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									                                    2010 CORPORATE RESPONSIBILITY REPORT


We believe it is our corporate responsibility        2   MESSAGE FROM THE CEO             26 CONDUCTING OUR BUSINESS ETHICALLY
                                                                                             AND TRANSPARENTLY
                                                     3   2010 CORPORATE RESPONSIBILITY
to make a significant contribution to humanity.          HIGHLIGHTS                       41 SUPPORTING STRONG WORKPLACE PRACTICES

We do this by creating medicines that help           4   ABOUT LILLY                      53 ENGAGING WITH PATIENTS AND COMMUNITIES

people live longer, healthier, more active lives …
                                                     5   OUR APPROACH TO CORPORATE        63 FOSTERING ENVIRONMENTAL SUSTAINABILITY
                                                                                          87 ABOUT THIS REPORT
improving global health in the 21st century.         8   ENHANCING ACCESS TO MEDICINES
                                                                                          88 GLOBAL REPORTING INITIATIVE INDEX
                                                     16 DEVELOPING INNOVATIVE MEDICINES
                                                                                          102 UNITED NATIONS GLOBAL COMPACT INDEX
                                            MESSAGE FROM THE CEO

 2010 Corporate Responsibility Highlights


                                            For more than 135 years, Eli Lilly and          to medicines. And we’ll work to strengthen
ENHANCING ACCESS TO MEDICINES               Company has shown its commitment to             global policies that foster better health in
                                            be a responsible global citizen—in large        the most effective and efficient ways.
DEVELOPING INNOVATIVE MEDICINES             part, through a long history of philanthropic
                                                                                            Approaching corporate responsibility this
                                            contributions. Today, however, our under-
CONDUCTING OUR BUSINESS ETHICALLY                                                           way will help us realize our vision: To make
                                            standing of corporate responsibility is
AND TRANSPARENTLY                                                                           a significant contribution to humanity by
                                            evolving beyond charity and reaching into
                                                                                            improving global health in the 21st century.
                                            the core of our business operations.
PRACTICES                                                                                   Aligning our business with pressing social
                                            Lilly’s emerging vision of our responsibility
                                                                                            needs opens up new opportunities to provide
                                            as a company is inspired by the concept of
ENGAGING WITH PATIENTS AND                                                                  greater value to people around the world.
                                            “shared value,” developed by Michael Porter
                                            and Mark Kramer of Harvard. We believe          We believe that collaborating with govern-
                                            that business can help solve today’s social     ments and other stakeholders builds trust
SUSTAINABILITY                              problems by finding intersections between       and reinforces our mutual interest in bringing
                                            what society needs and what a company           value to patients and society. And we know
                                            does—and then developing collaborative,         that conducting our business responsibly          doing our best to help meet them—working
                                            strategic initiatives that both serve society   enables us to attract a principled, passionate,   in the areas where we believe we can make
GLOBAL REPORTING INITIATIVE INDEX           and enhance business performance.               and creative workforce—individuals who seek       the greatest impact. We remain commit-
                                                                                            to contribute their talents to our mission of     ted to building on our heritage of corporate
UNITED NATIONS GLOBAL COMPACT INDEX         Lilly’s greatest contribution in this regard                                                      responsibility based on an unwavering dedi-
                                                                                            improving global health.
                                            is to continue to discover and develop inno-                                                      cation to helping people around the world
                                            vative medicines, which we believe will be      Our commitment to corporate responsibil-          live longer, healthier, and more active lives.
                                            among the most powerful tools to improve        ity is also reflected in our ongoing support
                                            the quality and reduce the cost of health       for the United Nations Global Compact’s
                                            care going forward.                             10 principles related to human rights, labor,
                                                                                            the environment, and anti-corruption.
                                            We aim to put a special focus on improv-
                                                                                            Information on Lilly’s activities and perfor-
                                            ing the health of underserved people in
                                                                                            mance in each of these areas is included in       JOHN C. LECHLEITER, PH.D.
                                            low- and middle-income countries around
                                                                                            this report.                                      CHAIRMAN, PRESIDENT, AND
                                            the globe—specifically, by tackling several
                                                                                                                                              CHIEF EXECUTIVE OFFICER
                                            tenacious diseases that are growing rapidly     We will continue our efforts aimed at serv-
                                            in these parts of the world.                    ing our local communities and reducing our        NOVEMBER 2011
                                                                                            environmental footprint. Highlights of these
                                            We’ll do this not only by contributing
                                                                                            efforts can be found on the next page.
                                            money, but also by applying what we do
                                            best, drawing on our scientific, technical,     Thank you for taking time to review the 2010
                                            and business expertise. We’ll also work to      Corporate Responsibility Report. Our world
                                            improve health by helping expand access         today faces daunting challenges, and we are

    PAGE 2                                                                                                                                      LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                             2010 CORPORATE RESPONSIBILITY HIGHLIGHTS
• 2010 Corporate Responsibility Highlights
                                             Building on what our people do best—discovering, developing,
                                             and delivering new medicines that address important patient
OUR APPROACH TO CORPORATE                    needs—we’re focusing our skills and resources in ways that will
                                             most effectively help us achieve our vision of improving patient
ENHANCING ACCESS TO MEDICINES                outcomes. Highlights of our recent efforts include the following:
                                              Since 2003, contributed $135 million in cash,              Launched a partnership in 2011 to leverage our medi-             Committed to end
CONDUCTING OUR BUSINESS ETHICALLY             medicines, technology, and know-how to fight               cines and expertise to fight diabetes and other non-             hunger for 100,000
                                              multidrug-resistant tuberculosis (MDR-TB).                 communicable diseases (NCDs) in developing nations.              families globally by
                                                                                                                                                                          2020 through a part-
PRACTICES                                                                                                                                                                 nership with Heifer
                                                                                                                                                                          International and our
ENGAGING WITH PATIENTS AND                    Improved energy                 Provided help to 227,000                         Invested $2.5 million—our                  Elanco animal health
COMMUNITIES                                   efficiency by more              patients through our                             largest-ever education-focused             division.
                                              than 12 percent,                patient-assistance                               grant—in a new education-reform
FOSTERING ENVIRONMENTAL                       compared to 2007, and           programs.                                        campaign sponsored by The Mind
SUSTAINABILITY                                reduced corresponding                                                            Trust, an organization committed
                                              greenhouse gas (GHG)                                                             to improving public education for          Made approximately
ABOUT THIS REPORT                                                                                                                                                         $430 million in
                                              emissions by more                                                                underserved children.
                                              than 9 percent (both            Named for the first time to                                                                 charitable contribu-
                                              per square foot of              DiversityInc’s list of “Top 50                                                              tions, including cash
UNITED NATIONS GLOBAL COMPACT INDEX           facility space).1               Companies for Diversity.”                                                                   and products.
                                                                                                                               Decreased our water intake by
                                                                                                                               more than 30 percent compared
                                                                                                                               to 2007.
                                                                                                                                                                          Received a perfect
                                              Selected 200 Lilly employees to volunteer in countries where
                                                                                                                                                                          score of 100 on the
                                              people lack resources or access to quality health care.
                                                                                                                                                                          Human Rights Cam-
                                                                                                                               Reduced serious injury and lost-           paign’s “Best Places
                                                                                                                               time injury rates by 33 percent            to Work: Corporate
                                                                                                                               each from our 2007 baseline.               Equality Index.”
                                              Reduced our waste to            Launched a physician
                                              landfill by 50 percent          payment registry in 2011
                                              compared to 2007.               to help people better
                                                                              understand how we work                           Committed to donating more than 800,000 vials of insulin to
                                                                              with doctors to advance                          the International Diabetes Federation’s Life for a Child program
                                                                              research and education.                          between 2008 and 2013.
                                              Introduced a new tool
                                              for social networking
                                              within Lilly—“The Loop.”

                                                                           	 See	page 66	for	notes	regarding	our	environmental	data	and	goals.

     PAGE 3                                                                                                                                             LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                      ABOUT LILLY



                                      In 2011, Eli Lilly and Company celebrated its 135th anniversary.
DEVELOPING INNOVATIVE MEDICINES       Today, we are the 10th-largest pharmaceutical company in the
CONDUCTING OUR BUSINESS ETHICALLY     world. Lilly has a long history of medical innovation, most notably in
AND TRANSPARENTLY                     the treatment of infectious diseases, diabetes, and mental health.
                                      Around the globe, we have forged alliances     About Elanco
PRACTICES                                                                                                                                               FOUNDED IN
                                      and partnerships that advance our capac-

                                      ity to develop innovative medicines at lower   Elanco is a division of Lilly that researches,
COMMUNITIES                           costs for some of the world’s most urgent      develops, and markets products to improve
                                      medical needs. For additional information      animal health and protein production in
FOSTERING ENVIRONMENTAL               about our corporate history and significant    more than 75 countries. The company
SUSTAINABILITY                        medical breakthroughs, visit the “About        introduced the first product for veterinary
                                      Lilly” pages on                 use in 1953, and today offers more than 30
ABOUT THIS REPORT                                                                    products. Elanco employs more than 2,400
                                                                                     people worldwide, with offices in more
GLOBAL REPORTING INITIATIVE INDEX     Facts at a Glance                              than 40 countries. Its global headquarters
                                      (AS OF DECEMBER 31, 2010)                      is in Greenfield, Indiana, United States,
                                                                                     which is also the base of its U.S. business
                                      • Founded in 1876                              operations.                                               HEADQUARTERED IN INDIANAPOLIS,
                                                                                                                                                   INDIANA, UNITED STATES
                                      • Headquartered in Indianapolis,
                                                                                     Elanco products are marketed primarily to
                                        Indiana, United States
                                                                                     cattle, poultry, and swine producers and
                                      • More than 38,300 employees worldwide         concentrate on four therapeutic classes:
                                      • 7,300 employees engaged in research          antibacterials, parasiticides, anticoc-

