Changes in foreign currency rates, or interest rate risks, ~~could materially~~and inflation affect our ~~revenue, cost~~results of ~~sales, and operating expenses.~~operations.

As a global company, ~~with substantial operations outside the U.S.,~~ we face foreign currency risk exposure from fluctuating currency exchange ~~rates. While we seek~~rates, interest rate risk from our exposure to ~~manage a portion~~floating and variable interest rates, and inflation risk from existing and expected rates of ~~these exposures through hedging~~inflation in the U.S. and other ~~risk management techniques,~~jurisdictions, each of which impacts our results of operations. In recent periods, significant fluctuations in currency rates ~~can~~and inflation have impacted our results of operations. We are a ~~material impact, either positive or negative, on~~net receiver of foreign currencies, and our ~~revenue, cost~~results of ~~sales, and operating expenses. In~~operations are

adversely impacted when the U.S. dollar is strong compared to foreign currencies. Further, in the event of an extreme devaluation of local currency in a particular market in which we operate, the price of our products could become unsustainable in the relevant market. Inflationary pressures in recent periods have also negatively impacted us and may continue to negatively impact us in various ways, including cost inflation, higher labor costs, and other higher expenses, with some of these higher expenses due in part to policy actions intended to curb inflation. See Item 7, ~~“Management’s~~"Management's Discussion and ~~Analysis -~~ Analysis—Financial Condition and ~~Liquidity”~~Liquidity" and Item 8, "Financial Statements and Supplementary Data—Note 1: Summary of Significant Accounting Policies and Implementation of New Financial Accounting Standards," for more details.

Risks Related to Government Regulation and Litigation

•~~Unanticipated changes~~We face litigation and investigations related to our products, how we price or commercialize our products, and other aspects of our business, which could adversely affect our business, and we are self-insured for such matters.

We are subject to a substantial number of claims involving various current and historical products, litigation, and investigations. These claims relate to how we commercialize and/or how we price our products, including relating to our 340B drug pricing program, product safety, as well as contractual matters and other disputes. See Item 8, "Financial Statements and Supplementary Data—Note 16: Contingencies" for more information on our current product liability litigation, as well as pricing and other litigation, investigations, and inquiries. Like many companies in our industry, from time to time investigations into aspects of our business include inquiries, subpoenas, and other types of information demands from government and regulatory authorities. There continues to be a significant volume of government and regulatory investigations and litigation against companies operating in our industry, as well as increasingly robust regulatory enforcement. Because of the nature of pharmaceutical products, we are, and could in the future become, subject to large numbers of product liability claims for our previous, current, or future products, or to further litigation or investigations, including related to product safety and pricing or other commercial practices. Some of these matters involve numerous plaintiffs and parties seeking large or indeterminate financial claims and may remain unresolved for several years. Such matters could negatively impact our reputation, affect our results of operations or require us to recognize substantial charges to resolve and, if involving marketed products, could adversely affect sales of the product and our consolidated results of operations in any given period. Due to a very restrictive market for liability insurance, we are predominately self-insured for litigation liability losses for all of our currently marketed products, as well as for litigation or investigations related to our pricing practices or other similar matters.

•We are subject to evolving and complex tax ~~rates or exposure to~~laws, which may result in additional ~~tax~~ liabilities ~~could increase~~and affect our ~~income taxes and decrease our net income.~~results of operations.

We are subject to income taxes in the U.S. and numerous ~~foreign~~other jurisdictions, and in the course of our business, we make judgments about the expected tax treatment of various transactions and events. Changes in ~~relevant~~ tax laws, regulations, administrative practices, principles, disclosure obligations, and interpretations, as well as events that differ from our expectations, ~~could~~have affected and may adversely affect our ~~future~~ effective tax ~~rates.~~rates, cash flows, and/or results of operations. In addition, ~~global~~ tax authorities in the U.S. and other jurisdictions in which we do business routinely examine our tax returns and are ~~expected to become more aggressive in~~intensifying their scrutiny and examinations of ~~profit allocations among jurisdictions~~cross-border tax issues, which could ~~affect~~unfavorably impact our ~~anticipated tax liabilities. In December 2017,~~results of operations. Further, actions taken with respect to tax-related matters by associations such as the ~~U.S. enacted tax reform legislation significantly revising U.S.~~Organisation for Economic Co-operation and Development and the European Commission could influence tax laws in countries in which we operate, such as the recent enactments by both the EU and non-EU countries of a number of other countries are also actively considering or enacting tax changes. Significant uncertainty currently exists regarding proposed tax policies of the current U.S. presidential administration including repeal of certain aspects of the 2017 tax law.global minimum tax. Modifications to key elements of the U.S. or international tax framework could have a ~~material adverse effect~~significant impact on our ~~consolidated operating~~effective tax rate, results of operations, and cash flows. See Item 7, ~~“Management’s~~"Management's Discussion and ~~Analysis - Results of Operations -~~ Analysis—Executive ~~Overview -~~ Overview—Other ~~Matters -~~ Matters—Tax ~~Matters”~~Matters" and Item 8, "Financial Statements and Supplementary ~~Data -~~ Data—Note ~~14,~~14: Income Taxes," for more details.

We have taken the position, based on an opinion of tax counsel, that our divestiture of Elanco common stock in connection with the 2019 separation of Elanco qualifies as a transaction that is tax-free for U.S. federal income tax purposes. If any facts, assumptions, representations, and undertakings from Lilly and Elanco regarding the past and future conduct of their respective businesses and other matters are incorrect or not otherwise satisfied, the divestiture may not qualify for tax-free treatment, which could result in significant U.S. federal income tax liabilities for us and our shareholders who exchanged their stock for Elanco stock.

•Regulatory compliance problems could be damaging to the company.

The marketing, promotional, and pricing practices of pharmaceutical manufacturers, as well as the manner in which manufacturers interact with purchasers, prescribers, and patients, are subject to extensive scrutiny and regulation. Many companies, including us, are and have been subject to investigations, litigation, and claims related to these practices asserted by ~~federal, state, and foreign~~ governmental authorities ~~private payers,~~ and ~~consumers.~~

other parties. These investigations, litigation, and claims have resulted in substantial expense and other significant ~~consequences to us. We are and could in the future become subject to~~consequences. The final outcomes of such investigations, ~~the outcomes of which could~~litigation, and claims include criminal charges and fines, penalties, or other monetary or non-monetary remedies, including exclusion from U.S. federal and other ~~health care~~healthcare programs. Such investigations, litigation, and claims have intensified and may continue to intensify as a result of ~~the~~evolving U.S. and foreign regulatory ~~priorities of the current U.S. presidential administration.~~priorities. New business practices or commercial capabilities may subject us to additional scrutiny over compliance with applicable regulatory schemes and compliance obligations or expose us to new regulatory schemes and compliance obligations entirely. In addition, regulatory issues concerning compliance with cGMP, quality assurance, evolving standards, and increased scrutiny around excipients and potential impurities such as nitrosamines, and similar regulations and standards (and comparable foreign ~~regulations)~~regulations and standards) for our products ~~can~~in some cases lead to regulatory and legal actions, product recalls and seizures, fines and penalties, interruption of production leading to product shortages, import bans or denials of import certifications, delays or denials in ~~the~~new product approvals or line extensions or supplemental approvals of ~~new~~current products pending resolution of the issues, and reputational harm, any of which ~~would~~ adversely ~~affect~~affects our business. Regulatory oversight of the pharmaceutical industry entails judgment and interpretation, which can result in inconsistent administration of laws and regulations by health authorities. Regulatory compliance and processes in jurisdictions outside the U.S. may be particularly unpredictable and result in additional costs, uncertainties, and risks.U.S. and foreign governmental authorities are actively promulgating additional regulations that impact many aspects of our operations. These regulations are in some cases advanced with short notice. New regulations may undermine our ability to achieve business objectives, may be costly to implement, may provide only limited time for compliance, may change accounting and reporting standards, and may carry significant penalties for non-compliance. See Item 1, ~~“Business -~~ "Business—Government Regulation of Our Operations,”" for more details.

Furthermore, there is an increased focus by foreign, federal, state, and local regulatory and legislative bodies regarding environmental policies relating to climate change, regulating greenhouse gas emissions, carbon taxes, emissions trading schemes, sustainability, human rights and equity matters, and disclosure regarding the foregoing, many of which may be ambiguous, inconsistent, dynamic or conflicting. We expect to experience increased restrictions and compliance costs, legal costs, and expenses related to such new or changing legal or regulatory requirements. Moreover, compliance with any such legal or regulatory requirements would require us to devote substantial time and attention to these matters. In addition, we may still be subject to penalties or potential litigation if such laws and regulations are interpreted or applied in a manner inconsistent with our practices.

Additionally, we are subject to increased negative attention from the media, stockholders, activists, and other stakeholders on climate change, social, and sustainability matters. The perception that we have failed to act in a socially responsible manner, whether or not valid, results in adverse publicity that can negatively affect our business, brand, and reputation, as well as result in increased scrutiny from legislators and regulatory authorities. Moreover, from time to time we establish and publicly announce goals and commitments, including to reduce our impact on the environment. Our ability to achieve any stated environmental, social or governance goal, target or objective is subject to numerous factors and conditions, many of which are outside our control. Examples of such factors include evolving regulatory requirements affecting sustainability standards or disclosures or imposing different requirements, the availability of requisite financing, and the availability of suppliers that can meet our sustainability and other goals. If we fail to achieve, are perceived to have failed or been delayed in achieving, or improperly report our progress toward achieving these goals and commitments, it could negatively affect our reputation, brand, or investor confidence, and expose us to enforcement actions and litigation.

Item 1B.Unresolved Staff Comments

None.

Item 1C.Cybersecurity

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.

Item 2.Properties

Our principal domestic and international executive offices are located in Indianapolis. At December 31, ~~2020,~~2023, we owned 9eleven production, distribution, and ~~distribution~~corporate administrative sites in the ~~U.S.~~United States (U.S.), including Puerto Rico. ~~Together with the corporate administrative offices, these~~These facilities contain an aggregate of approximately ~~8.2~~9.0 million square feet of floor area dedicated to production, distribution, and administration. Major production sites include Indianapolis, Indiana; Carolina, Puerto Rico; Durham, North Carolina; and Branchburg, New Jersey.

We also own production and distribution sites in ~~8 countries outside the U.S.,~~Europe and Asia, containing an aggregate of approximately ~~4.4~~4.7 million square feet of floor area. Major production sites include facilities in Ireland, France, Spain, Italy, and China. Additional U.S. and international production facilities and expansions of production facilities are expected to come online in future periods.

In the U.S., our research and development facilities contain an aggregate of approximately ~~4.2~~4.9 million square feet of floor area, primarily consisting of owned facilities located in ~~Indianapolis. We also lease~~Indianapolis and smaller leased sites primarily in Boston, Massachusetts; San Diego, California; San Francisco, California; and New York, New York. Outside the U.S., we own a small research and development facility in Spain and lease a small site in Singapore.

We believe that none of our properties is subject to any encumbrance, easement, or other restriction that would detract materially from its value or impair its use in the operation of the business. The buildings we own are of varying ages and in good condition.

Item 3.Legal Proceedings

We are a party to various currently pending legal actions, government investigations, and environmental proceedings. Information pertaining to legal proceedings is described in Item 8, "Financial Statements and Supplementary Data - Note ~~16,~~16: Contingencies," and incorporated by reference herein.

Item 4.Mine Safety Disclosures

Not applicable.

3137

Part II

Item 5.Market for the ~~Registrant’s~~Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

Information relating to the principal market for our common stock, dividends, and related stockholder matters is described in Item 7, "Management's Discussion and Analysis of Results of Operations and Financial Condition" and Item 12, "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters." This information is incorporated herein by reference.

As of February ~~12, 2021,~~16, 2024, there were approximately ~~21,650~~18,871 holders of record of our common stock based on information provided by EQ Shareowner Services, our transfer agent. Our common stock is listed under the ticker symbol LLY on the New York Stock Exchange (NYSE).

The following table summarizes the activity related to repurchases of our equity securities during the fourth quarter ended December 31, ~~2020:~~2023:

Period Total Number of
Shares Purchased
(in thousands) Average Price Paid
per Share Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
(in thousands) Approximate Dollar Value
of Shares that May Yet Be
Purchased Under the
Plans or Programs
(dollars in millions)
October 2020 — $ — — $ 1,000.0
November 2020 — — — 1,000.0
December 2020 — — — 1,000.0
Total — — —


Period	Total Number of Shares Purchased (in thousands)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (in thousands)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (dollars in millions)
October 2023	—	$	—	—	$	2,500.0
November 2023	—	—		—	2,500.0
December 2023	—	—		—	2,500.0
Total	—	—		—

During the three months ended December 31, ~~2020,~~2023, we did not repurchase any shares under ~~the $8.00~~our $5.00 billion share repurchase program authorized in ~~June 2018.~~May 2021.

3238

PERFORMANCE GRAPH

The following graph compares the return on Lilly stock with that of the Standard & ~~Poor’s~~Poor's (S&P) 500 Stock Index and our peer group for the years ~~2016~~2019 through ~~2020.~~2023. The graph assumes that, on ~~December 31, 2015,~~the last business day of 2018, a person invested $100 each in Lilly stock, the S&P 500 Stock Index, and the peer group's collective common stock. The graph measures total shareholder return, which takes into account both stock price and dividends. It assumes that dividends paid by a company are immediately reinvested in that ~~company’s~~company's stock.

Value of $100 Invested on Last Business Day of ~~2015~~2018 Comparison of Five-Year Cumulative Total Shareholder Return Among Lilly, S&P 500 Stock Index, and Peer Group(1)


			Lilly		Peer Group		S&P 500
Dec-15			$	100.00	$	100.00	$	100.00
Dec-16			$	89.63	$	94.96	$	111.96
Dec-17			$	105.61	$	111.86	$	136.40
		Lilly							Lilly	Peer Group	S&P 500
Dec-18	Dec-18		$	148.33	$	117.57	$	130.42
Dec-19	Dec-19		$	172.29	$	138.80	$	171.49
Dec-20	Dec-20		$	225.80	$	141.88	$	203.04
Dec-21
Dec-22
Dec-23

There are many difficulties and uncertainties inherent in pharmaceutical research and development, ~~and~~ the introduction of new products ~~as well as~~and indications, business development activities to enhance or refine or product pipeline, and commercialization of our products. There is a high rate of failure inherent in ~~new~~ drug discovery and development. To bring a ~~drug~~product from the discovery phase to market ~~can take over a decade~~takes considerable time and ~~often costs in excess of $2 billion.~~entails significant cost. Failure can occur at any point in the process, including in later stages after substantial investment. As a result, most funds invested in research and development programs will not generate financial returns. New product candidates that appear promising in development 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, 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 ~~new~~newer, better, or ~~better~~more cost-effective competitive products, difficulty or excessive costs to manufacture, insufficient infrastructure to support detection, diagnostic or 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. 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. Regulatory agencies ~~continue to~~ establish high hurdles for the efficacy and safety of new ~~products. Delays~~products and ~~uncertainties~~indications. Delay, uncertainty, unpredictability, and inconsistency in drug approval processes across markets and agencies can result in delays in product launches, ~~and~~ lost market ~~opportunity.~~opportunities, impairment of inventories, and other negative impacts. In addition, it can be very difficult to predict revenue growth rates of, or variability in demand for, new ~~products.~~products and indications which in some cases leads to difficulty meeting product demand or, on the other hand, excess inventory and related financial charges.

We manage research and development spending across our portfolio of potential new ~~medicines.~~medicines and indications. A delay in, or termination of, any one project will not necessarily cause a significant change in our total research and development spending. Due to the risks and uncertainties involved in the research and development process, we cannot reliably estimate the nature, timing, and costs of the efforts necessary to complete the development of our research and development projects, nor can we reliably estimate the future potential revenue that will be generated from any successful research and development project. Each project represents only a portion of the overall pipeline, and none is individually material to our consolidated research and development expense. While we do accumulate certain research and development costs on a project level for internal reporting purposes, we must make significant cost estimations and allocations, some of which rely on data that are neither reproducible nor validated through accepted control mechanisms. Therefore, we do not have sufficiently reliable data to report on total research and development costs by project, by preclinical versus clinical spend, or by therapeutic category.

Other Matters

Patent Matters

We depend on patents or other forms of intellectual property protection for most of our revenue, cash flows, and earnings.

~~Our formulation patents for Forteo~~® expired in December 2018, and our use patents expired in August 2019 in major European markets and the U.S. Both the formulation patent and the use patent expired in August 2019 in Japan. We expect further volume decline as a result of the anticipated entry of generic and biosimilar competition following the loss of patent exclusivity in these markets. In the aggregate, we expect that the decline in revenue will have a material adverse effect on our consolidated results of operations and cash flows.

~~The Alimta~~® vitamin regimen patents, which we expect to provide us with patent protection for Alimta through June 2021 in Japan and major European countries, and through May 2022 in the U.S., have been challenged in each of these jurisdictions. In the U.S., most challenges have been finally resolved in our favor, and one remains in active litigation. We and Eagle Pharmaceuticals, Inc. (Eagle) reached an agreement in December 2019 to settle all pending litigation, allowing Eagle a limited initial entry into the market with its product starting February 2022 (up to an approximate three-week supply) and subsequent unlimited entry starting April 2022. We expect that the entry of generic competition in the U.S. either from an unfavorable outcome to the patent challenge or following the loss of patent exclusivity, will cause a rapid and severe decline in revenue and have a material adverse effect on our consolidated results of operations and cash flows.

We are aware that several companies have received approval to market generic versions of pemetrexed in major European markets and that generic competitors may choose to attempt a launch at risk. Following a final decision in the Supreme Court of Germany in July 2020 overturning the lower court and upholding the validity of our Alimta patent, several generics that were on the market at risk in Germany left. We have removed the remaining generics from the market in Germany by obtaining preliminary injunctions in our favor. In September 2020, the Paris Court of First Instance in France issued a final decision upholding the validity of our Alimta patent and found infringement by Fresenius Kabi France and Fresenius Kabi Groupe France’s (collectively, Kabi) pemetrexed product. The court issued an injunction against Kabi and provisionally awarded us damages. In January 2021, that same court issued a preliminary injunction against Zentiva France S.A.S. (Zentiva), the last remaining company with a generic pemetrexed product on the French market, and provisionally awarded us damages. In October 2020, the Court of Appeal of the Netherlands overturned a lower court decision and ruled that our Alimta patent is valid and infringed and reinstated an injunction against Kabi, thereby removing Kabi's pemetrexed product from the Netherlands market. Kabi has appealed this decision to the Netherlands Supreme Court. Kabi's generic pemetrexed product was the only at risk generic on the market in the Netherlands. Our vitamin regimen patents have also been challenged in other smaller European jurisdictions.

We expect that further entry of generic competition for Alimta in major European markets following either the loss of effective patent protection or of patent exclusivity will cause a rapid and severe decline in revenue. See Note 16 to the consolidated financial statements for a ~~more detailed account~~description of ~~the~~ legal proceedings currently pending regarding certain of our patents.

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.

Trends Affecting Pharmaceutical Pricing, Reimbursement, and Access

Reforms, including those that may stem from political initiatives, periods of uneven economic growth or downturns, or as a result of high inflation, the emergence or escalation of, and responses to, international tension and conflicts, or government budgeting priorities, are expected to continue to result in added pressure on pricing and reimbursement for our products.

Global concern over access to and affordability of pharmaceutical products continues to drive regulatory and legislative debate and action, as well as worldwide cost containment efforts by governmental authorities. Such measures include the use of mandated discounts, price reporting requirements, mandated reference prices, restrictive formularies, changes to available intellectual property protections, as well as other efforts. In August 2022, the U.S.~~, Europe,~~ government enacted the Inflation Reduction Act of 2022 (IRA). Among other measures, the IRA requires the U.S. Department of Health and ~~Japan regarding, among others,~~Human Services (HHS) to effectively set prices for certain single-source drugs and biologics reimbursed under Medicare Part B and Part D. Generally, these government prices apply nine years (for medicines approved under a New Drug Application) or thirteen years (for medicines approved under a Biologics License Application) following initial FDA approval and will be set at a price that is likely to represent a significant discount from existing average prices to wholesalers and direct purchasers. While the law specifies a ceiling price, it does not set a minimum or floor price. In August 2023, the HHS selected Jardiance, which is part of our ~~Alimta patents.~~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 expiry of exclusivities. The effect of reducing prices and reimbursement for certain of our products would significantly impact our business and consolidated results of operations.

The ~~compound patent~~IRA has and will meaningfully influence our business strategies and those of our competitors. In particular, the nine-year timeline to set prices for ~~Humalog~~® ~~(insulin lispro) has expired~~medicines approved under a new drug application reduces the attractiveness of investment in ~~major markets. Global regulators have different legal pathways~~small molecule innovation. The IRA can cause changes to ~~approve similar versions~~development approach and timing and investments at-risk. The full impact of ~~insulin lispro. A competitor launched~~the IRA on our business and the pharmaceutical industry, including the implications to us of a ~~similar version~~competitor's product being selected for price setting, remains uncertain.

Additional policies, regulations, legislation, or enforcement, including those proposed or pursued by the U.S. Congress, the U.S. executive branch, and regulatory authorities worldwide, could adversely impact our business and consolidated results of ~~insulin lispro in certain European markets in 2017~~operations.

Consolidation and integration of private payors and pharmacy benefit managers in the U.S. ~~in the second quarter of 2018. While it is difficult to estimate the severity of the impact of insulin lispro products entering~~has also significantly impacted the market ~~we do not expect~~for pharmaceuticals by increasing payor leverage in negotiating manufacturer price or rebate concessions and ~~have not experienced a rapid~~pharmacy reimbursement rates. Furthermore, restrictive or unfavorable pricing, coverage, or reimbursement determinations for our medicines or product candidates by governments, regulatory agencies, courts, or private payers may adversely impact our business and ~~severe decline in revenue; however, we expect additional pricing pressure and some loss~~consolidated results of ~~market share that would continue over time.~~

~~Our compound patent protection for Cymbalta~~® ~~expired in Japan in January 2020. We expect generics to enter the market in mid-2021.~~operations. We expect that these actions may intensify and could particularly affect certain products, which could adversely affect our business. In addition, we are engaged in litigation and investigations related to our 340B program, access to insulin, pricing, product safety, and other matters that, if resolved adversely to us, could negatively impact our business and consolidated results of operations. It is not currently possible to predict the ~~entry~~overall potential adverse impact to us or the general pharmaceutical industry of ~~generic competition~~continued cost containment efforts worldwide.

In addition, regulatory issues concerning compliance with current Good Manufacturing Practices, quality assurance, safety signals, evolving standards, and increased scrutiny around excipients and potential impurities such as nitrosamines, and similar regulations and standards (and comparable foreign regulations and standards) for our products in some cases lead to regulatory and legal actions, product recalls and seizures, fines and penalties, interruption of production leading to product shortages, import bans or denials of import certifications, inability to realize the benefit of capital expenditures, or delays or denials in new product approvals, line extensions or supplemental approvals of current products pending resolution of the issues, or other negative impacts, any of which result in reputational harm or adversely affect our business. Moreover, increased focus on business combinations across industries and jurisdictions can lead to impediments to the completion of business combinations.

See Item 1, "Business—Regulations and Private Payer Actions Affecting Pharmaceutical Pricing, Reimbursement, and Access," Item 1A, "Risk Factors," and Note 16 to the consolidated financial statements for additional information.

Product Supply

We have faced challenges, and expect to continue to face challenges, meeting strong demand for our incretin products. In the U.S., given the strong uptake of Mounjaro, the recent launch of Zepbound, and continuing demand for Trulicity®, we have experienced intermittent delays in fulfilling certain orders for incretin products. 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.

We anticipate tight supplies of our incretin products will ~~cause a rapid~~persist while additional manufacturing capacity is operationalized. We expect additional internal and ~~severe decline~~contracted manufacturing capacity will become fully operational around the world in ~~revenue~~the next several years as part of our ongoing efforts to meet the significant demand for our incretin medicines. For example, in 2023 we began production at our Research Triangle Park site in North Carolina and ~~will~~expect to continue significant capacity expansion over time as we increase production at this site and others.

Tax Matters

We are subject to income taxes and various other taxes in the U.S. and in many foreign jurisdictions; therefore, changes in both domestic and international tax laws or regulations have ~~a material adverse effect on~~affected and may affect our effective tax rate, results of operations, and cash flows. The U.S. and countries around the world are actively proposing and enacting tax law changes. Further, actions taken with respect to tax-related matters by associations such as the Organisation for Economic Co-operation and Development (OECD) and the European Commission could influence tax laws in countries in which we operate. Tax authorities in the U.S. and other jurisdictions in which we do business routinely examine our tax returns and are expected to increase their scrutiny of cross-border tax issues. Changes to existing U.S. and foreign tax laws and increased scrutiny by tax authorities in the U.S. and other jurisdictions could adversely impact our future consolidated results of operations and cash flows.

In response to the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (Framework), which set forth a two-pillar solution to reform the international tax framework, and the EU's adoption of Directive 2022/2523 (known as "Pillar Two") (Directive) within the EU to implement the Framework, multiple countries, both within and outside of the EU, have enacted legislation that provides for a minimum level of taxation of multinational companies. The Directive required EU member states to enact legislation effective for years beginning on or after December 31, 2023. For certain provisions within the Framework, the OECD published guidance during 2023 that extends the effective dates for enactment. While we expect an increase in future years’ tax expense as a result of the global minimum tax, we do not anticipate a material impact to our 2024 consolidated results of operations. Our assessment of the impact for 2024 and subsequent years could be affected by legislative guidance, future enactment of additional provisions within the Pillar Two framework, and U.S. tax changes scheduled to occur in 2026 as part of the Tax Cuts and Jobs Act (2017 Tax Act).

A bipartisan tax bill, the Tax Relief for American Families and Workers Act, was passed by the U.S. House of Representatives in January 2024. The bill contains certain business tax provisions including the retroactive repeal for 2022 and 2023 and deferral of the requirement to capitalize U.S. research and development expenses for tax purposes that was a provision enacted in the 2017 Tax Act. Uncertainty exists as to whether the bill will be enacted into law; however, if the bill is enacted as currently drafted, we would expect our effective tax rate for 2024 to be moderately higher, and a net discrete tax detriment in the quarter of enactment related to 2022 and 2023. In addition, we would expect a decrease in cash tax payments.

Acquisitions

We invest in external research and technologies that we believe complement and strengthen our own efforts. These investments can take many forms, including acquisitions, collaborations, investments, and licensing arrangements. We view our business development activity as a way to enhance or refine our pipeline and strengthen our business.

For investments that were accounted for as asset acquisitions, we paid $3.94 billion in 2023 for acquired IPR&D primarily related to acquisitions of DICE, Versanis, Emergence Therapeutics AG (Emergence), and Mablink Biosciences SAS (Mablink). For investments that were accounted for as business combinations, we paid $1.04 billion in 2023 primarily related to the acquisition of POINT Biopharma Global Inc. (POINT).

See Note 3 to the consolidated financial statements for further discussion regarding our recent acquisitions.

For discussion of risks related to business development activities, see Item 1A, "Risk Factors—Pharmaceutical research and development is very costly and highly uncertain; we may not succeed in developing, licensing, or acquiring commercially successful products sufficient in number or value to replace revenues of products that have lost or will lose intellectual property protection or are displaced by competing products or therapies."

Foreign Currency Exchange Rates

As a global company, ~~with substantial operations outside the U.S.,~~ we face foreign currency risk exposure from fluctuating currency exchange rates, primarily the U.S. dollar against the euro, Japanese yen, and ~~Japanese yen.~~Chinese yuan. While we seek to manage a portion of these exposures through hedging and other risk management techniques, significant fluctuations in currency rates can have a material impact, either positive or negative, on our ~~revenue, cost~~consolidated results of ~~sales, and operating expenses. While there~~operations in any given period. There is uncertainty in the future movements in foreign currency exchange rates, and fluctuations in these rates could ~~negatively~~adversely impact our ~~future~~ consolidated results of operations and cash flows.

~~Trends Affecting Pharmaceutical Pricing, Reimbursement,~~Other Factors

Other factors have had, and ~~Access~~

~~U.S.~~

~~In the U.S., public concern over access~~may continue to and affordability of pharmaceuticals continues to drive the regulatory and legislative debate. These policy and political issues increase the risk that taxes, fees, rebates, or other cost control measures may be enacted to manage federal and state budgets. Key health policy initiatives affecting biopharmaceuticals include:

•~~the Coronavirus Aid, Relief, and Economic Security (CARES) Act and subsequent stimulus bills that focus on ensuring availability and access to lifesaving drugs during a public health crisis,~~

•~~foreign reference pricing in Medicare and private insurance,~~

•~~modifications to Medicare Parts B and D,~~

•~~provisions that would allow the Department of Health and Human Services (HHS) to negotiate prices for biologics and drugs in Medicare,~~

•~~a reduction in biologic data exclusivity,~~

•~~proposals related to Medicaid prescription drug coverage and manufacturer drug rebates,~~

•~~proposals that would require biopharmaceutical manufacturers to disclose proprietary drug pricing information, and~~

•~~state-level proposals related to prescription drug prices and reducing the cost of pharmaceuticals purchased by government health care programs.~~

On July 24, 2020 and September 13, 2020, former U.S. President Donald Trump signed Executive Orders related to the 340B Prescription Drug Program, rebate reform in Medicare Part D, drug importation including insulin, and foreign reference pricing in Medicare Part B and Part D. Although their current status is unclear given the change in presidential administration, these Executive Orders, if implemented, could have a material adverse impact on our future consolidated results of operations, liquidity, and financial position. On September 1, 2020, Lilly announced it would distribute all 340B ceiling priced products directly to covered entities and their child sites only. Lilly provides 340B discounts to a contract pharmacy only if it is a wholly owned subsidiary of a covered entity, if a covered entity does not have, an in-house pharmacy or, in the case of insulin, if the subject covered entity and its contract pharmacies agree to pass along the discount to patients without any markup for dispensing fees and without billing insurance or collecting duplicate discounts. Lilly has been transparent with regulatorsimpact on its distribution activity and continues to comply with all 340B program requirements. Certain covered entities and their trade associations have threatened litigation, questioning whether Lilly’s program, and similar actions by other manufacturers, violate 340B program requirements. On October 9, 2020, three covered entities sued HHS and the Health Resources and Services Administration (HRSA) in the U.S. District Court for the District of Columbia seeking to compel the agencies to take enforcement action against Lilly and three other companies, among other requested relief. On October 21, 2020, a trade association representing certain covered entities sued HHS in the same court seeking to compel the agency to promulgate administrative dispute resolution regulations. On December 11, 2020, a number of associations and entities filed suit against HHS in the U.S. District Court for the Northern District of California requesting immediate enforcement of the contract pharmacy guidance. On December 31, 2020, the General Counsel of HHS issued an advisory opinion alleging that honoring contract pharmacy agreements is mandatory. In January 2021, Lilly filed suit against HHS, the Secretary of HHS, the HRSA, and the Administrator of the HRSA in the U.S. District Court for the Southern District of Indiana seeking a declaratory judgment that HHS's attempt to require manufacturers to permit contract pharmacy distribution is unlawful and a preliminary injunction enjoining implementation of the alternative dispute resolution process created by defendants and, with it, their application of the advisory opinion, and other related relief. The cases are pending and the impact of these cases and any subsequent litigation is uncertain. See Note 16 to the consolidated financial statements for additional information.