                                        and development                              cidials, and productivity enhancers. Elanco

                                      • Research and development facilities          Companion Animal Health develops pet
                                        located in eight countries                   medicines and assists veterinarians in
                                                                                     helping companion animals lead longer,
                                      • Clinical research conducted in more          healthier lives.                                                 REVENUE IN 2010
                                        than 50 countries
                                      • Manufacturing plants located in
                                        13 countries
                                      • Products marketed in 125 countries
                                      • Revenue of $23 billion in 2010
                                      • Listed on the New York Stock Exchange
                                        with the symbol “LLY”
                                                                                                                                              NEW YORK STOCK EXCHANGE LISTING

    PAGE 4                                                                                                                            LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                      OUR APPROACH TO


                                      CORPORATE RESPONSIBILITY

• Key Issues for Lilly

 Key Performance Indicators


                                      KEY ISSUES FOR LILLY                                                                               CORPORATE RESPONSIBILITY
                                                                                                                                              GOALS FOR 2013
AND TRANSPARENTLY                     Lilly considers a variety of factors and stakeholder input to                                       (2007 baseline, unless stated otherwise)

                                      determine which issues are most relevant or important to our
                                      business and our corporate responsibility performance. These

                                      factors include: patient needs; conversations and interviews with
COMMUNITIES                           stakeholders; investor queries and feedback; business strategy
                                                                                                                                               REDUCTION IN SERIOUS INJURY,
                                      and risk assessment; public policy dialogue and legislative debate;                                      LOST TIME INJURY, AND MOTOR-

SUSTAINABILITY                        and employee interests.                                                                                    VEHICLE COLLISION RATES

ABOUT THIS REPORT                     We consider the following corporate          How Lilly Manages
                                      responsibility issues to be among the
                                      most important to our core business:         Corporate Responsibility
                                                                                                                                                    REDUCTION IN ENERGY
UNITED NATIONS GLOBAL COMPACT INDEX   • The development and production of          As a global company, Lilly governs corpo-
                                                                                                                                                  USE AND CORRESPONDING
                                        safe and effective medicines,              rate responsibility issues through our global                GREENHOUSE GAS EMISSIONS
                                                                                   corporate affairs leadership. The senior vice           (both per square foot of facilities space)4, 5
                                      • Upholding ethical standards in business
                                                                                   president of corporate affairs and com-
                                        practice, research and development,

                                                                                   munications (SVPCAC) reports directly to
                                        and marketing,
                                                                                   the chief executive officer and sits on the
                                      • Addressing issues of access to medicines   corporation’s executive committee, which
                                        and affordability,                         facilitates direct engagement with other                     REDUCTION IN WATER INTAKE,
                                      • Maintaining a diverse and engaged          senior Lilly executives on corporate respon-                    IN ABSOLUTE TERMS
                                        global workforce, and                      sibility priorities, actions, and outcomes.                        (2010 baseline)6

                                      • Minimizing environmental impacts           The SVPCAC also reports regularly to the

                                        and waste.                                 public policy and compliance committee of
                                                                                   the board of directors, providing a link to
                                                                                   the corporation’s highest governing body.
                                                                                   At the operational level, the senior director             REDUCTION IN WASTE TO LANDFILL,
                                                                                   of corporate responsibility (SDCR) reports                      IN ABSOLUTE TERMS
                                                                                   directly to the SVPCAC and also sits on the                        (2010 baseline)7

                                                                                   global corporate affairs leadership team.
                                                                                                                                                    See	footnotes	on	page 7.

      PAGE 5                                                                                                                       LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                                                                        KEY PERFORMANCE INDICATORS
                                      This operational framework allows for
                                                                                                                          GOAL              2007              2008         2009         2010     PERCENT
OUR APPROACH TO CORPORATE             cross-functional work on key global corpo-
RESPONSIBILITY                        rate responsibility issues. Environmental                                                                                                                 2009-2010
                                      issues are managed by Lilly’s health, safety,
 Key Issues for Lilly                 and environmental organization, which also        FINANCIAL HIGHLIGHTS
• Key Performance Indicators          reports to the company’s CEO.
                                                                                        Worldwide Revenue                        	 $	18,633.5 	 $	20,371.9 	 $	21,836.0 	 $	23,076.0                5.7%
                                      Both the SVPCAC and the SDCR play                 ($ millions)
                                      a critical role in engaging a range of
DEVELOPING INNOVATIVE MEDICINES       external stakeholders—including govern-               U.S. Revenue                         	 $	10,145.5 	 $	10,930.1 	 $	12,294.4 	 $	12,865.6                4.6%
                                      ment, nongovernment, and multi-sector
CONDUCTING OUR BUSINESS ETHICALLY     private entities—in dialogue on corpo-                Europe                               	 $	 4,731.8 	 $	 5,333.5 	 $	 5,227.2 	 $	 5,106.4               (2.3%)
AND TRANSPARENTLY                     rate responsibility issues. Lilly corporate
                                      responsibility staff at all levels coordinate
                                                                                            Other Foreign-                       	 $	 3,756.2 	 $	 4,108.3 	 $	 4,314.4 	 $	 5,104.0               18.3%
SUPPORTING STRONG WORKPLACE                                                                 Country Revenue
                                      with the corporate secretary, government
PRACTICES                             affairs, investor relations, and commu-           Stock Price                              	 $	     53.39 	 $	          40.27 	 $	   35.71 	 $	   35.04      (1.9%)
                                      nity relations departments to promote             ($ at year end)
                                      dialogue with key stakeholders. For more
                                      information on our approach to stake-             Dividend ($ per share)                   	 $	       1.70 	 $	          1.88 	 $	    1.96 	 $	    1.96          0%
FOSTERING ENVIRONMENTAL               holder dialogue, see page 31.
                                                                                        Research and Develop-                    	 $	 3,486.7 	 $	 3,840.9 	 $	 4,326.5 	 $	 4,884.2               12.9%
                                      Lilly continues to explore new ways of            ment ($ millions)
                                      gaining and sharing insights on a range of
                                      relevant responsibility issues. Recently, Lilly   WORKPLACE HIGHLIGHTS2
GLOBAL REPORTING INITIATIVE INDEX     launched an internal corporate responsibil-
                                      ity website that provides a dialogue venue        Serious Injury Rate              (50%)              1.44               1.17         0.91         0.95
                                      for employees wherever they work.                 (per 100 employees)
                                                                                        Lost-Time Injury Rate            (50%)              0.62               0.59         0.37         0.40
                                                                                        (per 100 employees)

                                                                                        Motor-Vehicle Collision (50%)                       11.1               12.0         11.2        10.48
                                                                                        Rate (collisions per
                                                                                        million miles driven)

                                                                                        PHILANTHROPY HIGHLIGHTS

                                                                                        Product and Other                           $        240     $         297    $     335    $     373
                                                                                        In-Kind Donations
                                                                                        ($ millions)

                                                                                        Cash Contributions                          $          75    $           53   $       70   $      57
                                                                                        ($ millions)

                                                                                        Total Contributions                         $        315     $         350    $     405    $     430
                                                                                        ($ millions)
                                                                                        	 2013	goal,	2007	baseline	for	all	three	workplace-related	metrics.

     PAGE 6                                                                                                                                                   LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                                                                                          KEY PERFORMANCE INDICATORS (cont’d)
                                                                                                                                    GOAL3         2007       2008        2009        2010    PERCENT
                                                                                                          ENVIRONMENTAL HIGHLIGHTS
 Key Issues for Lilly
                                                                                                          Energy Consumption                 12,900,000 11,900,000 11,300,000 11,200,000
• Key Performance Indicators
                                      	 Following	World	Resource	Institute	guidance,	progress	
                                      3                                                                   (million BTUs)
ENHANCING ACCESS TO MEDICINES           toward	environmental	goals	is	reported	on	an	adjusted	
                                        basis	accounting	for	mergers,	acquisitions,	and	dives-            Energy Intensity          (15%)4         593        562         543         520
                                        titures	as	appropriate,	to	ensure	comparability,	unless	          (thousand BTUs/
                                                                                                          square foot)
                                      	 2013	goal,	2007	baseline.	

CONDUCTING OUR BUSINESS ETHICALLY     	 2013	goal,	2007	baseline.	This	goal	covers	Lilly’s	Scope	1	

AND TRANSPARENTLY                                                                                         Greenhouse Gas                     1,810,000   1,740,000   1,670,000   1,620,000
                                        and	Scope	2	emissions.
                                      	 2013	goal,	2010	baseline.	Lilly	established	this	goal	after	

SUPPORTING STRONG WORKPLACE             meeting	its	prior	goal—to	reduce	water	intake	in	absolute	        (Scope 1 and Scope 2)
PRACTICES                               terms	by	25	percent	by	2013,	compared	to	2007—four	               (metric tons CO2e)
                                        years	early.	“Water	intake”	as	used	in	evaluating	our	prog-
                                        ress	toward	our	water-reduction	goal	is	the	total	amount	
ENGAGING WITH PATIENTS AND              of	water	coming	into	a	facility,	including	water	pumped	
                                                                                                          Greenhouse Gas            (15%)5        83.1        82.6        79.8        75.3
COMMUNITIES                             from	bodies	of	surface	water	and	groundwater,	and	water	          Emissions
                                        provided	by	a	utility.	It	includes	water	used	in	processes,	      Intensity (kg CO2e/
FOSTERING ENVIRONMENTAL                 utilities,	and	other	ancillary	operations,	such	as	irrigation.	
                                        The	term	does	not	include	groundwater	pumped	solely	for	          square foot)
SUSTAINABILITY                          treatment	to	satisfy	regulatory	actions	or	requirements	
                                        (e.g.,	remediation	activities	where	the	water	is	not	used	        Water Intake               (5%)6        19.6        17.6        13.2        13.3
ABOUT THIS REPORT                       for	another	purpose).	Values	also	do	not	include	the	water	       (billion liters)
                                        extracted	from	wells	solely	for	the	purpose	of	lowering	
                                        the	groundwater	table(s)	to	maintain	the	physical	and	
GLOBAL REPORTING INITIATIVE INDEX       structural	integrity	of	building	foundations.                     Water Intensity                         1.05      0.864       0.605       0.576
                                      	 2013	goal,	2010	baseline.	Lilly	established	this	goal	
                                      7                                                                   (million liters/
UNITED NATIONS GLOBAL COMPACT INDEX     after	meeting	its	prior	goal—to	reduce	waste	to	landfills	        million $ revenue)
                                        by	40	percent	in	absolute	terms	by	2013,	compared	
                                        to	2007—four	years	early.	Lilly’s	former	and	current	
                                        waste-to-landfill	goals	do	not	include	construction	and	
                                                                                                          Waste Generation                     379,000    387,000     287,000     228,000
                                        demolition	debris,	biosolids	from	wastewater	treat-               (metric tons)
                                        ment	plants,	incinerator	ash,	coal	ash	if	reused	for	mine	
                                        reclamation	or	road	base,	and	mycelia	and	urea	reused	            Waste Generation                        20.3        19.0        13.1        9.88
                                        for	fertilizer.	Unlike	our	energy,	GHG	emissions,	and	
                                        water-intake	goals,	performance	data	used	to	calculate	           Intensity (metric tons/
                                        progress	against	our	waste-to-landfill	goal	do	not	exclude	       million $ revenue)
                                        data	from	our	Tippecanoe	Laboratories	facility	in	Indiana,	
                                        U.S.A.,	which	Lilly	divested	in	2009,	because	the	data	at	
                                        that	site	did	not	have	a	significant	impact	on	our	world-
                                                                                                          Waste to Landfill         (20%)7      32,000     22,300      14,800      15,900
                                        wide	waste-to-landfill	total.	                                    (metric tons)
                                      	 “Reportable	permit-limit	exceedances”	are	environmental	

                                        releases	to	air,	water,	or	land	outside	of	regulatory	limits.	    Reportable Permit-                        43         27          16          11
                                        These	do	not	necessarily	result	in	harm	to	people	or	the	         Limit Exceedances8

     PAGE 7                                                                                                                                                  LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                                      ENHANCING ACCESS


                                                      TO MEDICINES


• Lilly’s Approach to Expanding Access to Medicines

 Public/Private Partnerships

 Differential Pricing
                                                      Health is one of our most important personal assets, and medicines
 Product Donations                                    play an essential role in preserving it. They can boost health by
                                                                                                                                                                                      $   135

DEVELOPING INNOVATIVE MEDICINES                       controlling symptoms and preventing subsequent illness, stopping
                                                      the progression of disease, and halting or lessening the severity
TRANSPARENTLY                                         of complications. In so doing, medicines help patients maintain                                                                AMOUNT PROVIDED IN CASH,
                                                                                                                                                                                MEDICINES AND TECHNOLOGY TO THE
                                                      a higher quality of life. Medicines also provide value to society by                                                     LILLY MDR-TB PARTNERSHIP, 2003-2011
PRACTICES                                             improving patient outcomes, reducing hospitalizations and the use
                                                      of other medical services, decreasing absenteeism, and increasing

COMMUNITIES                                           productivity and well-being.
FOSTERING ENVIRONMENTAL                               Yet around the world, millions lack access     BARRIERS TO HEALTH CARE FOR
SUSTAINABILITY                                        to comprehensive health care, includ-                                                                                     NUMBER OF PATIENTS HELPED BY LILLY
                                                                                                     LOW-INCOME POPULATIONS9CARE
                                                                                                            BARRIERS TO HEALTH                                                 PATIENT-ASSISTANCE PROGRAMS IN 2010
                                                      ing medicines and other treatment tools.                         FOR LOW-INCOME POPULATIONS
                                                      Poor disease outcomes—especially among
                                                      low-income populations—are shaped by                            PATIENT AWARENESS


                                                      a complex web of factors and therefore
UNITED NATIONS GLOBAL COMPACT INDEX                   require multifaceted solutions. This section
                                                      discusses Lilly’s approach.                                     SOCIAL STIGMA
                                                                                                                                                                                      MARKET VALUE OF LILLY
                                                                                                                                                                                  MEDICATIONS PROVIDED THROUGH

                                                      Lilly’s Approach to Expanding                                   GEOGRAPHICAL DISTANCE
                                                                                                                                                                               PATIENT-ASSISTANCE PROGRAMS IN 2010

                                                      Access to Medicines
                                                      Lilly is committed to expanding access to                       EFFECTIVE HEALTH CARE

                                                      medicines and health care, and we work                          DELIVERY SYSTEMS
                                                      with partners to improve health outcomes
                                                      for underserved populations. We recognize                        PRICE (COST OF CARE
                                                      that health care is about more than medi-                        & LOST WAGES)
                                                                                                                                                                                NUMBER OF VIALS OF INSULIN LILLY
                                                      cine. In fact, health care and outcomes that                                                                              WILL DONATE TO THE INTERNATIONAL
                                                      meet patients’ needs are the result of a                                                                                   DIABETES FEDERATION’S “LIFE FOR
                                                                                                                                                                                   A CHILD” PROGRAM, 2008-2013
                                                      complex coordination of health care tools,     9	
                                                                                                          Adapted	from	the	presentation:	Essential Medicines, Equity,
                                                                                                          and Human Rights: A Framework for Analysis and Action,	
                                                      health care professionals, supporting infra-        World	Health	Organization,	2007.	Available	at:	http://
                                                      structure, and appropriate measurement,   

     PAGE 8                                                                                                                                                             LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                                  evaluation, and regulatory capabilities. We      Lilly supports strong and effective protec-                            substitution occurs when a health care
                                                      take seriously our responsibility to popula-     tion of intellectual-property rights, including                        provider prescribes a branded medicine
ABOUT LILLY                                           tions in developing countries where ability to   patent protection and data protections for                             and the pharmacist is required or paid to
                                                      access affordable health care is dramatically    pharmaceutical products. Without this pro-                             substitute a generic version of a differ-
                                                      different than it is in developed countries.     tection, we would be unable to generate the                            ent medication.) Therapeutic substitution
                                                                                                       returns necessary to support the significant                           does not recognize the unique properties
                                                      No single organization can solve all of the
ENHANCING ACCESS TO MEDICINES                                                                          research and development costs to bring                                of medicines within a therapeutic class.
                                                      problems related to access to medicine.
                                                                                                       new drugs to market.                                                   The underlying assumption of therapeutic
                                                      Therefore, we focus our efforts where we
• Lilly’s Approach to Expanding Access to Medicines                                                                                                                           substitution is that the medicines under
                                                      believe we can have the greatest impact.            Generic Medications                                                 consideration are essentially the same. Yet
 Public/Private Partnerships                          Moving forward, our key area of focus will
                                                                                                       Once a patented medication has reached                                 even medicines within the same class work
                                                      be improving the health of people in need
 Differential Pricing                                                                                  the conclusion of its patent-protected                                 in different ways and have important differ-
                                                      around the globe—specifically, in low- and
                                                                                                       lifespan, Lilly supports the manufacture                               ences in side effects and effectiveness for
 Product Donations                                    middle-income countries. Increasingly, we
                                                                                                       and distribution of quality-assured generic                            each individual patient.
                                                      are aligning our initiatives with our core
DEVELOPING INNOVATIVE MEDICINES                       business areas of focus, where we have           medications. In many cases, Lilly’s own
                                                                                                                                                                                Patents in Least-Developed
                                                      experience and expertise.                        employee health care programs utilize
CONDUCTING OUR BUSINESS ETHICALLY AND                                                                  generic medications. While a generic
TRANSPARENTLY                                         We use multiple strategies to help increase      often may be appropriately substituted                                 In many developing countries, Lilly does
                                                      access to medicines, including investing         for the branded version of the same drug,                              not seek nor enforce patents for our
SUPPORTING STRONG WORKPLACE                           in public/private partnerships; supporting       Lilly does not support the therapeutic                                 medicines, to further contribute to mak-
PRACTICES                                             technology transfer to build manufactur-         substitution of generics for other medi-                               ing these medicines more accessible. For
                                                      ing capacity and technical know-how within       cations in the same class. (Therapeutic                                example, Lilly does not seek patents in
ENGAGING WITH PATIENTS AND                            developing countries; exploring differential
                                                      pricing for medicines; not enforcing intel-
                                                      lectual-property rights for Lilly medicines in   COUNTRIES WHERE LILLY DOES NOT SEEK PATENTS
SUSTAINABILITY                                        least-developed countries (LDCs) as defined
                                                      by the United Nations; and providing dona-
ABOUT THIS REPORT                                     tions of, and discounts on, Lilly products.
                                                      We also support programs that improve
GLOBAL REPORTING INITIATIVE INDEX                     patient outcomes, such as scholarships,
                                                      award recognitions, and tools for healthy
UNITED NATIONS GLOBAL COMPACT INDEX                   living. To learn more about our programs to
                                                      improve patient outcomes, see page 54.