California and several other states have enacted legislation related to prescription drug pricing transparency and it is unclear the effect this legislation will have on our business. Several states have also passed importation legislation, including Colorado, Florida, Maine, New Hampshire, New Mexico, and Vermont. As of late 2020 several of these states were actively working with the former presidential administration to implement an importation program from Canada. On November 22, 2020, Florida announced it submitted a proposed importation plan to the U.S. In 2020, HHS and the FDA also took several actions to advance state importation initiatives, including issuing requests for proposals for personal importation and reimportation of insulin and a final rule on the Importation of Prescription Drugs. Additionally, on November 27, 2020, the Canadian Minister of Health issued an interim order to ensure that participation in bulk importation frameworks, such as the one recently established by the U.S., does not cause or exacerbate a drug shortage in Canada. We continue to review these state proposals and legislation, as well as federal rules and guidance published by HHS and the FDA, the impact of which is uncertain at this time. Currently, it is unclear if the current presidential administration will adopt any of the importation initiatives put forth by the former presidential administration. We will continue to monitor and assess these developments.

In the private sector, consolidation and integration among healthcare providers significantly affects the competitive marketplace for pharmaceuticals. Health plans, pharmacy benefit managers, wholesalers, and other supply chain stakeholders have been consolidating into fewer, larger entities, thus enhancing their purchasing strength and importance. Private third-party insurers, as well as governments, typically maintain formularies that specify coverage (the conditions under which drugs are included on a plan's formulary) and reimbursement (the associated out-of-pocket cost to the consumer)to control costs by negotiating discounted prices in exchange for formulary inclusion. Formulary placement can lead to reduced usage of a drug 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. Consequently, pharmaceutical companies compete for formulary placement not only on the basis of product attributes such as efficacy, safety profile, or patient ease of use, but also by providing rebates. Value-based agreements, where pricing is based on achievement (or not) of specified outcomes, are another tool that may be utilized between payers and pharmaceutical companies as formulary placement and pricing are negotiated. Price is an increasingly important factor in formulary decisions, particularly in treatment areas in which the payer has taken the position that multiple branded products are therapeutically comparable. We expect these downward pricing pressures will continue to negatively affect our consolidated results of operations. ~~In addition to formulary placement, changes~~These factors include cost and wage inflation, availability of adequate capacity in ~~insurance designs continue to drive greater consumer cost-sharing through high deductible plans~~global transportation, supply chain and ~~higher co-insurance~~labor market complexities, international tension and conflicts, uneven economic growth or ~~co-pays. We continue to invest in patient affordability solutions (resulting in lower revenue) in~~downturns or uncertainty, and an ~~effort to assist patients in affording their medicines.~~

The main coverage expansion provisions of the Affordable Care Act (ACA) are currently in effect through both state-based exchanges and the expansion of Medicaid. A trend has been the prevalence of benefit designs containing high out-of-pocket costs for patients, particularly for pharmaceuticals. In addition to the coverage expansions, many employers in the commercial market continue to evaluate strategies such as private exchanges and wider use of consumer-driven health plans to reduce their healthcare liabilities over time. Federal legislation, litigation, or administrative actions to repeal or modify some or all of the provisions of the ACA could have a material adverse effect on our consolidated results of operations and cash flows. At the same time, the broader paradigm shift towards performance-based reimbursement and the launch of several value-based purchasing initiatives have placed demands on the pharmaceutical industry to offer products with proven real-world outcomes data and a favorable economic profile.

~~International~~

International operations also are generally subject to extensive price and market regulations. Cost-containment measures exist in a number of countries, including additional price controls and mechanisms to limit reimbursement for our products. Such policies are expected to increase in ~~impact~~overall demand in our industry for certain products and ~~reach, given the pressures~~materials.

See Item 1A, "Risk Factors" for additional information on ~~national and regional health care budgets~~risk factors that ~~come from a growing, aging population and ongoing economic challenges. As additional reforms are finalized, we will assess their~~could impact on future revenues. In addition, governments in many emerging markets are becoming increasingly active in expanding health care system offerings. Given the budget challenges of increasing health care coverage for citizens, policies may be proposed that promote generics and biosimilars only and reduce current and future access to branded pharmaceutical products. The COVID-19 pandemic is also creating additional pressure on health systems worldwide. As a result, cost containment and other measures may intensify as governments manage and emerge from the pandemic.

~~Tax Matters~~

We are subject to income taxes and various other taxes in the U.S. and in many foreign jurisdictions; therefore, changes in both domestic and international tax laws or regulations could affect our effective tax rate, results of operations, and cash flows. Countries around the world, including the U.S., are actively considering and enacting tax law changes. The current presidential administration's tax proposal contains significant changes, including the rate at which income of U.S. companies would be taxed. Further, actions taken with respect to tax-related matters by associations such as the Organisation for Economic Co-operation and Development and the European Commission could influence tax policy in countries in which we operate. In addition, global tax authorities routinely examine our tax returns and are expected to become more aggressive in their examinations of profit allocations among jurisdictions, which could affect our anticipated tax liabilities.

~~Acquisitions~~

We strategically invest in external research and technologies that we believe complement and strengthen our own efforts. These investments can take many forms, including acquisitions, strategic alliances, collaborations, investments, and licensing arrangements. We view our business ~~development activity as an important way to achieve our strategies, as we seek to bolster our pipeline~~ and ~~enhance shareholder value. We continuously evaluate business development transactions that have the potential to strengthen our business.~~

In 2019, we acquired all shares of Loxo for a purchase price of $6.92 billion, net of cash acquired. Under the terms of the agreement, we acquired a pipeline of investigational medicines, including selpercatinib, an oral RET inhibitor, and LOXO-305, an oral BTK inhibitor. In the second quarter of 2020, the FDA approved selpercatinib (Retevmo) under its Accelerated Approval regulations and continued approval may be contingent upon verification and description of clinical benefit in confirmatory trials.

In 2020, we acquired all shares of Dermira for a purchase price of $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. Lebrikizumab was granted Fast Track designation from the FDA. We also acquired Qbrexza® ~~cloth, a medicated cloth for the topical treatment of primary axillary hyperhidrosis (uncontrolled excessive underarm sweating).~~

In January 2021, we acquired all shares of Prevail Therapeutics Inc. (Prevail) for a purchase price of approximately $880 million in cash plus one non-tradable contingent value right (CVR). The CVR entitles Prevail stockholders to up to an additional approximately $160 million payable, subject to certain terms and conditions, upon the first regulatory approval of a Prevail product in one of the following countries: U.S., Japan, United Kingdom, Germany, France, Italy, or Spain. Under the terms of the agreement, we acquired a biotechnology company developing potentially disease-modifying AAV9-based gene therapies for patients with neurodegenerative diseases.

~~See Note 3 to the consolidated financial statements for further discussion regarding our recent acquisitions.~~operations.

4446

RESULTS OF OPERATIONS

Operating Results—~~2020~~2023

Revenue

The following table summarizes our revenue activity by region:


		Year Ended December 31,
		2020		2019		Percent Change
	Year Ended December 31,
		2023
		2023
		2023									2022				Percent Change
U.S.	U.S.	$	14,229.3	$	12,722.6	12	U.S.	$	21,791.0	$	$	18,190.0	20			20
Outside U.S.	Outside U.S.	10,310.5		9,596.8		7	Outside U.S.	12,333.1		10,351.3		10,351.3		19			19
Revenue	Revenue	$	24,539.8	$	22,319.5	10	Revenue	$	34,124.1	$	$	28,541.4	20			20

Note 18: Other–Net, (Income) Expense

Other–net, (income) expense consisted of the following:

2020 2019 2018
Interest expense $ 359.6 $ 400.6 $ 242.5
Interest income (33.0) (80.4) (159.3)
Debt extinguishment loss (Note 11) 0 252.5 0
Gain on sale of antibiotic business in China (Note 3) 0 (309.8) 0
Retirement benefit plans (251.8) (209.9) (240.5)
Other (income) expense (1,246.7) (344.6) 11.7
Other–net, (income) expense $ (1,171.9) $ (291.6) $ (145.6)

~~For the years ended December 31, 2020 and 2019, other income was primarily related to net gains on investments (Note 7).~~

~~Note 19: Discontinued Operations~~

On September 24, 2018, Elanco completed its initial public offering (IPO) resulting in the issuance of 72.3 million shares of its common stock, which represented 19.8 percent of Elanco's outstanding shares, at $24 per share.

In connection with the completion of the IPO, through a series of equity and other transactions, we transferred to Elanco the animal health businesses that formed its business. In exchange, Elanco transferred to us consideration of approximately $4.2 billion, which consisted primarily of the net proceeds from the IPO and the net proceeds from a $2.00 billion debt offering and a $500.0 million three-year term loan facility entered into by Elanco in August 2018. The consideration that we received was used for debt repayment, dividends, and share repurchases. The excess of the net proceeds from the IPO over the net book value of our divested interest was $629.2 million and was recorded in additional paid-in capital.

Through March 11, 2019, we continued to consolidate Elanco, as we retained control over Elanco. We completed the disposition of our remaining 80.2 percent ownership of Elanco common stock through a tax-free exchange offer that closed on March 11, 2019 (the disposition date). The earnings attributable to the divested, noncontrolling interest for the period from the IPO until disposition were not material.

As a result of the disposition, in the first quarter of 2019, we recognized a gain related to the disposition of approximately $3.7 billion, and we presented Elanco, including the gain related to the disposition, as discontinued operations in our consolidated financial statements for all periods presented.

~~The following table sets summarizes revenue and net income from discontinued operations:~~

2019 2018
Revenue from discontinued operations $ 580.0 $ 3,062.4
Net income from discontinued operations 3,680.5 81.4

The gain related to the disposition of Elanco in the consolidated statement of cash flows includes the operating results of Elanco through the disposition date, which were not material. Net cash flows of our discontinued operations for operating activities were not material for the year ended December 31, 2019. Net cash provided by operating activities related to our discontinued operations was approximately $500 million for the year ended December 31, 2018. The net cash flows of our discontinued operations for investing activities were not material for any period presented.

We entered into a transitional services agreement (TSA) with Elanco that is designed to facilitate the orderly transfer of various services to Elanco. The TSA relates primarily to administrative services, which are generally to be provided over 24 months from the disposition date. This agreement is not material and does not confer upon us the ability to influence the operating and/or financial policies of Elanco subsequent to the disposition date.


	2023		2022		2021
Interest expense	$	485.9	$	331.6	$	339.8
Interest income	(173.6)		(62.8)		(25.4)
Net investment (gains) losses on equity securities (Note 7)	20.2		410.7		(176.9)
Debt extinguishment loss (Note 11)	—		—		405.2
Retirement benefit plans	(461.9)		(372.9)		(289.7)
Other (income) expense	32.7		14.3		(51.4)
Other–net, (income) expense	$	(96.7)	$	320.9	$	201.6

~~112~~105

~~Management’s~~Management's Reports

~~Management’s~~Management's Report for Financial Statements—Eli Lilly and Company and Subsidiaries

Management of Eli Lilly and Company and subsidiaries is responsible for the accuracy, integrity, and fair presentation of the financial statements. The statements have been prepared in accordance with generally accepted accounting principles in the United States and include amounts based on judgments and estimates by management. In ~~management’s~~management's opinion, the consolidated financial statements present fairly our financial position, results of operations, and cash flows.

In addition to the system of internal accounting controls, we maintain a code of conduct (known as "The Red Book") that applies to all employees worldwide, requiring proper overall business conduct, avoidance of conflicts of interest, compliance with laws, and confidentiality of proprietary information. All employees must take training annually on The Red Book and are required to report suspected violations. A hotline number is available on our lilly.com website and on the internal LillyNow website to enable reporting of suspected violations anonymously. Employees who report suspected violations are protected from discrimination or retaliation by the company. In addition to The Red Book, the chief executive officer and all financial management must sign a financial code of ethics, which further reinforces their ethical and fiduciary responsibilities.

The consolidated financial statements have been audited by Ernst & Young LLP, an independent registered public accounting ~~firm.~~firm (PCAOB ID: 42). Their responsibility is to examine our consolidated financial statements in accordance with generally accepted auditing standards of the Public Company Accounting Oversight Board (United States). Ernst & ~~Young’s~~Young's opinion with respect to the fairness of the presentation of the statements is included in Item 8 of our ~~annual report~~Annual Report on Form 10-K. Ernst & Young reports directly to the audit committee of the board of directors.

Our audit committee includes ~~six~~four nonemployee members of the board of directors, all of whom are independent from our company. The committee charter, which is available on our website, outlines the ~~members’~~members' roles and responsibilities. It is the audit ~~committee’s~~committee's responsibility to appoint an independent registered public accounting firm subject to shareholder ratification, pre-approve both audit and non-audit services performed by the independent registered public accounting firm, and review the reports submitted by the firm. The audit committee meets several times during the year with management, the internal auditors, and the independent public accounting firm to discuss audit activities, internal controls, and financial reporting matters, including reviews of our externally published financial results. The internal auditors and the independent registered public accounting firm have full and free access to the committee.

We are dedicated to ensuring that we maintain the high standards of financial accounting and reporting that we have established. We are committed to providing financial information that is transparent, timely, complete, relevant, and accurate. Our culture demands integrity and an unyielding commitment to strong internal practices and policies. Finally, we have the highest confidence in our financial reporting, our underlying system of internal controls, and our people, who are objective in their responsibilities, operate under a code of conduct and are subject to the highest level of ethical standards.