                                                        Intellectual-Property Rights
                                                      The use of patents to protect intellectual
                                                      property and secure exclusive rights to
                                                      market a medicine is sometimes seen as a
                                                      factor that prevents access to medicines in
                                                      both the developed and developing world.
                                                      The patent system provides an essential
                                                      incentive for the investments needed to
                                                      obtain solutions to unmet medical needs.
                                                      The pharmaceutical industry is dependent         Afghanistan // Angola // Bangladesh // Benin // Bhutan // Burkina Faso // Burundi // Cambodia // Central African Republic // Chad //
                                                      upon this protection, which grants the           Comoros // Democratic Republic of the Congo // Djibouti // Equatorial Guinea // Eritrea // Ethiopia // Gambia // Guinea //
                                                                                                       Guinea-Bissau // Haiti // Kiribati // Laos // Lesotho // Liberia // Madagascar // Malawi // Maldives // Mali // Mauritania // Mozambique //
                                                      inventor of a new product an exclusive,          Myanmar // Nepal // Niger // Rwanda // Samoa // São Tomé and Príncipe // Senegal // Sierra Leone // Solomon Islands // Somalia //
                                                      yet limited, period to market the product.       Sudan // Tanzania // Timor-Leste // Togo // Tuvalu // Uganda // Vanuatu // Yemen // Zambia

     PAGE 9                                                                                                                                                                      LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                                 LDCs, as defined by the United Nations. As     with leading global health organizations.        focusing resources on NCD treatment and
                                                     a result, generics manufacturers are free      Specifically, the campaign employs a novel       prevention; however, they do not currently
ABOUT LILLY                                          to produce and provide generic versions of     approach that immediately benefits health        have tools and models to provide care. For
                                                     our medicines in these countries.              care providers and patients and, in parallel,    these reasons, NCDs are one of the main
                                                                                                    assesses program outcomes. The cam-              areas where we are focusing our expertise
                                                                                                    paign’s operational framework includes           and resources.
                                                     Public/Private Partnerships                    three components which Lilly will imple-
                                                     There are sizable challenges as we work to     ment with its partners:                            The Lilly NCD Partnership
 Lilly’s Approach to Expanding Access to Medicines   improve the health and well-being of those     • RESEARCH: Pilot new, comprehensive             In September 2011 we announced The Lilly
                                                     in our immediate communities and around          models of health care based on sophisti-       NCD Partnership. This program will enable
• Public/Private Partnerships
                                                     the world. Removing barriers to access           cated research and detailed data collection.   us to apply our capabilities and resources—
 Differential Pricing                                requires the collaboration, expertise, and                                                      along with those of our partners—in novel
                                                                                                    • REPORT: Work with well-respected part-
                                                     resources of many, including the pharma-                                                        ways to help increase access to health care
 Product Donations                                                                                    ners to share data and lessons learned.
                                                     ceutical industry. We believe public/private                                                    and improve individual patient outcomes. The
                                                     partnerships can play an important role.       • ADVOCATE: Inform key stakeholders about        partnership will focus on diabetes initially.
                                                                                                      program findings and encourage the adop-
CONDUCTING OUR BUSINESS ETHICALLY AND                  The Lilly Global Health Innovation             tion of proven, cost-effective solutions.        Our Focus on Tuberculosis
TRANSPARENTLY                                        Campaign
                                                                                                      Our Focus on Non-Communicable                  Tuberculosis (TB), often thought of as a
                                                     In 2011, we launched a new platform, The       Diseases (NCDs)                                  disease of the past, continues to plague
                                                     Lilly Global Health Innovation Campaign,                                                        the world’s most vulnerable populations.
                                                     aimed at improving health for underserved      Non-communicable diseases such as dia-           A curable disease, it claims the lives of
                                                     populations. The campaign encompasses          betes, cancer, and heart disease are placing     1.7 million people each year, according to
COMMUNITIES                                          two of Lilly’s signature programs, The Lilly   an increasing burden on patients, health         the WHO. And 98 percent of those deaths
                                                     NCD Partnership and The Lilly MDR-TB           care systems, and economies, not only in         occur in the developing world, accord-
FOSTERING ENVIRONMENTAL                              Partnership.                                   developed countries but also in middle- and      ing to the U.S. Agency for International
SUSTAINABILITY                                                                                      low-income countries. According to the           Development. More than 2 billion people,
                                                     The Lilly Global Health Innovation Campaign    World Health Organization (WHO), NCDs            or one-third of the world’s population, are
ABOUT THIS REPORT                                    will advance treatment capabilities and        account for 63 percent of global deaths          infected with the microbes that cause TB.
                                                     improve outcomes through partnerships          worldwide, or 36 million annually. Nearly        Of those infected, one in 10 will become
GLOBAL REPORTING INITIATIVE INDEX                                                                   80 percent of those occur in low- to middle-     sick with active TB.
                                                                                                    income countries; and sadly, almost half
UNITED NATIONS GLOBAL COMPACT INDEX                                                                                                                  The most popular vaccine used to treat
                                                     JANE NELSON                                    of these deaths are premature, occurring
                                                                                                    before age 70. NCDs are a major cause of         TB was developed in the early 20th century
                                                     DIRECTOR, CORPORATE SOCIAL RESPONSIBILITY                                                       using a bovine strain of the disease. Despite
                                                                                                    economic hardship and poverty and a bar-
                                                     INITIATIVE, HARVARD KENNEDY SCHOOL
                                                                                                                                                     widespread use, the vaccine does not

                                                                                                    rier to social and economic development.
                                                                                                                                                     always work. It has been shown to protect
                                                     Businesses are increasingly under pres-        Despite these statistics, the Center for         against severe TB in children, but there is
                                                     sure to rebuild trust, meet rising social      Global Development reports that, from            little evidence of effectiveness in adults.
                                                     expectations, and access emerging              2001 to 2008, spending on NCDs in devel-         Furthermore, it can create a false-positive
                                                     markets. Companies that can leverage           oping countries was less than 3 percent of       TB test in those who have been vaccinated.
                                                     their core business competencies to            all global health assistance ($503 million
                                                     find creative strategies that address          out of $22 billion). Moreover, few success-      To cure TB requires a regimen of several
                                                     social problems have the opportunity to        ful models of treatment and care for NCDs        medicines that must be taken daily for six
                                                     gain competitive advantage in this new         currently exist in the developing world—         to nine months. But many patients fail to
                                                     marketplace. I applaud Lilly’s efforts in      particularly in low-income communities.          complete the treatment, or medication is

                                                     this direction.                                Governments in developing countries              incorrectly prescribed, which can lead to
                                                                                                    increasingly see the importance of               multidrug-resistant tuberculosis (MDR-TB).

     PAGE 10                                                                                                                                           LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                                                                                these drugs would be insufficient to meet      Working alongside international organiza-
                                                                                                    future global treatment needs. To address      tions, in-country TB programs, and local
ABOUT LILLY                                              MARK KRAMER
                                                                                                    this gap, as Lilly set about significantly     nongovernmental organizations (NGOs), The
                                                     FOUNDER AND MANAGING DIRECTOR, FSG, AND        expanding our own manufacturing capacity,      Lilly MDR-TB Partnership has worked to:
                                                                                                    we also set out to establish partnerships
RESPONSIBILITY                                       BILITY INITIATIVE, HARVARD KENNEDY SCHOOL                                                     • Promote community support and patient
                                                                                                    that would transfer our technology to local

ENHANCING ACCESS TO MEDICINES                                                                       manufacturers in countries hit hard by the
                                                     Through the new Lilly NCD Partnership,                                                        • Implement MDR-TB care and training
                                                                                                    disease. Ultimately, this work evolved into
                                                     Lilly is making a major move toward the                                                         programs and strengthen surveillance of
 Lilly’s Approach to Expanding Access to Medicines                                                  The Lilly MDR-TB Partnership, with a main
                                                     concept of creating ‘shared value.’ By                                                          drug resistance,
                                                                                                    focus on increasing capability and capacity
• Public/Private Partnerships                        investing in the health care infrastruc-       in affected countries and ensuring a sus-      • Transfer Lilly drug manufacturing tech-
                                                     ture of countries that have the highest        tainable supply of quality-assured drugs.
 Differential Pricing                                                                                                                                nology to local pharmaceutical companies,
                                                     burden of diabetes, they are leveraging                                                         and supply medicines at concessionary
 Product Donations                                   their assets and expertise to both drive                                                        prices until local companies were qualified
                                                     business results and improve public                                                             and approved to do so,
DEVELOPING INNOVATIVE MEDICINES                      health. Only the private sector, work-
                                                                                                                                                   • Facilitate research for new drug discovery,
                                                     ing in smart concert with governments
CONDUCTING OUR BUSINESS ETHICALLY AND                                                                                                                and
                                                     and health care actors, can achieve the
                                                     scale necessary to solve such emerging                                                        • Collaborate with policymakers to raise

                                                     global health problems.                                                                         awareness and prevent the spread of
                                                                                                      The Lilly MDR-TB Partnership                   MDR-TB.
                                                                                                    The Lilly MDR-TB Partnership was created       In 2010, the International Chamber of
ENGAGING WITH PATIENTS AND                                                                                                                         Commerce recognized The Lilly MDR-TB
                                                                                                    in 2003 to confront a disease so daunting
COMMUNITIES                                          When that happens, a new treatment regi-
                                                                                                    that no single organization could fight it     Partnership with a World Business and
                                                     men requiring intensive monitoring and                                                        Development Award as an example of
FOSTERING ENVIRONMENTAL                                                                             alone. This public/private initiative offers
                                                     complex treatment plans over 18 to 24                                                         an innovative, business-driven solution
SUSTAINABILITY                                                                                      education, training, and improved care to
                                                     months must be undertaken.                                                                    addressing the United Nations’ Millennium
                                                                                                    people worldwide who have fallen victim to
ABOUT THIS REPORT                                    In 1996, the nonprofit organization Partners   deadly multidrug-resistant TB. Working in      Development Goals (MDGs). Endorsed by
                                                     in Health (PIH) began pioneering work in       more than 80 nations and with more than 20     189 countries, the MDGs include eight goals
GLOBAL REPORTING INITIATIVE INDEX                    an impoverished district on the outskirts of   partners, The Lilly MDR-TB Partnership has
                                                     Lima, Peru. This work demonstrated that        trained doctors and nurses to recognize,
                                                     cure rates of more than 80 percent could be    treat, monitor, and prevent the spread of
                                                     achieved for patients with MDR-TB using        multidrug-resistant TB. These health care
                                                     several drugs, including two Lilly antibiot-   professionals have raised awareness to           MULTIDRUG-RESISTANT
                                                     ics that the company had planned to stop       reduce the stigma of the disease, promoted       TUBERCULOSIS
                                                     manufacturing. These outcomes opened           prevention, researched drugs to improve
                                                     the door for treatment in resource-poor set-   treatment, and advocated for some of the         According to the WHO, there are almost
                                                     tings where MDR-TB had previously gone         world’s most vulnerable populations.             9.4 million new cases of TB every year, of which
                                                     untreated. Realizing these antibiotics were                                                     approximately half a million are multidrug
                                                                                                    When the partnership began its work in           resistant. MDR-TB is highly contagious, and
                                                     an important part of the two-year treatment
                                                                                                    2003, the WHO set a goal of treating 20,000      can be easily transmitted through the air. In
                                                     regimen, Lilly decided to offer them, in
                                                                                                    MDR-TB patients by 2010—a goal achieved          2008, the WHO reported the highest rates of
                                                     partnership with the WHO and the Centers
                                                                                                    ahead of schedule. We’re working now as          MDR-TB ever recorded, with some locations
                                                     for Disease Control, at steep discounts to
                                                                                                    part of an overall effort to meet a new tar-     in the former Soviet Union reporting up to
                                                     countries facing outbreaks of the resistant
                                                                                                    get: treating a cumulative 800,000 MDR-TB        22 percent of all new TB cases to be MDR-TB.
                                                     strains. However, Lilly also realized that
                                                                                                    patients by 2015.
                                                     the company’s capacity to manufacture

     PAGE 11                                                                                                                                         LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                                 that promote the reduction of poverty, bet-                                                           multidrug-resistant tuberculosis. Funding
                                                     ter education, improved maternal health,                                                              will begin in 2012 and conclude in 2016.
ABOUT LILLY                                          gender equality, the lessening of child                                                               Over the next five years, the Lilly Foun-
                                                                                                      LILLY TECHNOLOGY TRANSFER
                                                     mortality, and the eradication of infectious                                                          dation will support its partners to help
OUR APPROACH TO CORPORATE                                                                             FOR MDR-TB TREATMENT
                                                     diseases, including TB.                                                                               ensure they are well positioned to carry
                                                                                                      In addition to providing lifesaving medication,      on this important work.
                                                     Additional information about The Lilly
ENHANCING ACCESS TO MEDICINES                        MDR-TB Partnership is available at www.          The Lilly MDR-TB Partnership has worked to           Since inception, the Partnership has made
                                                                            transfer technology so medicines can be pro-         tremendous strides. We’ve also learned
 Lilly’s Approach to Expanding Access to Medicines                                                    duced locally, where they are needed, building       along the way; importantly, we’ve learned
                                                                                                      local economic benefits and health care system       that we need to focus our efforts in a more
• Public/Private Partnerships
                                                     THE LILLY MDR-TB PARTNERSHIP INVESTMENT          capacity by training local doctors and nurses to     concentrated way on areas where we can
 Differential Pricing                                                                                 treat the disease. Because the Lilly drugs used to   have the deepest impact, and the great-
                                                     Between 2003-2011, Lilly provided $135           treat MDR-TB can be difficult to manufacture
 Product Donations                                                                                                                                         est chance of finding new approaches that
                                                     million in cash, medicines, and technology:      and require specialized equipment and facilities,    can be replicated elsewhere. Our primary
DEVELOPING INNOVATIVE MEDICINES                                                                       Lilly identified capable manufacturers in high-      aim is to ensure all activities the Partner-
                                                     $15M to The Lilly TB Drug Discovery
                                                                                                      burden countries—China, India, Russia, and           ship engages in over the next five years are
CONDUCTING OUR BUSINESS ETHICALLY AND                                                                 South Africa—and offered them, free of charge,       sustainable and replicable. The Partnership
TRANSPARENTLY                                                                                         access to know-how and technical support so
                                                     $50M for advocacy activities, com-
                                                          munity support and health care              they could manufacture the needed drugs on
                                                                                                                                                           will identify, document, and advocate for the
                                                                                                                                                           replication and scale-up of best practices
SUPPORTING STRONG WORKPLACE                                     provider training, and                their own. In addition, Lilly identified and         that have the support of strong global and
PRACTICES                                                                                             worked with companies in the United States           local organizations to continue this work
ENGAGING WITH PATIENTS AND                           $70M for the transfer of MDR-TB
                                                          drug manufacturing technology
                                                                                                      and Greece to provide additional capacity and
                                                                                                      assure supply of these products to global markets.
                                                                                                                                                           once the Lilly Foundation’s support ends.
COMMUNITIES                                                                                                                                                The work in the final phase of the Partnership
                                                                to generic producers in high-         Lilly also provided funding where necessary to
                                                                burden countries.                     support the conversion or upgrading of local         will be regionally and topically focused to:
SUSTAINABILITY                                                                                        manufacturing facilities to meet international       • Provide training for health care providers,
                                                                                                      quality standards.                                     from professional health care workers
                                                       Lessons Learned and Challenges
                                                                                                                                                             such as nurses and doctors, to informal
                                                     Tackling MDR-TB has proven challenging.                                                                 caregivers such as community volunteers,
GLOBAL REPORTING INITIATIVE INDEX                    Less than one percent of estimated MDR-
                                                                                                    donated $135 million in cash, medicines,               • Improve supply and access to safe,
                                                     TB patients globally receive appropriate
UNITED NATIONS GLOBAL COMPACT INDEX                                                                 and support to our distinguished partners                effective, and high-quality drugs to treat
                                                     treatment. Over the past eight years, Lilly
                                                                                                    for much-needed programs and to compa-                   MDR-TB,
                                                     has learned a lot about the myriad obsta-
                                                                                                    nies that will make lifesaving medicines.
                                                     cles blocking patient access to diagnosis                                                             • Continue Lilly’s commitment to finding
                                                                                                    But billions of dollars are needed. Success
                                                     and treatment. The strategy of transferring                                                             new medicines to treat TB quicker and
                                                                                                    depends on a sustained, joint commitment
                                                     technology has proved especially timely, as                                                             more effectively, with a grant of nearly
                                                                                                    by governments, NGOs, and businesses to
                                                     we realize now that the need for medicines                                                              $5 million plus volunteer support of more
                                                                                                    bring an end to this disease.
                                                     is much greater than anyone imagined                                                                    than $1 million over several years made
                                                     when we first began.                                                                                    to the Infectious Disease Research
                                                                                                      Moving Forward
                                                     Removing barriers will take a focused,                                                                  Institute (IDRI), and
                                                                                                    In the coming years, the Eli Lilly and
                                                     coordinated effort by everyone committed                                                              • Work with partners at the global and local
                                                                                                    Company Foundation will assume funding
                                                     to stamping out TB. When we launched The                                                                level, with a specific focus on partners in
                                                                                                    responsibility for The Lilly MDR-TB Part-
                                                     Lilly MDR-TB Partnership in 2003, it was the                                                            the four countries carrying the highest
                                                                                                    nership. The Lilly Foundation has made a
                                                     largest philanthropic effort ever undertaken                                                            burden of MDR-TB: China, India, Russia
                                                                                                    commitment of $30 million over five years
                                                     by the company. Through 2011, Lilly has                                                                 and South Africa.
                                                                                                    to extend the Partnership’s efforts to fight