~~Management’s~~Management's Report on Internal Control Over Financial Reporting—Eli Lilly and Company and Subsidiaries

Management of Eli Lilly and Company and subsidiaries is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. We have global financial policies that govern critical areas, including internal controls, financial accounting and reporting, fiduciary accountability, and safeguarding of corporate assets. Our internal accounting control systems are designed to provide reasonable assurance that assets are safeguarded, that transactions are executed in accordance with ~~management’s~~management's authorization and are properly recorded, and that accounting records are adequate for preparation of financial statements and other financial information. A staff of internal auditors regularly monitors, on a worldwide basis, the adequacy and effectiveness of internal accounting controls. The general auditor reports directly to the audit committee of the board of directors.

We conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in "Internal Control—Integrated Framework" (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

~~113~~106

Based on our evaluation under this framework, we concluded that our internal control over financial reporting was effective as of December 31, ~~2020.~~2023. However, because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The effectiveness of internal control over financial reporting as of December 31, ~~2020~~2023 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their attestation report, which appears herein. Their responsibility is to evaluate whether internal control over financial reporting was designed and operating effectively.


David A. Ricks						Anat Ashkenazi
~~Chairman,~~Chair, President, and Chief Executive Officer						~~Senior~~Executive Vice President and Chief Financial Officer

February ~~17, 2021~~21, 2024

~~114~~107

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors ~~and Shareholders~~ of Eli Lilly and Company

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Eli Lilly and Company and subsidiaries (the Company) as of December 31, ~~2020~~2023 and ~~2019,~~2022, the related consolidated statements of operations, comprehensive income (loss), ~~shareholders‘~~shareholders' equity and cash flows for each of the three years in the period ended December 31, ~~2020,~~2023, and the related notes (collectively referred to as the ~~“consolidated~~"consolidated financial ~~statements“~~statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, ~~2020~~2023 and ~~2019,~~2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2020,~~2023, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, ~~2020,~~2023, based on criteria established in Internal ~~Control-Integrated~~Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February ~~17, 2021~~21, 2024, expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the ~~Company’s~~Company's management. Our responsibility is to express an opinion on the ~~Company’s~~Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

~~115~~108


						Medicaid, Managed Care, and Medicare sales rebate accruals
Description of the Matter						As described in Note 2 to the consolidated financial statements under the caption ~~“Net~~"Net Product Revenue,”" the Company establishes provisions for sales rebate and discounts in the same period as the related sales occur. At December 31, ~~2020~~2023, the Company had ~~$5,853.0~~$11,689.0 million in sales rebate and discount accruals. A large portion of these accruals are rebates associated with sales in the United States for which payment for purchase of the product is covered by Medicaid, Managed Care, and Medicare. Auditing the Medicaid, Managed Care, and Medicare sales rebate and discount liabilities is challenging because of the subjectivity of certain assumptions required to estimate the rebate liabilities. In calculating the appropriate accrual amount, the Company considers historical Medicaid, Managed Care, and Medicare rebate payments by product as a percentage of their historical sales as well as any significant changes in sales trends, the lag in payment timing, changes in rebate contracts, an evaluation of the current Medicaid and Medicare laws and interpretations, the percentage of products that are sold via Medicaid, Managed Care, and Medicare, and product pricing. For Medicaid, there is significant complexity associated with calculating the legislated Medicaid rebates. Management utilizes employees with legislative experience and knowledge in developing assumptions used to calculate Medicaid rebates.~~Similarly, for Managed Care and Medicare, given~~Given variability in prescription drug costs, continued historical year over year increases in enrollees and variability in prescription data, historical rebate information may not be predictive for management to estimate the rebate accrual and thus, management supplements its historical data analysis with qualitative adjustments based upon current ~~utilization.~~expectations, particularly for select products which contribute the largest portion of the Company's revenue.
How We Addressed the Matter in Our Audit						We tested the ~~Company’s~~Company's controls addressing the identified risks of material misstatement related to the valuation of the sales rebate and discount liabilities. This included testing controls over ~~management’s~~management's review of the significant assumptions used to calculate the Medicaid, Managed Care, and Medicare rebate liabilities, including the significant assumptions discussed above. This testing also included ~~management’s~~management's control to compare actual activity to forecasted activity and controls to ensure the data used to evaluate the significant assumptions was complete and accurate. Our audit procedures included, among others, evaluating for reasonableness the significant assumptions in light of economic trends, product profiles, and other regulatory factors. Our testing involved assessing the historical accuracy of ~~management’s~~management's estimates by comparing actual activity to previous estimates and performing analytical procedures, based on internal and external data sources, to evaluate the completeness of the reserves. Additionally, our procedures included reviewing a sample of contracts, testing a sample of rebate payments and testing the underlying data used in ~~management’s~~management's evaluation. For Medicaid, we involved our ~~professional~~professionals with an understanding of the statutory reimbursement requirements to assess the consistency of the ~~Company’s~~Company's calculation methodologies with the applicable government regulations and policy.~~For Medicare we evaluated the reasonableness of assumptions made by management in estimating the Medicare coverage gap liability.~~

109


						Retirement Benefits - Valuation of Alternative Investments
Description of the Matter						As described in Note 15 to the consolidated financial statements under the caption ~~“Benefit~~"Benefit Plan Investments,”" the ~~Company’s~~Company's benefit plan investment policies are set with specific consideration of return and risk requirements in relationship to the respective liabilities. At December 31, ~~2020~~2023, the Company had ~~$17,806.0~~$16,289.0 million in plan assets related to the defined benefit pension plans and retiree health benefit plans. Approximately ~~33%~~48 percent of the total pension and retiree health assets are in hedge funds and private equity-like investment funds (“("alternative ~~investments”~~investments"). These alternative investments are valued ~~using significant unobservable inputs or are valued~~primarily at net asset value (NAV) reported by the counterparty, adjusted as necessary. Auditing the fair value of these alternative investments is challenging because of the higher estimation uncertainty of the inputs to the fair value calculations, ~~including~~particularly the underlying determination of net asset values ~~(“NAVs”~~("NAVs")~~, discounted cash flow valuations, comparable market valuations, and adjustments for currency, credit, liquidity and other risks.~~. Additionally, certain information regarding the fair value of these alternative investments is based on unaudited information available to management at the time of valuation.

~~116~~


How We Addressed the Matter in Our Audit						We tested the ~~Company’s~~Company's controls addressing the risks of material misstatement relating to valuation of alternative investments. This included testing ~~management’s review~~management's controls over alternative investment valuation, which included a comparison of returns to benchmarks and ~~in-person or telephonic meetings with~~monitoring investment ~~firms to discuss~~firms' valuation policies and procedures, as well as portfolio performance. Our audit procedures included, among others, comparing fund returns to selected relevant benchmarks and understanding variations, and obtaining the latest audited financial statements and comparing to the ~~Company’s~~Company's estimated fair ~~values and reconciling any differences.~~values. We also inquired of management about changes to the investment portfolio and/or related investment strategies and considerations. We assessed the historical accuracy of ~~management’s~~management's estimates by comparing actual activity to previous estimates. We evaluated for contrary evidence by confirming the fair value of the investments and ownership interest directly with the ~~trustees~~custodian and a sample of fund managers at year end.


/s/ Ernst & Young LLP

We have served as the ~~Company‘s~~Company's auditor since 1940.

Indianapolis, Indiana

February ~~17, 2021~~21, 2024

~~117~~110

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors ~~and Shareholders~~ of Eli Lilly and Company

Opinion on Internal Control Over Financial Reporting

We have audited Eli Lilly and Company and ~~subsidiaries’~~subsidiaries' internal control over financial reporting as of December 31, ~~2020,~~2023, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Eli Lilly and Company and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2020,~~2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, ~~2020~~2023 and ~~2019,~~2022, the related consolidated statements of operations, comprehensive income (loss), ~~shareholders‘~~shareholders' equity and cash flows for each of the three years in the period ended December 31, ~~2020,~~2023, and the related notes and our report dated February ~~17, 2021~~21, 2024, expressed an unqualified opinion thereon.

Basis for Opinion

The ~~Company’s~~Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying ~~Management’s~~Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the ~~Company’s~~Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A ~~company’s~~company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A ~~company’s~~company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the ~~company’s~~company's assets that could have a material effect on the financial statements.

~~118~~111

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


/s/ Ernst & Young LLP

Indianapolis, Indiana

February ~~17, 2021~~21, 2024

~~119~~112

Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under applicable Securities and Exchange Commission (SEC) regulations, management of a reporting company, with the participation of the principal executive officer and principal financial officer, must periodically evaluate the ~~company’s “disclosure~~company's "disclosure controls and procedures,”" which are defined generally as controls and other procedures designed to ensure that information required to be disclosed by the reporting company in its periodic reports filed with the SEC (such as this Form 10-K) is recorded, processed, summarized, and reported on a timely basis.

Our management, with the participation of David A. Ricks, president and chief executive officer, and Anat Ashkenazi, ~~senior~~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)~~Act of 1934) as of December 31, ~~2020,~~2023, and concluded that they were effective.

Management's Report on Internal Control over Financial Reporting

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~~company's internal control over financial reporting is effective at December 31, ~~2020~~2023 based on the framework in "Internal Control—Integrated Framework" (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States. Due to the inherent limitations, no evaluation over internal control can provide absolute assurance that no material misstatements or fraud exist.

In addition, Ernst & Young LLP, the ~~company’s~~company's independent registered public accounting firm, issued an attestation report on the ~~company’s~~company's internal control over financial reporting as of December 31, ~~2020.~~2023.

You can find the full text of ~~management’s~~management's report and Ernst & ~~Young’s~~Young's attestation report in Item 8.

Changes in Internal Control over Financial Reporting

During the fourth quarter of ~~2020,~~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.

113

Item 9B.Other Information

~~None.~~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.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

~~120~~114

Part III

Item 10.Directors, Executive Officers, and Corporate Governance

Directors and Executive Officers

Information relating to our board of directors is found in our Definitive Proxy Statement, to be dated on or about March ~~19, 2021~~22, 2024 (Proxy Statement), under ~~“Governance~~"Governance - ~~Board Operations and Governance”~~How We Build an Effective Board" and is incorporated in this Annual Report on Form 10-K by reference.

Information relating to our executive officers is found at Item 1, ~~“Business~~"Business - Executive Officers of the ~~Company”~~Company" and is incorporated by reference herein.

Code of Ethics

Information relating to our code of ethics is found in our Proxy Statement under ~~“Governance~~"Governance - How We Operate an Effective Board - Governance Practices - Board Oversight - Key Areas of ~~Strategy, Compliance,~~Oversight by the Board and ~~Risk Management~~Its Committees - Governance - Code of ~~Ethics”~~Ethics" and is incorporated in this Annual Report on Form 10-K by reference.

Corporate Governance

Information about the procedures by which shareholders can recommend nominees to our board of directors is found in our Proxy Statement under ~~“Shareholder Engagement on Governance Issues~~"Governance - How We Build an Effective Board - Director Nominations - Shareholder ~~Recommendations and Nominations for~~ Director Candidates" and is incorporated in this Annual Report on Form 10-K by reference.

The board of directors has appointed an audit committee consisting entirely of independent directors in accordance with applicable ~~SEC~~Securities and Exchange Commission and New York Stock Exchange requirements for audit committees. Information about our audit committee is found in our Proxy Statement under ~~“Governance~~"Governance - ~~Membership and~~How We Operate an Effective Board - Board Structure - Meetings of the Board and Its Committees - Committees of the Board - Audit ~~Committee”~~Committee" and is incorporated in this Annual Report on Form 10-K by reference.

Section 16(a) Reporting Compliance

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

Item 11.Executive Compensation

Information on director compensation, executive compensation, and talent and compensation committee matters can be found in the Proxy Statement under ~~“Governance~~"Governance - How We Operate an Effective Board - Board Alignment - Director Compensation,~~” “- Membership and~~" "- How We Operate an Effective Board - Board Structure - Meetings of the Board and Its Committees - Committees of the Board - Talent and Compensation Committee,~~” “Compensation~~" "Compensation - Compensation Discussion and Analysis,”" "- Talent and “-Compensation Committee Matters," and "- Executive Compensation.”" Such information is incorporated in this Annual Report on Form 10-K by reference.

~~121~~115

Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management

Information relating to ownership of the ~~company’s~~company's common stock by management and by persons known by the company to be the beneficial owners of more than five percent of the outstanding shares of common stock is found in the Proxy Statement under ~~“Ownership~~"Ownership of Company ~~Stock”~~Stock" and incorporated in this Annual Report on Form 10-K by reference.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table presents information as of December 31, ~~2020~~2023 regarding the company's compensation plans under which shares of the company's common stock have been authorized for issuance.


Plan category	(a) Number of securities to be issued upon exercise of outstanding options, warrants, and rights (1)	(b) Weighted-average exercise price of outstanding options, warrants, and rights		(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders	—	$	—	~~49,510,908~~49,082,012
Equity compensation plan not approved by security holders	—	—		—
Total	—	—		~~49,510,908~~49,082,012

(1) ~~9,192,921~~3,599,883 shares are underlying outstanding equity awards other than options.

Item 13.Certain Relationships and Related Transactions, and Director Independence

Related Person Transactions

Information relating to the policies and procedures for approval of related person transactions by our board of directors can be found in the Proxy Statement under ~~“Governance~~"Governance - ~~Highlights of the Company’s Corporate Governance~~How We Operate an Effective Board - Board Alignment - Conflicts of Interest and Transactions with Related Persons.”" Such information is incorporated in this Annual Report on Form 10-K by reference.

Director Independence

Information relating to director independence can be found in the Proxy Statement under ~~“Governance~~"Governance - How We Build an Effective Board - Director ~~Independence”~~Qualifications - Independence" and is incorporated in this Annual Report on Form 10-K by reference.

Item 14.Principal Accountant Fees and Services

Information related to the fees and services of our principal independent accountants, Ernst & Young LLP, can be found in the Proxy Statement under ~~“Audit~~"Audit Matters - Item 3. Ratification of the Appointment of the Independent Auditor - ~~Audit Committee Report -~~ Services Performed by the Independent ~~Auditor”~~Auditor" and “-"- Independent Auditor Fees.”" Such information is incorporated in this Annual Report on Form 10-K by reference.

~~122~~116

Item 15.Exhibits and Financial Statement Schedules

(a)1. Financial Statements

The following consolidated financial statements of the company and its subsidiaries are found at Item 8:

•Consolidated Statements of Operations—Years Ended December 31, ~~2020, 2019,~~2023, 2022, and ~~2018~~2021

•Consolidated Statements of Comprehensive Income (Loss)—Years Ended December 31, ~~2020, 2019,~~2023, 2022, and ~~2018~~2021

•Consolidated Balance Sheets—December 31, ~~2020~~2023 and ~~2019~~2022

•Consolidated Statements of Shareholders' Equity—Years Ended December 31, ~~2020, 2019,~~2023, 2022, and ~~2018~~2021

•Consolidated Statements of Cash Flows—Years Ended December 31, ~~2020, 2019,~~2023, 2022, and ~~2018~~2021

•Notes to Consolidated Financial Statements

(a)2. Financial Statement Schedules

The consolidated financial statement schedules of the company and its subsidiaries have been omitted because they are not required, are inapplicable, or are adequately explained in the financial statements.

Financial statements of interests of 50 percent or less, which are accounted for by the equity method, have been omitted because they do not, considered in the aggregate as a single subsidiary, constitute a significant subsidiary.