     PAGE 12                                                                                                                                                 LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                                                                                      from a research facility in Seattle, Wash-                   Lilly donated $15 million to launch the effort
                                                                                                          ington, and operates in partnership with                     and has opened our library of more than
ABOUT LILLY                                                                                               the Infectious Disease Research Institute,                   500,000 existing molecular compounds to
                                                                                                          Merck and Company, and the National                          test for possible TB treatments, including
                                                        The Lilly TB Drug Discovery                       Institute of Allergy and Infectious Diseases,                more effective treatments for drug-resistant
                                                     Initiative                                           which is part of the U.S. National Institutes                strains. In 2008, the initiative announced its
ENHANCING ACCESS TO MEDICINES                                                                             of Health. Bringing together specialists                     first acquisition of compounds for further
                                                     The battle against TB requires new, faster-
                                                                                                          from around the world for the systematic                     development into drug candidates.
                                                     acting medicines at affordable prices. The
 Lilly’s Approach to Expanding Access to Medicines                                                        exploration of vast, private molecular librar-
                                                     Lilly TB Drug Discovery Initiative, launched
                                                                                                          ies, the initiative has a primary goal of filling
 Public/Private Partnerships                         in June 2007, is a nonprofit public/private
                                                                                                          the pipeline with new clinical candidates for                Differential Pricing
                                                     partnership focused on accelerating early-
• Differential Pricing                                                                                    future TB drug development.                                  Lilly believes providing financial incen-
                                                     stage TB drug discovery. The initiative is run
                                                                                                                                                                       tives for pharmaceutical innovation is in
 Product Donations
                                                                                                                                                                       everyone’s interest. Our ability to improve
DEVELOPING INNOVATIVE MEDICINES                      THE LILLY MDR-TB PARTNERSHIP ACHIEVEMENTS: 2003-201110                                                            outcomes for individual patients depends
                                                                                                                                                                       on our discovering, developing, and
                                                               DRUG SUPPLY AND ACCESS                            TRAINING FOR HEALTH CARE PROVIDERS                    commercializing innovative new pharma-
TRANSPARENTLY                                                                                                                                                          ceutical products. The profits we generate
                                                      • Technology transfer successfully completed             • More than 21,000 nurses in 15 countries
                                                        for two Lilly drugs to seven manufacturing               directly trained in patient care and infection        enable us to invest in the research neces-
SUPPORTING STRONG WORKPLACE                             companies across the globe                               control                                               sary to bring the next generation of new
PRACTICES                                                                                                                                                              medicines to the market.
                                                      • Donated or steeply discounted Lilly medicines          • More than 100,000 nurses reached indirectly
                                                        reached more than 40,000 MDR-TB patients                 through secondary training
ENGAGING WITH PATIENTS AND                                                                                                                                             Lilly advocates for policies that support
COMMUNITIES                                           • More than doubled capacity for one MDR-TB              • Toolkits to help identify, diagnose and treat         differential pricing—i.e., the charging of
                                                        drug and significantly expanded production               TB and MDR-TB distributed to more than
                                                                                                                                                                       different prices based on a purchaser’s
FOSTERING ENVIRONMENTAL                                 of another through partnership with local                200,000 health care professionals in more
                                                        manufacturers                                            than 45,000 hospitals and clinics
                                                                                                                                                                       ability to pay. Currently, many countries
SUSTAINABILITY                                                                                                                                                         reference the price of medicines in other
                                                                                                                                                                       countries as a basis for setting prices for
                                                               ADVOCACY AND AWARENESS                                   AWARDS AND RECOGNITION                         new drugs. This practice limits differential
GLOBAL REPORTING INITIATIVE INDEX                                                                                                                                      pricing because a discounted price in a
                                                      • Trained more than 350 journalists trained about        • Committee Encouraging Corporate Phi-
                                                                                                                                                                       lower-income country can be referenced
                                                        TB and MDR-TB, to enable them to report more             lanthropy Excellence Award in Corporate
UNITED NATIONS GLOBAL COMPACT INDEX                     accurately and frequently on the disease                 Philanthropy, 2009
                                                                                                                                                                       by a higher-income country. Entering into
                                                                                                                                                                       commercial contracts with payers can
                                                      • Raised awareness of TB for approximately               • Global Business Coalition Award for Excellence
                                                        45,000 school-aged children, through a                   in Business Action, 2007 and 2010
                                                                                                                                                                       support the increased use of differential
                                                        number of education campaigns, including a                                                                     pricing, if those contracts are private and
                                                                                                               • International Chamber of Commerce and
                                                        soccer-themed game                                       United Nations Development Programme, 2010
                                                      • Reached 15.2 million commuters through an                World Business and Development Award
                                                        awareness campaign in South African public
                                                        transport                                                                                                          INTERNATIONAL FEDERATION OF RED
                                                                                                                                                                           CROSS AND RED CRESCENT SOCIETIES

                                                      • Reached 6 million radio listeners and 3 million
                                                        cell phone users in awareness campaign in
                                                        India                                                                                                          Because of Lilly, the International Fed-
                                                      • Reached 3 million university students in
                                                                                                                                                                       eration of Red Cross and Red Crescent
                                                        awareness campaign in China                                                                                    Societies is able to place TB on the
                                                      • Reached 50,000 people in Russia through the                                                                    agenda at the global level. If not for
                                                        White Flower of Hope campaign, an initiative                                                                   this support, this work on multidrug-

                                                        that engaged young people to make paper flow-      	Indicators	are	approximations	based	on	available	data	
                                                                                                                                                                       resistant TB would go unfunded.
                                                        ers to show their commitment to fighting TB         and	do	not	represent	the	sum	total	of	the	Partnership’s	

      PAGE 13                                                                                                                                                               LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                                 LILLY MDR-TB PARTNERSHIPS11



 Lilly’s Approach to Expanding Access to Medicines

 Public/Private Partnerships                                                                                                                                        Estonia
                                                                                          Canada                                                                    Latvia
                                                                                                                                 United Kingdom
 Differential Pricing                                                                                                                      Belgium
                                                                                                                                                           Germany Ukraine
                                                                                                                                                                       Moldova            Kazakhstan            Mongolia
                                                                                                                                              France               Romania        Azerbaijan
• Product Donations                                                                                                                         Switzerland         Bosnia &      Abkhazia        Uzbekistan
                                                                                                    United States                          Spain Italy          Herzegovina         Georgia Kyrgyzstan
                                                                                                                                       Portugal          Greece       Turkey    Armenia                                     South Korea
                                                                                                                                                       Malta               Lebanon          Tajikistan
DEVELOPING INNOVATIVE MEDICINES                                                                                                                   Tunisia      Israel
                                                                                                                                                                             Syria                                China       Japan
                                                                                                                                                              Jordan                   Pakistan     Nepal
                                                                                                   Mexico                                                    Egypt                                    Bangladesh
CONDUCTING OUR BUSINESS ETHICALLY AND                                                                          Dominican Republic Senegal                                                                   Thailand
                                                                                              Honduras          Haiti                                 Burkina Faso                                  India     Vietnam
TRANSPARENTLY                                                                             El Salvador                           Guinea-Bissau     Ghana Nigeria                                 Cambodia                 Philippines
                                                                                             Costa Rica                                Guinea                               Ethiopia
                                                            Community Support                                                                         Benin               Uganda
                                                            & Patient Advocacy                                                                                               Kenya
SUPPORTING STRONG WORKPLACE                                                                                   Ecuador                                   Congo         Rwanda                                   Indonesia
                                                            Treatment, Training                                                                                           Tanzania
PRACTICES                                                   & Surveillance                                      Peru          Brazil                                       Malawi                                        East Timor
                                                            Transferring Technology                                   Bolivia                     Namibia          Botswana
ENGAGING WITH PATIENTS AND                                                                                              Paraguay
                                                            Research                                                                                                   Swaziland
COMMUNITIES                                                                                                                                                           Lesotho
                                                            Awareness & Prevention                                         Uruguay                                   South Africa
FOSTERING ENVIRONMENTAL                              11
                                                          Except for transferring of technology,
SUSTAINABILITY                                            all activities are implemented directly
                                                          by Lilly MDR-TB partners through
                                                          unrestricted grants

GLOBAL REPORTING INITIATIVE INDEX                    the discounted price cannot be referenced.                            developed and emerging markets. Pricing is                          In times of disaster, we donate medicines
                                                     Lilly also supports efforts to decrease                               one way pharmaceutical companies, includ-                           to those in need. To learn more about Lilly
                                                     the final price of medicine to patients,                              ing Lilly, can enhance access to medicines.                         disaster relief efforts, see page 59.
                                                     such as through minimizing value-added                                Lilly believes differential pricing can help
                                                     taxes and markups applied in the supply                               balance the desire to have affordable prices                            Lilly TruAssist
                                                     chain. Finally, Lilly advocates for stronger                          for low-income populations with rewards                             In the United States, approximately 50 mil-
                                                     anti-counterfeiting protections, to ensure                            for innovation.                                                     lion people were without health insurance in
                                                     patients receive quality-assured medicines.                                                                                               2010, according to the U.S. Census Bureau,
                                                     Prices for prescription medicines, like other                         Product Donations                                                   and many others had limited coverage.
                                                     products, can differ from country to country                                                                                              As the cost of health care has risen, even
                                                     because of differences in currency value                              Lilly strives to engage with governments                            people with health insurance are paying a
                                                     and market dynamics—or they may be kept                               throughout the world to offer our products                          higher portion of costs out of pocket. For
                                                     artificially low by government price con-                             at sustainable prices that are affordable for                       the uninsured and underinsured, the cost of
                                                     trols. We recognize that, for individuals, the                        local populations. We also offer our medi-                          medical treatment and prescription drugs
                                                     price of medicines can present a barrier to                           cines for free, or at deeply discounted prices,                     may be an obstacle to getting the care and
                                                     those who might benefit from them, both in                            through our patient-assistance programs.                            medicines they need.