~~123~~

(a)3. Exhibits

The following documents are filed as part of this Annual Report on Form 10-K:


~~2.1~~Exhibit	~~Agreement and Plan of Merger, dated January 5, 2019, among the Company, Bowfin Acquisition Corporation and Loxo Oncology, Inc.~~Description

3.1		Amended Articles of Incorporation, incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on May 4, 2022

3.2		Bylaws, as amended, incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed on May 4, 2022

4.1		Indenture, dated February 1, 1991, between the Company and Deutsche Bank Trust Company Americas, as successor trustee to Citibank, N.A., as Trustee, incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-3, Registration No. 333-186979

4.2		Tripartite Agreement, dated September 13, 2007, appointing Deutsche Bank Trust Company Americas as Successor Trustee under the Indenture listed in Exhibit 4.1, incorporated by reference to Exhibit 4.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 2008

4.3	Description of the Company's Common ~~Stock~~Stock*

4.4	Description of the Company's ~~1.000% Notes due 2022,~~ 1.625% Notes due 2026 and 2.125% Notes due 2030, incorporated by reference to Exhibit 4.4 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019

4.5	Description of the Company's 6.77% Notes due 2036, incorporated by reference to Exhibit 4.5 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019

4.6	Description of the Company's 7 1/8% Notes due 2025, incorporated by reference to Exhibit 4.6 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019

4.7	Description of the Company's 0.625% Notes due 2031 and 1.700% Notes due 2049, incorporated by reference to Exhibit 4.7 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019

117


4.8	Description of the Company's 0.500% Notes due 2033, 1.125% Notes due 2051, and 1.375% Notes due 2061, incorporated by reference to Exhibit 4.8 to the Company's Annual Report on Form 10-K for the year ended December 31, 2021

4.9	Description of the Company's 1.625% Notes due 2043, incorporated by reference to Exhibit 4.9 to the Company's Annual Report on Form 10-K for the year ended December 31, 2021

10.1	Amended and Restated 2002 Lilly Stock Plan(1), incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2018

10.2	Form of Performance Award under the 2002 Lilly Stock Plan(1) incorporated by reference to Exhibit 10.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 2022

10.3	~~Form of Performance Award under the 2002 Lilly Stock Plan (with non-compete)(1)~~

~~10.4~~	~~Form of Performance Award under the 2002 Lilly Stock Plan (non-executive officer)(1)~~

~~10.5~~	Form of Shareholder Value Award under the 2002 Lilly Stock Plan(1)*

~~10.6~~10.4	~~Form of Shareholder Value Award under the 2002 Lilly Stock Plan (with non-compete)(1)~~

~~10.7~~	~~Form of Shareholder Value Award under the 2002 Lilly Stock Plan (non-executive officer)(1)~~

~~10.8~~	Form of Relative Value Award under the 2002 Lilly Stock Plan(1)*

~~10.9~~10.5	~~Form of Relative Value Award under the 2002 Lilly Stock Plan (with non-compete)(1)~~

~~10.10~~	Form of Restricted Stock Unit Award under the 2002 Lilly Stock Plan(1)*

~~10.11~~10.6	~~Restricted Stock Unit Award~~Form of Non-Compete Payment Agreement(1), incorporated by reference to ~~Michael Harrington under~~Exhibit 10.5 to the ~~2002 Lilly Stock Plan(1)~~Company's Annual Report on Form 10-K for the year ended December 31, 2022

~~10.12~~10.7	The Lilly Deferred Compensation Plan, as amended(1), incorporated by reference to Exhibit 10.5 to the Company's Annual Report on Form 10-K for the year ended December 31, 2013

~~10.13~~10.8	The Lilly Directors' Deferral Plan, as amended(1), incorporated by reference to Exhibit 10 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2017

~~10.14~~10.9	The Eli Lilly and Company Bonus Plan, as amended(1), incorporated by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the year ended December 31, 2020

~~10.15~~10.10	2007 Change in Control Severance Pay Plan for Select Employees, as amended(1)*

21		List of ~~Subsidiaries~~Subsidiaries*

23		Consent of Independent Registered Public Accounting ~~Firm~~Firm*

31.1		Rule 13a-14(a) Certification of David A. Ricks, ~~Chairman,~~Chair, President, and Chief Executive ~~Officer~~Officer*

31.2		Rule 13a-14(a) Certification of Anat Ashkenazi, ~~Senior~~Executive Vice President and Chief Financial ~~Officer~~Officer*

32		Section 1350 ~~Certification~~Certification*

97	Executive Compensation Recovery Policy*

101	Interactive Data ~~File~~File*

104	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)*

(1) Indicates management contract or compensatory plan.

* Filed herewith.

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.

~~124~~

Item 16.Form 10-K Summary

Not applicable.

~~Index to Exhibits~~

~~The following documents are filed as part of this report:~~

~~Exhibit~~

~~Location~~

~~2.1~~

~~Agreement and Plan of Merger, dated January 5, 2019, among the Company, Bowfin Acquisition Corporation and Loxo Oncology, Inc.~~

~~Incorporated by reference to Exhibit 2.1 to the Current~~ ~~Report on Form 8-K filed by Loxo Oncology, Inc. on January 7, 2019~~

~~3.1~~

~~Amended Articles of Incorporation~~

~~Incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 2013~~

~~3.2~~

~~Bylaws, as amended~~

~~Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on February 9, 2021~~

~~4.1~~

~~Indenture, dated February 1, 1991, between the Company and Deutsche Bank Trust Company Americas, as successor trustee to Citibank, N.A., as Trustee~~

~~Incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-3, Registration No. 333-186979~~

~~4.2~~

~~Tripartite Agreement, dated September 13, 2007, appointing Deutsche Bank Trust Company Americas as Successor Trustee under the Indenture listed in Exhibit 4.1~~

~~Incorporated by reference to Exhibit 4.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008~~

~~4.3~~

~~Description of the Company's Common Stock~~

~~Incorporated by reference to Exhibit 4.3 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019~~

~~4.4~~

~~Description of the Company's 1.000% Notes due 2022, 1.625% Notes due 2026, and 2.125% Notes due 2030~~

~~Incorporated by reference to Exhibit 4.4 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019~~

~~4.5~~

~~Description of the Company's 6.77% Notes due 2036~~

~~Incorporated by reference to Exhibit 4.5 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019~~

~~4.6~~

~~Description of the Company's 7 1/8% Notes due 2025~~

~~Incorporated by reference to Exhibit 4.6 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019~~

~~4.7~~

~~Description of the Company's 0.625% Notes due 2031 and 1.700% Notes due 2049~~

~~Incorporated by reference to Exhibit 4.7 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019~~

~~10.1~~

~~Amended and Restated 2002 Lilly Stock Plan~~

~~Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018~~

~~10.2~~

~~Form of Performance Award under the 2002 Lilly Stock Plan~~

~~Attached~~

~~10.3~~

~~Form of Performance Award under the 2002 Lilly Stock Plan (with non-compete)~~

~~Attached~~

~~10.4~~

~~Form of Performance Award under the 2002 Lilly Stock Plan (non-executive officer)~~

~~Attached~~

~~10.5~~

~~Form of Shareholder Value Award under the 2002 Lilly Stock Plan~~

~~Attached~~

~~125~~

~~10.6~~

~~Form of Shareholder Value Award under the 2002 Lilly Stock Plan (with non-compete)~~

~~Attached~~

~~10.7~~

~~Form of Shareholder Value Award under the 2002 Lilly Stock Plan (non-executive officer)~~

~~Attached~~

~~10.8~~

~~Form of Relative Value Award under the 2002 Lilly Stock Plan~~

~~Attached~~

~~10.9~~

~~Form of Relative Value Award under the 2002 Lilly Stock Plan (with non-compete)~~

~~Attached~~

~~10.10~~

~~Form of Restricted Stock Unit Award under the 2002 Lilly Stock Plan~~

~~Attached~~

~~10.11~~

~~Restricted Stock Unit Award to Michael Harrington under the 2002 Lilly Stock Plan~~

~~Incorporated by reference to Exhibit 10.5 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019~~

~~10.12~~

~~The Lilly Deferred Compensation Plan, as amended~~

~~Incorporated by reference to Exhibit 10.5 to the Company's annual report on Form 10-K for the year ended December 31, 2013~~

~~10.13~~

~~The Lilly Directors' Deferral Plan, as amended~~

~~Incorporated by reference to Exhibit 10 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2017~~

~~10.14~~

~~The Eli Lilly and Company Bonus Plan, as amended~~

~~Attached~~

~~10.15~~

~~2007 Change in Control Severance Pay Plan for Select Employees, as amended~~

~~Attached~~

~~List of Subsidiaries~~

~~Attached~~

~~Consent of Independent Registered Public Accounting Firm~~

~~Attached~~

~~31.1~~

~~Rule 13a-14(a) Certification of David A. Ricks, Chairman, President, and Chief Executive Officer~~

~~Attached~~

~~31.2~~

~~Rule 13a-14(a) Certification of Anat Ashkenazi, Senior Vice President and Chief Financial Officer~~

~~Attached~~

~~Section 1350 Certification~~

~~Attached~~

~~101~~

~~Interactive Data File~~

~~Attached~~

~~104~~

~~Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)~~

~~Attached~~

~~126~~118

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Eli Lilly and Company


By						/s/ David A. Ricks
David A. Ricks
~~Chairman,~~Chair, President, and Chief Executive Officer

February ~~17, 2021~~21, 2024

~~127~~119

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February ~~17, 2021~~21, 2024 by the following persons on behalf of the Registrant and in the capacities indicated.


Signature						Title

/s/ David A. Ricks						~~Chairman,~~Chair, President, and Chief Executive Officer (principal executive officer)
DAVID A. RICKS

/s/ Anat Ashkenazi						~~Senior~~Executive Vice President and Chief Financial Officer (principal financial officer)
ANAT ASHKENAZI

/s/ Donald A. Zakrowski						Senior Vice President, Finance, and Chief Accounting Officer (principal accounting officer)
DONALD A. ZAKROWSKI

/s/ Ralph Alvarez						Director
RALPH ALVAREZ

/s/ Katherine Baicker, Ph.D.						Director
KATHERINE BAICKER, Ph.D.

/s/ ~~Carolyn R. Bertozzi, Ph.D.~~Erik Fyrwald						Director
~~CAROLYN R. BERTOZZI, Ph.D.~~ERIK FYRWALD

/s/ ~~Michael L. Eskew~~Mary Lynne Hedley, Ph.D.						Director
~~MICHAEL L. ESKEW~~MARY LYNNE HEDLEY, Ph. D.

~~/s/ J. Erik Fyrwald~~						~~Director~~
~~J. ERIK FYRWALD~~

/s/ Jamere Jackson						Director
JAMERE JACKSON

/s/ Kimberly Johnson						Director
KIMBERLY H. JOHNSON

/s/ William G. Kaelin, Jr., M.D.						Director
WILLIAM G. KAELIN, JR., M.D.

/s/ Juan R. Luciano						Director
JUAN R. LUCIANO

/s/ Marschall S. Runge, M.D., Ph.D.						Director
MARSCHALL S. RUNGE, M.D., Ph.D.

~~/s/ Kathi P. Seifert~~						~~Director~~
~~KATHI P. SEIFERT~~

/s/ Gabrielle Sulzberger						Director
GABRIELLE SULZBERGER

~~/s/ Jackson P. Tai~~						~~Director~~
~~JACKSON P. TAI~~

/s/ Karen Walker						Director
KAREN WALKER

~~128~~120

Trademarks Used In ~~This~~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 ~~report,~~Annual Report on Form 10-K, appear with an initial capital and are followed by the symbol ® or ™, as applicable. In subsequent uses of the marks in the item, the symbols may be omitted.

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

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

Glyxambi®, Jardiance®, Jentadueto®, Synjardy®, Trajenta®, and Trijardy® are trademarks of Boehringer Ingelheim International GmbH.

~~Posilac~~® ~~is a trademark of Union Agener and Elanco US Inc.~~

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

~~Viagra~~Qbrexza® is a registered trademark of ~~Pfizer Inc.~~Journey Medical Corporation.

Zyprexa® is a registered trademark of Cheplapharm Arzneimittel GmbH.

~~129~~121


Therapeutic area	Products	Certain Indications
Diabetes, Obesity and Other Cardiometabolic products	•~~Baqsimi~~®~~, a nasal powder formulation for the treatment of severe hypoglycemia in patients with diabetes~~ •Basaglar®~~, a long-acting human insulin analog for the treatment of diabetes~~ •~~Humalog~~®, ~~Humalog Mix 75/25,Humalog U-100,Humalog U-200,Humalog Mix 50/50~~, ~~insulin lispro,insulin lispro protamine, and~~ ~~insulin lispro mix 75/25,~~ ~~human insulin analogs for the treatment of diabetes~~ •~~Humulin~~®, ~~Humulin 70/30, Humulin N, Humulin R,~~ ~~and~~ ~~Humulin U-500~~,~~human insulins of recombinant DNA origin for the treatment of diabetes~~ •~~Jardiance~~®~~, for the treatment of type 2 diabetes and to reduce the risk of cardiovascular death in adult patients with type 2 diabetes and established cardiovascular disease~~ •~~Lyumjev~~®~~, a rapid-acting human insulin analog for the treatment of diabetes~~ •~~Trajenta~~®~~, for the treatment of type 2 diabetes~~ •~~Trulicit~~y®, for the treatment of type 2 diabetes 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 ~~Oncology products, including:~~ •~~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 EGFR or ALK 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 •~~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 •~~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®	In collaboration with Boehringer Ingelheim, a long-acting human insulin analog for the treatment of diabetes.
	Humalog®, Humalog Mix 75/25, Humalog U-100, Humalog U-200, Humalog Mix 50/50, insulin lispro, insulin lispro protamine, and insulin lispro mix 75/25	Human insulin analogs for the treatment of diabetes.
	Humulin®, Humulin 70/30, Humulin N, Humulin R, and Humulin U-500	Human insulins of recombinant DNA origin for the treatment of diabetes.
	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; to reduce the risk of cardiovascular death and hospitalizations for heart failure in 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.
	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.
	Trulicity®	For the treatment of type 2 diabetes in adults and pediatric patients 10 years of age and 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.
	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
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.
	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.
	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.
	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 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.
	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 who have progressed on or following prior systemic treatment or who have no satisfactory alternative treatment options.
	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; for the first-line treatment of gastric cancer in combination with two other agents; and, in combination with two other agents, for patients with epidermal growth factor receptor (EGFR)-mutated non-squamous NSCLC that progressed after EGFR-tyrosine kinase inhibitor therapy, each in China.
	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 recurrence.