     PAGE 14                                                                                                                                                                                       LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                                 Lilly provides access to our medicines for        In 2009, we also expanded access to our          These donations, initially focused on 12
                                                     eligible patients through several patient-        most widely used patient-assistance              countries in sub-Saharan Africa, have now
ABOUT LILLY                                          assistance programs, some in partnerships         programs in the United States by adjusting       expanded to include 21 countries through-
                                                     with industry groups. In 2011, we announced       income requirements to allow the enroll-         out Africa, Asia, and South America. The
                                                     Lilly TruAssist, a central point of information   ment of eligible patients with incomes of up     medicine will help as many as 24,000
                                                     about these programs, including eligibility       to 300 percent (up from 200 percent) of the      children who have no access to diabetes
ENHANCING ACCESS TO MEDICINES                        requirements and available Lilly medicines.       U.S. Federal Poverty Level. During 2010,         treatment. The donation is one of Lilly’s
                                                     Lilly TruAssist increases awareness of avail-     more than 227,000 patients received help         largest single contributions in the 85 years
 Lilly’s Approach to Expanding Access to Medicines   able assistance by providing an easy-to-use,      through Lilly patient-assistance programs,       since we introduced the world’s first mass-
                                                     one-stop resource to help health care provid-     in areas including mental health, diabe-         produced insulin. For more information,
 Public/Private Partnerships                         ers, advocates, and patients quickly access       tes, cardiovascular disease, men’s health,       visit
 Differential Pricing                                the information they need.                        osteoporosis, oncology, and growth-hormone
                                                                                                       disorders. This represented an increase of         Kenyan Hospital Partnership
• Product Donations                                                                                    12 percent from 2009. The market value of        Lilly has a long-standing partnership with
                                                                                                       this assistance totaled $335 million. To learn   Indiana University and the Moi Teaching
                                                                                                       more, visit              and Referral Hospital in Eldoret, Kenya. For
CONDUCTING OUR BUSINESS ETHICALLY AND                                                                                                                   more than 10 years, Lilly has supported this
                                                                                                         Life for a Child
TRANSPARENTLY                                                                                                                                           hospital with donations of insulin and medi-
                                                                                                       Lilly has committed to donating more             cines to treat depression, mental illness,
SUPPORTING STRONG WORKPLACE                                                                            than 800,000 vials of insulin to the Interna-    and cancer. In 2010, total drug donations to
PRACTICES                                                                                              tional Diabetes Federation’s Life for a          this hospital were $6 million at net whole-
                                                                                                       Child program between 2008 and 2013.             sale value.





     PAGE 15                                                                                                                                              LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                                    DEVELOPING INNOVATIVE





• The Lilly Bioethics Program: A Global Framework

 The Drug Development Process                       Lilly has a rich history of creating breakthrough products that
                                                    enhance and preserve life. Today, our commitment to scientific

 Animal Testing, Care and Use

 Diversity in Clinical Trials                       research and development remains as strong as ever, and we’ve
 Lilly Global Patient Safety Organization
                                                    developed some innovative approaches that are helping us speed
                                                    the creation of new medicines. Yet we recognize that the responsi-                                            EMPLOYEES ENGAGED IN
                                                                                                                                                                RESEARCH AND DEVELOPMENT
TRANSPARENTLY                                       bilities we have go far beyond the laboratory.                                                                AS OF DECEMBER 31, 2010

SUPPORTING STRONG WORKPLACE                         At all stages of the development and use        to the area. The program is an indepen-
PRACTICES                                           of our medicines, Lilly strives to maintain     dent organizational unit within Lilly with

                                                    the highest standards of ethical behavior.      dedicated senior leadership by the vice
ENGAGING WITH PATIENTS AND                          This begins with our bioethics program          president of global patient safety and bio-
COMMUNITIES                                         and guiding principles and is reflected in      ethics. Full-time staff with graduate training
                                                    our commitment to safeguard and protect         in bioethics is responsible for the program’s            NUMBER OF COUNTRIES WHERE LILLY
                                                    the rights of people who participate in our     development, oversight, and deliverables.               CONDUCTED CLINICAL RESEARCH IN 2010
                                                    research and use our products. It is also       The program also includes part-time effort
ABOUT THIS REPORT                                   reflected in our commitment to use animals      in the form of the Lilly bioethics advisory
                                                    in research only when needed and to ensure      committee (BEAC) and the Lilly bioethics

GLOBAL REPORTING INITIATIVE INDEX                   their humane treatment. This section            network (BEN).
                                                    explores these issues and provides an
UNITED NATIONS GLOBAL COMPACT INDEX                                                                 The Lilly Bioethics Program is designed to
                                                    overview of how Lilly brings new medicines
                                                                                                    address the increasingly complex ethi-
                                                    to patients who need them.
                                                                                                    cal challenges of global pharmaceutical                    NUMBER OF COUNTRIES WHERE
                                                                                                    research and development (R&D) in today’s                   LILLY MARKETED PRODUCTS
                                                                                                                                                                 AS OF DECEMBER 31, 2010
                                                    The Lilly Bioethics Program:                    fast-paced biotechnology environment.
                                                                                                    The program is a global framework that
                                                    A Global Framework                              governs the full sweep of Lilly’s R&D activi-
                                                    In 1999, Lilly became one of the first phar-    ties. It promotes ethical research and drug
                                                                                                    development, safeguards the integrity of

                                                    maceutical companies to establish a
                                                    standing bioethics committee to systemati-      the scientific process, protects patients’
                                                    cally identify, evaluate, and communicate       well-being, and ensures that animals are
                                                    bioethics issues. In 2008, we took our first    treated humanely. The program’s purpose                   AVERAGE AMOUNT OF TIME IT TAKES
                                                                                                                                                                 TO DEVELOP A NEW MEDICINE
                                                    steps toward a more dedicated approach to       is to assist employees in identifying and
                                                    bioethics and established the Lilly Bioethics   addressing bioethical issues related to
                                                    Program, devoting full-time resources           Lilly’s R&D activities. Program staff also