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.
	Olumiant®	In collaboration with Incyte Corporation, for the treatment of adults with moderately to severely active rheumatoid 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 dermatitis; severe alopecia areata; and for the treatment of hospitalized adults with COVID-19 who require supplemental oxygen, mechanical ventilation, or extracorporeal membrane oxygenation.
	OmvohTM	For the treatment of adults with moderately to severely active ulcerative colitis.
	Taltz®	For the treatment of adults and pediatric patients aged 6 years or older with moderate to severe plaque psoriasis; adults with active psoriatic arthritis; adults with ankylosing spondylitis; and adults with active non-radiographic axial spondyloarthritis.
Neuroscience products	Cymbalta®	For the treatment of major depressive disorder; diabetic peripheral neuropathic pain; generalized anxiety disorder; fibromyalgia; and chronic musculoskeletal pain due to chronic low back pain or chronic pain due to osteoarthritis.
	Emgality®	For migraine prevention and the treatment of episodic cluster headache in adults.
Other products and therapies	Cialis®	For the treatment of erectile dysfunction and benign prostatic hyperplasia.
	Forteo®	For the treatment of metastatic NSCLC in adult patients; for the treatment of advanced metastatic medullary thyroid cancer who require systemic therapy in adult and pediatric patients; and for the treatment of advanced metastatic thyroid cancer in adult and pediatric patients who require systemic therapy and are radioactive iodin-refractory •~~Tyvyt~~®~~, for the treatment of relapsed or refractory classic Hodgkin’s lymphoma and for the first-line treatment of non-squamous NSCLC in combination with Alimta and another agent in China~~ •~~Verzenio~~®~~, for use as monotherapy or in combination with endocrine therapy for the treatment of HR+, HER2- metastatic breast cancer~~ ~~Immunology products, including:~~ •~~Olumiant~~®~~, for the treatment of adults with moderately-to-severely active rheumatoid arthritis~~ ◦~~Baricitinib~~ ~~was granted Emergency Use Authorization (EUA) in 2020 for the treatment of suspected or laboratory confirmed COVID-19, in combination with remdesivir, in hospitalized adults and pediatric patients~~ •~~Taltz~~®, for the treatment of adults and pediatric patients aged 6 years or older with moderate-to-severe plaque psoriasis, adults with active psoriatic arthritis, adults with ankylosing spondylitis, and adults with active non-radiographic axial spondyloarthritis ~~Neuroscience products, including:~~ •~~Cymbalta~~®, for the treatment of major depressive disorder, diabetic peripheral neuropathic pain, generalized anxiety disorder, fibromyalgia, and chronic musculoskeletal pain due to chronic low back pain or chronic pain due to osteoarthritis •~~Emgality~~®~~, for migraine prevention and the treatment of episodic cluster headache in adults~~ •~~Reyvow~~®~~, for the acute treatment of migraine, with or without aura, in adults~~ •~~Zyprexa~~®~~, for the treatment of schizophrenia, acute mixed or manic episodes associated with bipolar I disorder, and bipolar maintenance~~ ~~Other therapies, including:~~ •~~Bamlanivimab, for the treatment of mild-to-moderate COVID-19 in adults and pediatric patients with positive results of direct SARS-CoV-2 viral testing (EUA granted in 2020)~~ •~~Bamlanivimab~~ ~~and~~ ~~etesevimab, administered together, for the treatment of mild-to-moderate COVID-19 in adults and pediatric patients with positive results of direct SARS-CoV-2 viral testing (EUA granted in 2021)~~ •~~Cialis~~®~~, for the treatment of erectile dysfunction and benign prostatic hyperplasia~~ •~~Forteo~~®~~, for the treatment of osteoporosis in postmenopausal women and men at high risk for fracture and for glucocorticoid-induced~~ osteoporosis in men and postmenopausal women at high risk for broken bones or fracture and for glucocorticoid-induced osteoporosis in men and women.


	Year Ended December 31						Percent Change
	2020			2019
Revenue	$	24,539.8		$	22,319.5		10
Gross margin	19,056.5			17,598.3			8
Gross margin as a percent of revenue	77.7		%	78.8		%
Operating expense	$	12,206.9		$	11,808.8		3
Acquired in-process research and development	660.4			239.6			NM
Asset impairment, restructuring, and other special charges	131.2			575.6			(77)
Income before income taxes	7,229.9			5,265.9			37
Income taxes	1,036.2			628.0			65
Net income from continuing operations	6,193.7			4,637.9			34

Net income	6,193.7			8,318.4			(26)
EPS from continuing operations	6.79			4.96			37

EPS	6.79			8.89			(24)


	Year Ended December 31,

		Year Ended December 31,
		2020						2019			2023									2022					Percent Change
Product	Product	U.S.		Outside U.S.		Total		Total		Percent Change	Product	U.S.			Outside U.S.				Total									Total				Percent Change
Trulicity	Trulicity	$	3,835.9	$	1,232.2	$	5,068.1	$	4,127.8	23	Trulicity	$	5,433.3	$	$	1,699.2	$		$	7,132.6				$		$								(4)
Humalog(1)		1,485.6		1,140.3		2,625.9		2,820.7		(7)
Mounjaro											Mounjaro	4,834.2			328.9				5,163.1					482.5						NM
Verzenio											Verzenio	2,509.0			1,354.3				3,863.4					2,483.5						56
Taltz											Taltz	1,831.6			928.0				2,759.6					2,482.0						11
Jardiance(1)											Jardiance(1)	1,600.4			1,144.2				2,744.7					2,066.0						33
Zyprexa(2)											Zyprexa(2)	79.4			1,615.4				1,694.8					336.9						NM
Humalog(3)											Humalog(3)	863.2			800.2				1,663.3					2,060.6						(19)
Cyramza®											Cyramza®	402.3			572.4				974.7					971.4						—
Olumiant® (4)											Olumiant® (4)	225.5			697.2				922.6					830.5						11
Humulin®											Humulin®	610.1			242.0				852.1					1,019.4						(16)
Basaglar® (5)											Basaglar® (5)	443.1			285.2				728.3					760.4						(4)
Emgality®											Emgality®	482.2			196.0				678.3					650.9						4
Baqsimi											Baqsimi	645.7			31.9				677.6					139.3						NM
Erbitux®											Erbitux®	528.9			67.6				596.5					566.5						5
Forteo®											Forteo®	335.5			197.7				533.2					613.1						(13)
Cialis®											Cialis®	26.1			355.3				381.5					587.3						(35)
Alimta	Alimta	1,265.3		1,064.7		2,329.9		2,115.8		10	Alimta	72.9		144.6		144.6		217.5			217.5		927.7				927.7		(77)				(77)
Taltz		1,288.5		500.0		1,788.5		1,366.4		31
Humulin®		866.4		393.2		1,259.6		1,290.1		(2)
Jardiance(2)		620.8		533.0		1,153.8		944.2		22
Basaglar®		842.3		282.1		1,124.4		1,112.6		1
Forteo		510.3		536.0		1,046.3		1,404.7		(26)
Cyramza®		381.9		650.8		1,032.6		925.1		12
Verzenio		618.2		294.4		912.7		579.7		57
Bamlanivimab(3)		850.0		21.2		871.2		—		NM
Cymbalta		42.1		725.6		767.7		725.4		6
Olumiant		63.8		575.0		638.9		426.9		50
Cialis®		61.8		545.4		607.1		890.5		(32)
Erbitux®		480.1		56.3		536.4		543.4		(1)
Zyprexa®		46.1		360.5		406.5		418.7		(3)
Emgality®		325.9		37.0		362.9		162.5		NM
Trajenta®(4)		95.6		263.0		358.5		590.6		(39)
Zepbound											Zepbound	175.8			—				175.8					—						NM
COVID-19 antibodies(6)											COVID-19 antibodies(6)	—			—				—					2,023.5						NM
Other products	Other products	548.7		1,099.8		1,648.8		1,874.4		(12)	Other products	691.8		1,673.0		1,673.0		2,364.5			2,364.5		2,100.2				2,100.2		13				13
Revenue	Revenue	$	14,229.3	$	10,310.5	$	24,539.8	$	22,319.5	10	Revenue	$	21,791.0	$	$	12,333.1	$		$	34,124.1		$		$	28,541.4			20			20


Title of Each Class	Trading Symbol(s)	Name of Each Exchange On Which Registered
Common Stock (no par value)	LLY	~~New York Stock Exchange~~
~~1.000% Notes due 2022~~	~~LLY22~~	New York Stock Exchange
7 1/8% Notes due 2025	LLY25	New York Stock Exchange
1.625% Notes due 2026	LLY26	New York Stock Exchange
2.125% Notes due 2030	LLY30	New York Stock Exchange
0.625% Notes due 2031	LLY31	New York Stock Exchange
0.500% Notes due 2033	LLY33	New York Stock Exchange
6.77% Notes due 2036	LLY36	New York Stock Exchange
1.625% Notes due 2043	LLY43	New York Stock Exchange
1.700% Notes due 2049	LLY49A	New York Stock Exchange
1.125% Notes due 2051	LLY51	New York Stock Exchange
1.375% Notes due 2061	LLY61	New York Stock Exchange


		2020 vs. 2019
		U.S.		Outside U.S.		Consolidated
	2023 vs. 2022														2023 vs. 2022
	U.S.											U.S.		Outside U.S.	Consolidated
Volume	Volume	17	%	13	%	15	%	Volume	11	%	25	%	16	%
Price	Price	(5)	%	(6)	%	(5)	%	Price	9	%	(4)	%	4	%
Foreign exchange rates	Foreign exchange rates	—	%	—	%	—	%	Foreign exchange rates	—	%	(1)	%	—	%
Percent change	Percent change	12	%	7	%	10	%	Percent change	20	%	19	%	20	%


(Dollars in millions)		2020		2019
						2023	2022
Sales return, rebate, and discount liabilities, beginning of year	Sales return, rebate, and discount liabilities, beginning of year	$	4,635.5	$	4,670.9
Reduction of net sales(1)	Reduction of net sales(1)	18,668.4		15,490.2
Cash payments	Cash payments	(17,903.9)		(15,525.6)
Sales return, rebate, and discount liabilities, end of year	Sales return, rebate, and discount liabilities, end of year	$	5,400.0	$	4,635.5


ELI LILLY AND COMPANY AND SUBSIDIARIES (Dollars in millions and shares in thousands, except per-share data)			Year Ended December 31	2020		2019		2018
Revenue				$	24,539.8	$	22,319.5	$	21,493.3
ELI LILLY AND COMPANY AND SUBSIDIARIES (Dollars in millions, except per-share data, and shares in thousands)										ELI LILLY AND COMPANY AND SUBSIDIARIES (Dollars in millions, except per-share data, and shares in thousands)	Year Ended December 31	2023	2022	2021
Revenue (Note 2)
Costs, expenses, and other:	Costs, expenses, and other:
Cost of sales
Cost of sales
Cost of sales	Cost of sales			5,483.3		4,721.2		4,681.7
Research and development	Research and development			6,085.7		5,595.0		5,051.2
Marketing, selling, and administrative	Marketing, selling, and administrative			6,121.2		6,213.8		5,975.1
Acquired in-process research and development (Note 3)	Acquired in-process research and development (Note 3)			660.4		239.6		1,983.9
Asset impairment, restructuring, and other special charges (Note 5)	Asset impairment, restructuring, and other special charges (Note 5)			131.2		575.6		266.9
Other—net, (income) expense (Note 18)	Other—net, (income) expense (Note 18)			(1,171.9)		(291.6)		(145.6)
				17,309.9		17,053.6		17,813.2
		27,569.5
Income before income taxes	Income before income taxes			7,229.9		5,265.9		3,680.1
Income taxes (Note 14)	Income taxes (Note 14)			1,036.2		628.0		529.5
Net income from continuing operations				6,193.7		4,637.9		3,150.6
Net income from discontinued operations (Note 19)				0		3,680.5		81.4

Net income

Net income

Net income	Net income			$	6,193.7	$	8,318.4	$	3,232.0

Earnings per share:	Earnings per share:
Earnings from continuing operations - basic				$	6.82	$	4.98	$	3.07
Earnings from discontinued operations - basic				0		3.95		0.07
Earnings per share - basic				$	6.82	$	8.93	$	3.14
Earnings per share:
Earnings per share:
Earnings per share:
Earnings per share:
Earnings per share:
Earnings per share:
Earnings per share:
Earnings per share:

Earnings from continuing operations - diluted				$	6.79	$	4.96	$	3.05
Earnings from discontinued operations - diluted				0		3.93		0.08
Earnings per share - diluted				$	6.79	$	8.89	$	3.13

Basic

Basic

Basic

Diluted

Diluted

Diluted

Shares used in calculation of earnings per share:	Shares used in calculation of earnings per share:
Shares used in calculation of earnings per share:
Shares used in calculation of earnings per share:
Shares used in calculation of earnings per share:
Shares used in calculation of earnings per share:
Shares used in calculation of earnings per share:
Shares used in calculation of earnings per share:
Shares used in calculation of earnings per share:
Shares used in calculation of earnings per share:
Basic
Basic
Basic	Basic			907,634		931,059		1,027,721
Diluted	Diluted			912,505		935,684		1,033,667


ELI LILLY AND COMPANY AND SUBSIDIARIES (Dollars in millions, shares in thousands)	ELI LILLY AND COMPANY AND SUBSIDIARIES (Dollars in millions, shares in thousands)	December 31	2020		2019		ELI LILLY AND COMPANY AND SUBSIDIARIES (Dollars in millions, shares in thousands)	December 31	2023	2022
Assets	Assets
Current Assets	Current Assets
Current Assets
Current Assets
Cash and cash equivalents (Note 7)
Cash and cash equivalents (Note 7)
Cash and cash equivalents (Note 7)	Cash and cash equivalents (Note 7)		$	3,657.1	$	2,337.5
Short-term investments (Note 7)	Short-term investments (Note 7)		24.2		101.0
Accounts receivable, net of allowances of $25.9 (2020) and $22.4 (2019)			5,875.3		4,547.3
Accounts receivable, net of allowances of $14.8 (2023) and $16.0 (2022)
Other receivables	Other receivables		1,053.7		994.2
Inventories (Note 6)	Inventories (Note 6)		3,980.3		3,190.7
Prepaid expenses and other			2,871.5		2,538.9

Prepaid expenses
Other current assets
Total current assets	Total current assets		17,462.1		13,709.6
Investments (Note 7)	Investments (Note 7)		2,966.8		1,962.4
Goodwill (Note 8)	Goodwill (Note 8)		3,766.5		3,679.4
Other intangibles, net (Note 8)	Other intangibles, net (Note 8)		7,450.0		6,618.0
Deferred tax assets (Note 14)	Deferred tax assets (Note 14)		2,830.4		2,572.6
Property and equipment, net (Note 9)	Property and equipment, net (Note 9)		8,681.9		7,872.9

Other noncurrent assets	Other noncurrent assets		3,475.4		2,871.2
Other noncurrent assets
Other noncurrent assets

Total assets
Total assets
Total assets	Total assets		$	46,633.1	$	39,286.1
Liabilities and Equity	Liabilities and Equity
Current Liabilities	Current Liabilities
Current Liabilities
Current Liabilities
Short-term borrowings and current maturities of long-term debt (Note 11)
Short-term borrowings and current maturities of long-term debt (Note 11)
Short-term borrowings and current maturities of long-term debt (Note 11)	Short-term borrowings and current maturities of long-term debt (Note 11)		$	8.7	$	1,499.3
Accounts payable	Accounts payable		1,606.7		1,405.3
Employee compensation	Employee compensation		997.2		915.5
Sales rebates and discounts	Sales rebates and discounts		5,853.0		4,933.6
Dividends payable	Dividends payable		770.6		671.5
Income taxes payable (Note 14)			495.1		160.6

Other current liabilities
Other current liabilities
Other current liabilities	Other current liabilities		2,750.3		2,189.4

Total current liabilities	Total current liabilities		12,481.6		11,775.2
Other Liabilities
Total current liabilities
Total current liabilities
Noncurrent Liabilities
Long-term debt (Note 11)
Long-term debt (Note 11)
Long-term debt (Note 11)	Long-term debt (Note 11)		16,586.6		13,817.9
Accrued retirement benefits (Note 15)	Accrued retirement benefits (Note 15)		4,094.5		3,698.2
Long-term income taxes payable (Note 14)	Long-term income taxes payable (Note 14)		3,837.8		3,607.2

Other noncurrent liabilities	Other noncurrent liabilities		1,707.5		1,501.0
Deferred tax liabilities (Note 14)			2,099.9		2,187.5
Other noncurrent liabilities
Other noncurrent liabilities

Total other liabilities			28,326.3		24,811.8
Total noncurrent liabilities
Total noncurrent liabilities
Total noncurrent liabilities
Commitments and Contingencies (Note 16)	Commitments and Contingencies (Note 16)		0		0		Commitments and Contingencies (Note 16)
Eli Lilly and Company Shareholders' Equity (Notes 12 and 13)	Eli Lilly and Company Shareholders' Equity (Notes 12 and 13)
Common stock—no par value Authorized shares: 3,200,000 Issued shares: 957,077 (2020) and 958,056 (2019)			598.2		598.8
Common stock—no par value Authorized shares: 3,200,000 Issued shares: 949,781 (2023) and 950,632 (2022)
Common stock—no par value Authorized shares: 3,200,000 Issued shares: 949,781 (2023) and 950,632 (2022)
Common stock—no par value Authorized shares: 3,200,000 Issued shares: 949,781 (2023) and 950,632 (2022)
Additional paid-in capital	Additional paid-in capital		6,778.5		6,685.3
Retained earnings	Retained earnings		7,830.2		4,920.4
Employee benefit trust	Employee benefit trust		(3,013.2)		(3,013.2)
Accumulated other comprehensive loss (Note 17)	Accumulated other comprehensive loss (Note 17)		(6,496.4)		(6,523.6)
Cost of common stock in treasury	Cost of common stock in treasury		(55.7)		(60.8)
Total Eli Lilly and Company shareholders' equity	Total Eli Lilly and Company shareholders' equity		5,641.6		2,606.9
Noncontrolling interests	Noncontrolling interests		183.6		92.2
Total equity	Total equity		5,825.2		2,699.1
Total liabilities and equity	Total liabilities and equity		$	46,633.1	$	39,286.1


		Equity of Eli Lilly and Company Shareholders
ELI LILLY AND COMPANY AND SUBSIDIARIES (Dollars in millions, shares in thousands)		Common Stock			Additional Paid-in Capital		Retained Earnings		Employee Benefit Trust		Accumulated Other Comprehensive Loss		Common Stock in Treasury			Noncontrolling Interest
		Shares	Amount										Shares	Amount
Balance at January 1, 2018		1,100,672	$	687.9	$	5,817.8	$	13,894.1	$	(3,013.2)	$	(5,718.6)	664	$	(75.8)	$	75.7
	Equity of Eli Lilly and Company Shareholders
ELI LILLY AND COMPANY AND SUBSIDIARIES (Dollars in millions, except per-share data, and shares in thousands)

ELI LILLY AND COMPANY AND SUBSIDIARIES (Dollars in millions, except per-share data, and shares in thousands)																		ELI LILLY AND COMPANY AND SUBSIDIARIES (Dollars in millions, except per-share data, and shares in thousands)	Common Stock		Additional Paid-in Capital	Retained Earnings	Employee Benefit Trust	Accumulated Other Comprehensive Loss	Common Stock in Treasury	Noncontrolling Interest
																			Shares	Amount					Shares		Amount
Balance at January 1, 2021
Net income	Net income						3,232.0									3.7
Other comprehensive income (loss), net of tax											85.6					(2.0)
Cash dividends declared per share: $2.33							(2,372.0)
Other comprehensive income, net of tax
Cash dividends declared per share: $3.53
Cash dividends declared per share: $3.53
Cash dividends declared per share: $3.53
Retirement of treasury shares
Retirement of treasury shares
Retirement of treasury shares	Retirement of treasury shares	(45,882)	(28.7)				(4,122.0)						(45,882)	4,150.7
Purchase of treasury shares	Purchase of treasury shares												45,882	(4,150.7)
Purchase of treasury shares
Purchase of treasury shares
Issuance of stock under employee stock plans, net
Issuance of stock under employee stock plans, net
Issuance of stock under employee stock plans, net	Issuance of stock under employee stock plans, net	2,849	1.8		(139.0)								(60)	6.4
Stock-based compensation	Stock-based compensation				279.5
Adoption of new accounting standards (Note 1)							763.8				(105.2)
Sale of Elanco Stock (Note 19)					629.2						9.0					1,017.2
Other					(3.9)											(14.2)
Balance at December 31, 2018		1,057,639	661.0		6,583.6		11,395.9		(3,013.2)		(5,729.2)		604	(69.4)		1,080.4
Net income							8,318.4									37.7
Other comprehensive income (loss), net of tax											(794.4)					11.0
Cash dividends declared per share: $2.68							(2,430.5)
Retirement of treasury shares		(102,640)	(64.1)				(12,363.4)						(102,640)	12,427.5
Purchase of treasury shares													37,639	(4,400.0)
Issuance of stock under employee stock plans, net		3,057	1.9		(210.7)								(74)	8.6
Stock-based compensation	Stock-based compensation				312.4
Acquisition of common stock in exchange offer													65,001	(8,027.5)
Deconsolidation of Elanco																(1,028.9)
Other																(8.0)
Balance at December 31, 2019		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 comprehensive income, net of tax											27.2					0
Cash dividends declared per share: $3.07							(2,786.2)
Retirement of treasury shares		(3,627)	(2.3)				(497.7)						(3,627)	500.0
Purchase of treasury shares													3,627	(500.0)
Issuance of stock under employee stock plans, net		2,648	1.7		(212.7)								(43)	5.1
Stock-based compensation	Stock-based compensation				308.1

Other	Other				(2.2)											(35.2)
Balance at December 31, 2020		957,077	$	598.2	$	6,778.5	$	7,830.2	$	(3,013.2)	$	(6,496.4)	487	$	(55.7)	$	183.6

Other

Other
Balance at December 31, 2021
Net income (loss)
Other comprehensive income, net of tax
Cash dividends declared per share: $4.07
Cash dividends declared per share: $4.07
Cash dividends declared per share: $4.07
Retirement of treasury shares
Retirement of treasury shares
Retirement of treasury shares
Purchase of treasury shares
Purchase of treasury shares
Purchase of treasury shares
Issuance of stock under employee stock plans, net
Issuance of stock under employee stock plans, net
Issuance of stock under employee stock plans, net
Stock-based compensation
Stock-based compensation
Stock-based compensation

Other

Other

Other
Balance at December 31, 2022
Net income
Other comprehensive loss, net of tax
Cash dividends declared per share: $4.69
Cash dividends declared per share: $4.69
Cash dividends declared per share: $4.69
Retirement of treasury shares
Retirement of treasury shares
Retirement of treasury shares
Purchase of treasury shares
Purchase of treasury shares
Purchase of treasury shares
Issuance of stock under employee stock plans, net
Issuance of stock under employee stock plans, net
Issuance of stock under employee stock plans, net
Stock-based compensation
Stock-based compensation
Stock-based compensation

Other

Other

Other
Balance at December 31, 2023


Estimated Fair Value at December 27, 2023
Cash	$	302.7
Acquired IPR&D	196.0
Goodwill(1)	859.1

Other assets and liabilities, net	(19.3)
Acquisition date fair value of consideration transferred	1,338.5
Less:
Cash acquired	(302.7)
Cash paid, net of cash acquired	$	1,035.8


Estimated Fair Value at ~~February 15, 2019~~December 1, 2022
Cash	$	153.2
Acquired IPR&D(1)	$184.0		~~4,670.0~~
~~Finite-lived intangibles~~Goodwill(2)	~~980.0~~ 185.6
~~Deferred income taxes~~	~~(1,032.8)~~
Other assets and liabilities, - net	~~(26.4)~~24.5
Acquisition date fair value of consideration transferred	547.3
~~Total identifiable net assets~~Less:
Cash acquired	~~4,590.8~~ (153.2)
~~Goodwill~~Fair value of CVR liability(3)	~~2,326.9~~ (66.9)
~~Total consideration transferred -~~Cash paid, net of cash acquired	$	~~6,917.7~~327.2


Estimated Fair Value at January 22, 2021
Cash	$	90.5
Acquired IPR&D(1)	824.0
Goodwill(2)	126.8
Deferred tax liabilities	(106.0)
Other assets and liabilities, net	(31.5)
Acquisition date fair value of consideration transferred	903.8
Less:
Cash acquired	(90.5)
Fair value of CVR liability(3)	(65.9)
Cash paid, net of cash acquired	$	747.4


~~Product Family~~	~~Milestones~~ ~~(Deferred) Capitalized(1)~~
~~Trajenta(2)~~	$	~~446.4~~
~~Jardiance(3)~~	~~289.0~~
~~Basaglar~~	~~(250.0)~~


	U.S.						Outside U.S.
	2020		2019		2018		2020		2019		2018
Revenue—to unaffiliated customers:


Diabetes:
Trulicity®	$	3,835.9	$	3,155.2	$	2,515.8	$	1,232.2	$	972.7	$	683.3
Humalog® (1)	1,485.6		1,669.7		1,787.8		1,140.3		1,151.0		1,208.7
Humulin®	866.4		879.7		910.2		393.2		410.4		421.2
Jardiance (2)	620.8		565.9		400.2		533.0		378.3		258.1
Basaglar®	842.3		876.2		622.8		282.1		236.3		178.5
Trajenta (3)	95.6		224.8		224.2		263.0		365.8		350.5
Other Diabetes	162.5		158.0		146.0		81.5		88.1		112.2
Total Diabetes	7,909.1		7,529.5		6,607.0		3,925.3		3,602.6		3,212.5

Oncology:
Alimta®	1,265.3		1,219.5		1,131.0		1,064.7		896.4		1,001.9
Cyramza®	381.9		335.3		291.5		650.8		589.9		529.9
Verzenio®	618.2		454.8		248.5		294.4		124.9		6.6
Erbitux®	480.1		487.9		531.6		56.3		55.4		103.8
Other Oncology	46.6		111.0		200.6		461.0		339.3		215.1
Total Oncology	2,792.1		2,608.5		2,403.2		2,527.2		2,005.9		1,857.3

Immunology:
Taltz®	1,288.5		1,016.8		738.7		500.0		349.6		198.7
Olumiant®	63.8		42.2		6.7		575.0		384.7		195.9
Other Immunology	20.0		0		0		14.6		0		0
Total Immunology	1,372.3		1,059.0		745.4		1,089.6		734.3		394.6

Neuroscience:
Cymbalta®	42.1		49.6		54.3		725.6		675.8		653.7
Zyprexa®	46.1		41.0		36.2		360.5		377.6		435.1

Emgality®	325.9		154.9		4.9		37.0		7.7		0
Other Neuroscience	73.2		111.0		182.0		220.9		305.3		454.5
Total Neuroscience	487.3		356.5		277.4		1,344.0		1,366.4		1,543.3

Other:
Forteo®	510.3		645.5		757.9		536.0		759.1		817.7


	U.S.						Outside U.S.
	2023		2022		2021		2023		2022		2021



Diabetes and obesity:
Trulicity®	$	5,433.3	$	5,688.8	$	4,914.4	$	1,699.2	$	1,750.9	$	1,557.6
Mounjaro®	4,834.2		366.6		—		328.9		115.9		—
Jardiance(1)	1,600.4		1,194.5		807.3		1,144.2		871.5		683.5
Humalog® (2)	863.2		1,191.9		1,320.7		800.2		868.7		1,132.3
Humulin®	610.1		730.2		832.9		242.0		289.2		389.6
Basaglar® (3)	443.1		470.7		588.3		285.2		289.7		304.2
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
Total diabetes and obesity	14,780.8		9,911.1		8,719.3		4,886.8		4,553.7		4,468.8

Oncology:
Verzenio®	2,509.0		1,653.2		834.9		1,354.3		830.3		515.0
Cyramza®	402.3		351.4		358.1		572.4		620.0		674.8
Erbitux®	528.9		500.1		481.8		67.6		66.4		66.4
Tyvyt®	—		—		—		393.4		293.3		418.1
Alimta®	72.9		543.7		1,233.9		144.6		384.0		827.5
Other oncology	283.9		169.7		120.1		329.0		254.1		210.7
Total oncology	3,797.0		3,218.1		3,028.8		2,861.3		2,448.1		2,712.5

Immunology:
Taltz®	1,831.6		1,724.6		1,542.4		928.0		757.4		670.4
Olumiant® (4)	225.5		148.2		324.1		697.2		682.3		791.0
Other immunology	0.8		20.0		15.3		114.4		12.1		17.6
Total immunology	2,057.9		1,892.8		1,881.8		1,739.6		1,451.8		1,479.0

Neuroscience:
Zyprexa(5)	79.4		30.4		39.6		1,615.4		306.5		390.7
Emgality®	482.2		462.8		434.5		196.0		188.1		142.7
Other neuroscience	134.4		119.2		140.7		371.1		439.2		750.3
Total neuroscience	696.0		612.4		614.8		2,182.5		933.8		1,283.7

Other:


	Maturities by Period
	Total		Less Than 1 Year		1-5 Years		6-10 Years		More Than 10 Years
Fair value of debt securities	$	657.2	$	84.1	$	227.9	$	98.4	$	246.8


	2023		2022
Unrealized gross gains	$	3.4	$	0.6
Unrealized gross losses	37.9		49.2
Fair value of securities in an unrealized gain position	159.2		46.8
Fair value of securities in an unrealized loss position	452.0		568.7


					Fair Value Measurements Using
	Carrying Amount		Cost (1)		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
December 31, 2023
Cash equivalents(2)	$	1,088.4	$	1,088.4	$	1,079.3	$	9.1	$	—	$	1,088.4
Short-term investments:
U.S. government and agency securities	$	32.1	$	32.3	$	32.1	$	—	$	—	$	32.1
Corporate debt securities	52.0		52.1		—		52.0		—		52.0


Other securities	25.0		25.0		—		13.6		11.4		25.0

Short-term investments	$	109.1
Noncurrent investments:
U.S. government and agency securities	$	148.1	$	161.0	$	148.1	$	—	$	—	$	148.1
Corporate debt securities	214.3		226.6		—		214.3		—		214.3
Mortgage-backed securities	157.3		167.1		—		157.3		—		157.3
Asset-backed securities	53.5		54.4		—		53.5		—		53.5
Other securities	197.4		100.2		—		23.5		173.9		197.4
Marketable equity securities	711.3		493.2		711.3		—		—		711.3
Equity investments without readily determinable fair values(3)	608.0
Equity method investments(3)	962.3
Noncurrent investments	$	3,052.2

December 31, 2022
Cash equivalents(2)	$	657.4	$	657.4	$	650.4	$	7.0	$	—	$	657.4
Short-term investments:
U.S. government and agency securities	$	30.8	$	31.1	$	30.8	$	—	$	—	$	30.8
Corporate debt securities	53.4		53.5		—		53.4		—		53.4

Asset-backed securities	2.0		2.0		—		2.0		—		2.0
Other securities	58.6		58.6		—		39.1		19.5		58.6

Short-term investments	$	144.8
Noncurrent investments:
U.S. government and agency securities	$	146.4	$	163.2	$	146.4	$	—	$	—	$	146.4
Corporate debt securities	213.9		235.8		—		213.9		—		213.9
Mortgage-backed securities	149.2		161.5		—		149.2		—		149.2
Asset-backed securities	50.6		52.5		—		50.6		—		50.6
Other securities	398.6		34.5		—		311.0		87.6		398.6
Marketable equity securities	683.6		484.7		683.6		—		—		683.6
Equity investments without readily determinable fair values(3)	478.4
Equity method investments(3)	781.1
Noncurrent investments	$	2,901.8


					Fair Value Measurements Using
Description	Carrying Amount		Cost (1)		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
December 31, 2020
Cash equivalents	$	2,097.9	$	2,097.9	$	2,097.9	$	0	$	0	$	2,097.9
Short-term investments:
U.S. government and agency securities	$	9.9	$	9.9	$	9.9	$	0	$	0	$	9.9
Corporate debt securities	2.8		2.8		0		2.8		0		2.8
Asset-backed securities	1.2		1.2		0		1.2		0		1.2
Other securities	10.3		10.3		0		0		10.3		10.3

Short-term investments	$	24.2
Noncurrent investments:
U.S. government and agency securities	$	78.7	$	74.3	$	78.7	$	0	$	0	$	78.7
Corporate debt securities	137.0		126.8		0		137.0		0		137.0
Mortgage-backed securities	106.4		101.4		0		106.4		0		106.4
Asset-backed securities	24.3		23.7		0		24.3		0		24.3
Other securities	110.5		31.8		0		0		110.5		110.5
Marketable equity securities	1,664.2		311.6		1,664.2		0		0		1,664.2
Equity investments without readily determinable fair values(2)	373.9
Equity method investments(2)	471.8
Noncurrent investments	$	2,966.8

December 31, 2019
Cash equivalents	$	1,025.4	$	1,025.4	$	1,025.4	$	0	$	0	$	1,025.4
Short-term investments:
U.S. government and agency securities	$	7.2	$	7.2	$	7.2	$	0	$	0	$	7.2
Corporate debt securities	81.4		81.1		0		81.4		0		81.4
Asset-backed securities	2.6		2.6		0		2.6		0		2.6
Other securities	9.8		9.8		0		0		9.8		9.8

Short-term investments	$	101.0
Noncurrent investments:
U.S. government and agency securities	$	77.2	$	76.3	$	77.2	$	0	$	0	$	77.2
Corporate debt securities	271.1		267.8		0		271.1		0		271.1
Mortgage-backed securities	101.1		99.6		0		101.1		0		101.1
Asset-backed securities	30.0		29.6		0		30.0		0		30.0
Other securities	60.0		27.4		0		0		60.0		60.0
Marketable equity securities	718.6		254.4		718.6		0		0		718.6
Equity investments without readily determinable fair values(2)	405.0
Equity method investments(2)	299.4
Noncurrent investments	$	1,962.4


	2024		2025		2026		2027		2028
Estimated amortization expense	$	542.5	$	530.3	$	519.7	$	517.7	$	511.6



~~Year 1~~	$	~~150.9~~
~~Year 2~~	~~120.7~~
~~Year 3~~	~~94.1~~
~~Year 4~~	~~73.3~~
~~Year 5~~	~~63.4~~
~~After Year 5~~	~~258.7~~
~~Total lease payments~~	~~761.1~~
~~Less imputed interest~~	~~97.4~~
~~Total~~	$	~~663.7~~



2024	$	197.0
2025	180.2
2026	153.9
2027	138.2
2028	108.1
After 2028	614.7
Total lease payments	1,392.1
Less imputed interest	284.8
Total	$	1,107.4


(Percents)		2020		2019		2018
	2023										2023			2022			2021
Expected dividend yield	Expected dividend yield	2.50	%	2.50	%	2.50	%	Expected dividend yield	1.07	%		1.60	%		2.50	%
Risk-free interest rate	Risk-free interest rate	1.38		2.46		2.31
Volatility	Volatility	20.90		21.00		22.26


~~(Percents)~~	~~2020~~
~~Expected dividend yield~~	~~2.50~~	%
~~Risk-free interest rate~~	~~1.38~~
~~Volatility~~	~~19.89~~


	Total	Less than 1 Year	1-3 Years	3-5 Years
2017 Tax Act Toll Tax	$2,403.1	$253.7	$729.3	$1,420.1


	Defined Benefit Pension Plans				Retiree Health Benefit Plans
	2020		2019		2020		2019
Change in benefit obligation:
Benefit obligation at beginning of year	$	16,251.0	$	13,427.1	$	1,601.4	$	1,540.0
Service cost	325.5		250.4		40.8		36.3
Interest cost	425.8		486.0		43.7		58.0
Actuarial loss	1,563.1		2,631.7		142.1		54.3
Benefits paid	(587.2)		(584.2)		(75.1)		(87.3)

Curtailment (gain) loss	2.2		(16.8)		0		(0.5)
Foreign currency exchange rate changes and other adjustments	245.1		56.8		0.8		0.6
Benefit obligation at end of year	18,225.5		16,251.0		1,753.7		1,601.4


Change in plan assets:
Fair value of plan assets at beginning of year	12,858.0	10,932.6	2,768.2	2,398.1
Actual return on plan assets	1,802.4	2,012.0	539.0	444.1
Employer contribution	318.8	429.9	(5.1)	13.2
Benefits paid	(587.2)	(584.2)	(75.1)	(87.3)
Foreign currency exchange rate changes and other adjustments	187.0	67.7	0	0.1
Fair value of plan assets at end of year	14,579.0	12,858.0	3,227.0	2,768.2


Funded status	(3,646.5)		(3,393.0)		1,473.3		1,166.8
Unrecognized net actuarial (gain) loss	6,515.5		6,177.6		(349.1)		(111.6)
Unrecognized prior service (benefit) cost	15.4		17.4		(177.6)		(236.4)
Net amount recognized	$	2,884.4	$	2,802.0	$	946.6	$	818.8


				Fair Value Measurements Using
Asset Class	Asset Class	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Investments Valued at Net Asset Value(1)
Asset Class
Asset Class												Total	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Investments Valued at Net Asset Value(1)
Defined Benefit Pension Plans	Defined Benefit Pension Plans
Public equity securities:	Public equity securities:
Public equity securities:
Public equity securities:
U.S.
U.S.
U.S.	U.S.	$	737.6	$	476.1	$	0	$	1.0	$	260.5
International	International	2,635.8		1,102.3		0		0		1,533.5
Fixed income:	Fixed income:
Developed markets	Developed markets	4,301.3		2.9		3,179.2		0		1,119.2
Developed markets
Developed markets
Developed markets - repurchase agreements	Developed markets - repurchase agreements	(1,670.8)		0		(1,670.8)		0		0
Emerging markets	Emerging markets	631.0		14.2		262.7		0.1		354.0
Private alternative investments:	Private alternative investments:
Hedge funds
Hedge funds
Hedge funds	Hedge funds	2,661.3		0		0		0		2,661.3
Equity-like funds	Equity-like funds	2,844.7		0		0		16.9		2,827.8
Real estate	Real estate	558.9		259.6		6.9		5.8		286.6
Other	Other	1,879.2		60.4		301.2		18.0		1,499.6
Total	Total	$	14,579.0	$	1,915.5	$	2,079.2	$	41.8	$	10,542.5

Retiree Health Benefit Plans	Retiree Health Benefit Plans
Retiree Health Benefit Plans
Retiree Health Benefit Plans
Public equity securities:	Public equity securities:
Public equity securities:
Public equity securities:
U.S.
U.S.
U.S.	U.S.	$	68.3	$	45.0	$	0	$	0.1	$	23.2
International	International	162.3		58.1		0		0		104.2
Fixed income:	Fixed income:
Developed markets	Developed markets	101.5		0		80.3		0		21.2
Developed markets
Developed markets
Emerging markets	Emerging markets	53.5		0		24.7		0		28.8
Private alternative investments:	Private alternative investments:
Hedge funds
Hedge funds
Hedge funds	Hedge funds	229.7		0		0		0		229.7
Equity-like funds	Equity-like funds	223.4		0		0		1.6		221.8
Cash value of trust owned insurance contract	Cash value of trust owned insurance contract	2,204.6		0		2,204.6		0		0
Real estate	Real estate	25.8		24.5		0.7		0.6		0
Other	Other	157.9		14.1		21.1		1.7		121.0
Total	Total	$	3,227.0	$	141.7	$	2,331.4	$	4.0	$	749.9


	Continuing Operations
(Amounts presented net of taxes)	Foreign Currency Translation Gains (Losses)		Unrealized Net Gains (Losses) on Securities		Defined Benefit Pension and Retiree Health Benefit Plans		Effective Portion of Cash Flow Hedges		Discontinued Operations		Accumulated Other Comprehensive Loss
Beginning balance at January 1, 2018 (1)	$	(1,191.7)	$	113.5	$	(4,311.3)	$	(234.3)	$	(71.1)	$	(5,694.9)
Reclassification due to adoption of new accounting standard(2)	—		(128.9)		—		—		—		(128.9)
Other comprehensive income (loss) before reclassifications	(378.0)		24.5		250.7		(16.3)		12.2		(106.9)
Net amount reclassified from accumulated other comprehensive loss	0		(31.2)		207.9		11.7		2.1		190.5
Net other comprehensive income (loss)	(378.0)		(6.7)		458.6		(4.6)		14.3		83.6



Balance at December 31, 2018(3)	(1,569.7)		(22.1)		(3,852.7)		(238.9)		(56.8)		(5,740.2)


Other comprehensive income (loss) before reclassifications	(46.2)		28.9		(967.6)		14.5		(27.2)		(997.6)
Net amount reclassified from accumulated other comprehensive loss	(62.1)		(1.9)		181.7		12.5		84.0		214.2
Net other comprehensive income (loss)	(108.3)		27.0		(785.9)		27.0		56.8		(783.4)

Balance at December 31, 2019	(1,678.0)		4.9		(4,638.6)		(211.9)		0		(6,523.6)

Other comprehensive income (loss) before reclassifications	250.5		6.8		(379.7)		(133.8)		0		(256.2)
Net amount reclassified from accumulated other comprehensive loss	0		3.1		267.3		13.0		0		283.4
Net other comprehensive income (loss)	250.5		9.9		(112.4)		(120.8)		0		27.2

Ending balance at December 31, 2020	$	(1,427.5)	$	14.8	$	(4,751.0)	$	(332.7)	$	0	$	(6,496.4)



(Amounts presented net of taxes)	Foreign Currency Translation Gains (Losses)		Net Unrealized Gains (Losses) on Available-For-Sale Securities		Retirement Benefit Plans		Net Unrealized Gains (Losses) on Cash Flow Hedges		Accumulated Other Comprehensive Loss
Beginning balance at January 1, 2021	$	(1,427.5)	$	14.8	$	(4,751.0)	$	(332.7)	$	(6,496.4)

Other comprehensive income (loss) before reclassifications	(122.7)		(11.9)		1,823.4		106.6		1,795.4
Net amount reclassified from accumulated other comprehensive loss	—		0.8		344.0		13.1		357.9
Net other comprehensive income (loss)	(122.7)		(11.1)		2,167.4		119.7		2,153.3



Balance at December 31, 2021	(1,550.2)		3.7		(2,583.6)		(213.0)		(4,343.1)


Other comprehensive income (loss) before reclassifications	(324.4)		(52.2)		291.5		332.8		247.7
Net amount reclassified from accumulated other comprehensive loss	0.4		11.4		229.8		9.2		250.8
Net other comprehensive income (loss)	(324.0)		(40.8)		521.3		342.0		498.5

Balance at December 31, 2022	(1,874.2)		(37.1)		(2,062.3)		129.0		(3,844.6)

Other comprehensive income (loss) before reclassifications	78.9		10.1		(686.9)		79.7		(518.2)
Net amount reclassified from accumulated other comprehensive loss	(23.7)		0.8		51.9		6.8		35.8
Net other comprehensive income (loss)	55.2		10.9		(635.0)		86.5		(482.4)

Ending balance at December 31, 2023	$	(1,819.0)	$	(26.2)	$	(2,697.3)	$	215.5	$	(4,327.0)


Tax benefit (expense)	2020		2019		2018
Foreign currency translation gains/losses	$	128.3	$	(18.4)	$	51.6
Unrealized net gains/losses on securities	(4.3)		(7.4)		2.1
Defined benefit pension and retiree health benefit plans	44.8		184.1		(85.3)
Effective portion of cash flow hedges	32.1		(7.3)		1.3
Benefit/(provision) for income taxes allocated to other comprehensive income (loss) items	$	200.9	$	151.0	$	(30.3)


Details about Accumulated Other Comprehensive Loss Components		Year Ended December 31,						Affected Line Item in the Consolidated Statements of Operations
		2020		2019		2018
	Year Ended December 31,																				Year Ended December 31,							Affected Line Item in the Consolidated Statements of Operations
									2023					2022							2021
Amortization of retirement benefit items:	Amortization of retirement benefit items:
Prior service benefits, net
Prior service benefits, net
Prior service benefits, net	Prior service benefits, net	$	(55.0)	$	(56.8)	$	(74.9)	Other—net, (income) expense	$	(50.5)		$		$	(52.4)			$		$	(55.4)		Other—net, (income) expense	Other—net, (income) expense
Actuarial losses	Actuarial losses	393.3		286.8		338.6		Other—net, (income) expense	Actuarial losses		116.2		343.3				343.3		490.9					490.9		Other—net, (income) expense	Other—net, (income) expense
Total before tax	Total before tax	338.3		230.0		263.7
Tax benefit	Tax benefit	(71.0)		(48.3)		(55.8)		Income taxes
Tax benefit
Tax benefit											(13.8)					(61.1)						(91.5)			Income taxes
Net of tax	Net of tax	267.3		181.7		207.9

Other, net of tax	Other, net of tax	16.1		(51.5)		(19.5)		Other—net, (income) expense
Reclassifications from continuing operations (net of tax)		283.4		130.2		188.4
Reclassifications from discontinued operations (net of tax)		0		84.0		2.1		Net income from discontinued operations

Other, net of tax

Other, net of tax											(16.1)					21.0						13.9			Other—net, (income) expense
Total reclassifications for the period, net of tax	Total reclassifications for the period, net of tax	$	283.4	$	214.2	$	190.5


	2019		2018
Revenue from discontinued operations	$	580.0	$	3,062.4
Net income from discontinued operations	3,680.5		81.4