     PAGE 16                                                                                                                                         LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                                provides consultations with primary internal      identify and address bioethics issues
                                                    stakeholders on bioethical matters related        related to R&D activities. This service
ABOUT LILLY                                         to other aspects of the company’s business.       handles requests for consultation about            BIOETHICS SPECIALIST TEAM
                                                                                                      specific ethical concerns, clarifies Lilly
OUR APPROACH TO CORPORATE                           The Lilly Bioethics Program comprises four                                                           AND BIOETHICS SPECIALIST
                                                                                                      bioethics positions and how to apply them to
RESPONSIBILITY                                      core activities:
                                                                                                      workplace situations, and facilitates the dis-     DEVELOPMENT PROGRAM
ENHANCING ACCESS TO MEDICINES                       • Contributing to internal collaborative          cussion of hypothetical or historical cases.
                                                                                                                                                         The bioethics specialist team (BEST) is a
                                                      projects that integrate bioethics into R&D                                                         subgroup of the BEN and comprises Lilly
DEVELOPING INNOVATIVE MEDICINES                       operations, as well as external projects          The Lilly Bioethics Network
                                                                                                                                                         employees with specialized knowledge and skills
                                                      that contribute to the advancement of the       Recently, the program launched the Lilly           in bioethics and an ongoing commitment to
• The Lilly Bioethics Program: A Global Framework     field of bioethics as it relates to pharma-     bioethics network (BEN). BEN is an infor-          develop in this area. BEST members support the
                                                      ceutical applications,                          mal, voluntary, virtual community of Lilly         Lilly Bioethics Program through participation in
 The Drug Development Process
                                                    • Establishing and articulating company           staff who are interested in developing their       bioethics activities and projects.
 Animal Testing, Care and Use                         positions on key bioethics issues,              knowledge and skills in bioethics. Partici-
                                                                                                      pation includes training opportunities and         The bioethics specialist development program
 Diversity in Clinical Trials                       • Conducting internal education and train-                                                           is an internal, six-month, experiential training
                                                      ing on bioethics, and                           attendance at lectures, seminars, case
 Lilly Global Patient Safety Organization                                                             discussions, and other activities sponsored        program designed to help Lilly employees iden-
                                                    • Consulting with Lilly staff.                                                                       tify and respond to bioethics issues specifically
                                                                                                      by the Lilly Bioethics Program.
CONDUCTING OUR BUSINESS ETHICALLY AND                                                                                                                    related to their functional role in the company
TRANSPARENTLY                                         The Lilly Bioethics Advisory                                                                       and the pharmaceutical industry.
                                                                                                        Bioethics Framework for Human
                                                                                                      Biomedical Research
PRACTICES                                           The Lilly BEAC is a cross-functional
                                                                                                      Lilly strives to maintain the highest stan-
                                                    volunteer committee comprising senior-
                                                                                                      dards of ethical behavior in all aspects of      To view Lilly’s position statements, visit:
ENGAGING WITH PATIENTS AND                          level individuals from various functional
                                                                                                      the company’s business, consistent with
COMMUNITIES                                         areas within and outside of R&D, including
                                                                                                      our brand. In 2010, to provide research-         Pages/bioethics.aspx
                                                    medical, patient safety, discovery research,
                                                                                                      ers with guiding principles and practical
FOSTERING ENVIRONMENTAL                             veterinary resources, legal, corporate
SUSTAINABILITY                                                                                        tools, Lilly developed a bioethics framework       Stem Cell Research
                                                    affairs, and global brand development.
                                                                                                      specifically to describe and evaluate the
                                                    Membership also includes two external                                                              Lilly believes in the scientific potential of
ABOUT THIS REPORT                                                                                     ethics of developing, conducting, analyz-
                                                    academic bioethicists. Members are asked                                                           stem cell research, but also acknowledges
                                                                                                      ing, and disclosing results from studies
                                                    to take basic training in bioethics, provide                                                       that there are conflicting views about the
GLOBAL REPORTING INITIATIVE INDEX                                                                     involving human subjects. The framework
                                                    advice on bioethics consultations, and offer                                                       ethics of using stem cells derived from cer-
                                                                                                      incorporates ethics principles from widely
UNITED NATIONS GLOBAL COMPACT INDEX                 input into company bioethics projects, such                                                        tain sources. To support scientific innovation,
                                                                                                      recognized global guidelines and scholarly
                                                    as the development of Lilly’s official position                                                    respect human life, and respect stakeholder
                                                                                                      literature, including but not limited to the
                                                    on a bioethics issue. Meetings are held on a                                                       views, Lilly uses stem cells that are derived
                                                                                                      Belmont Report, the Declaration of Helsinki,
                                                    regular basis, but can also be called for ad                                                       from animals, and from human sources
                                                                                                      the Council for International Organizations
                                                    hoc discussions.                                                                                   where appropriate informed consent and/or
                                                                                                      of Medical Sciences’ International Ethical
                                                                                                      Guidelines, and the International Conference     assent can be obtained and there is little risk
                                                    Positions developed by the BEAC inform
                                                                                                      on Harmonisation’s Guideline for Good            of harm to the sample donor.
                                                    the policies, standards, procedures, and
                                                    practices of our R&D group. Employees             Clinical Practice.
                                                                                                                                                         Human Biological Samples
                                                    involved in clinical research are trained
                                                                                                      Flowing out of the framework, the Lilly
                                                    on these items, and refresher courses are                                                          Human biological samples have long been
                                                                                                      Bioethics Program has developed bioethics
                                                    provided as policies, standards, and proce-                                                        utilized in preclinical and clinical phar-
                                                                                                      positions on relevant and emerging topics,
                                                    dures are updated.                                                                                 maceutical research, but they play an
                                                                                                      including stem-cell research, human bio-
                                                                                                                                                       increasingly important role in the post-
                                                    The BEAC runs an internal bioethics con-          logical samples, and the choice of control
                                                                                                                                                       human genome era. Specifically, DNA
                                                    sultation service to help Lilly employees         for clinical trials.

     PAGE 17                                                                                                                                             LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                                samples are essential to understanding how       Lilly believes that the use of placebo con-     In applying these considerations, Lilly
                                                    genome variations affect or are affected by      trols in the development of new medicines       places paramount importance on the safety
ABOUT LILLY                                         pharmaceutical interventions. Because of         can be scientifically valuable and ethically    and well-being of the individual research
                                                    the individualized information that can be       justifiable, provided the use of the placebo    participants. Taken together, this external
                                                    extracted from DNA samples, Lilly commits        meets several key conditions and the deci-      and internal guidance helps researchers
                                                    to protecting and using data derived from        sion to conduct a placebo-controlled trial      access thoughtful, informed, consistent
ENHANCING ACCESS TO MEDICINES                       samples in a responsible manner that mini-       is made after a careful analysis of scien-      advice on ethical questions that relate to
                                                    mizes the potential for physical, dignatory,     tific and ethical considerations, risks to      the design, planning, and implementation of
DEVELOPING INNOVATIVE MEDICINES                     discriminatory, or stigmatizing harms.           research participants, and local regulatory     clinical trials, and to the timely disclosure of
                                                                                                     requirements.                                   research results.
• The Lilly Bioethics Program: A Global Framework     Choice of Control for Clinical Trials
                                                                                                       Protecting Research Subjects’                   Informed Consent
 The Drug Development Process                       ACTIVE CONTROLS                                  Rights in Clinical Trials                       One key aspect of protecting research par-
 Animal Testing, Care and Use                       Part of ensuring the scientific validity of      Our bioethics framework is the basis            ticipants is the informed-consent process,
                                                    research is designing clinical trials that are   for a single global standard that Lilly         designed to respect an individual’s auton-
 Diversity in Clinical Trials
                                                    methodologically sound. Therefore, studies       applies to the conduct of clinical trials       omy and protect an individual’s freedom
 Lilly Global Patient Safety Organization           that measure differences among active            worldwide. Our practices are consistent         of choice. Each patient or volunteer who
                                                    treatments should be designed to make            with the Pharmaceutical Research and            wishes to participate in Lilly-sponsored
CONDUCTING OUR BUSINESS ETHICALLY AND               fair comparisons.                                Manufacturers of America’s Principles           research is informed both verbally and
                                                    An active control is an agent used as a com-     on Conduct of Clinical Trials, in addition      in writing of the purpose, methods, and
SUPPORTING STRONG WORKPLACE                         parator in a clinical trial that is presumed     to the applicable laws and regulations of       possible risks and benefits of a study, as
PRACTICES                                           to have beneficial effects related to the dis-   the country or countries in which a study       well as the fact that he or she is free to
                                                    ease being studied. Use of an active control     is conducted.                                   withdraw from the study at any time and for
ENGAGING WITH PATIENTS AND                          is often considered scientifically necessary                                                     any reason. The decision to volunteer for
                                                                                                     Lilly is a global company serving the
COMMUNITIES                                         to obtain valid comparisons between two or                                                       a study must be an individual choice, free
                                                                                                     medical needs of a global population. In
                                                    more treatments.                                                                                 from undue influences that might persuade
FOSTERING ENVIRONMENTAL                                                                              choosing locations worldwide to conduct
                                                                                                                                                     a person to consent to greater than reason-
SUSTAINABILITY                                      The decision to use an active control should     clinical trials, Lilly considers the local
                                                                                                                                                     able risk. To help ensure this, it is Lilly’s
                                                    be made after giving careful consideration       prevalence of the disease under study and
                                                                                                                                                     policy that the promise of payments of
ABOUT THIS REPORT                                   to several factors, including the severity of    the medical research capabilities of the
                                                                                                                                                     money or other rewards not be so large as
                                                    the illness, the adverse event profile of the    candidate institutions.
GLOBAL REPORTING INITIATIVE INDEX                                                                                                                    to unduly influence a prospective subject’s
                                                    investigational treatment (i.e., potential for   In addition, Lilly works with local ethics      decision. The individual’s consent to partici-
UNITED NATIONS GLOBAL COMPACT INDEX                 harm), and the scientific and regulatory         committees and/or health authorities, as        pate in a study is documented by a signature
                                                    objectives of the trial.                         appropriate, to ensure that conducting          of agreement. In the case of an individual
                                                                                                     the proposed research in each location is       who is not capable of giving informed
                                                    PLACEBO CONTROLS                                 scientifically and ethically justified. These   consent, including children, the consent
                                                    A placebo control is an inactive agent used      decisions take into consideration:              of a legally authorized representative may
                                                    as a baseline for comparison against a test                                                      be obtained on behalf of that individual,
                                                                                                     • the risks and benefits for research           provided that the study participant provides
                                                    treatment in a clinical trial, and is often
                                                                                                       participants,                                 his or her assent to participate.
                                                    considered scientifically necessary to obtain
                                                    valid trial results. However, there is concern   • the potential for the research to yield
                                                    that placebo controls are ethically prob-          important scientific advances,
                                                    lematic, because individuals who receive a       • the relevance of the research to local
                                                    placebo are not receiving an established,          health needs, and
                                                    effective treatment.                             • intent to register the drug in the host

     PAGE 18                                                                                                                                           LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                               The Drug Development Process
ABOUT LILLY                                        The research-based pharmaceutical industry is uniquely able to discover, develop, and produce lifesaving medicines for patients who need
                                                   them. Yet pharmaceutical research and development is a complex and lengthy process. To demonstrate the safety and efficacy of a drug, by
OUR APPROACH TO CORPORATE                          law it must be tested in the laboratory, in living cells and organisms, in laboratory animals, and finally, in humans. After the drug-discovery
RESPONSIBILITY                                     process produces a promising lead, that compound is still a long way from being ready for testing in human subjects. Here is how the
                                                   process unfolds in the United States.12

                                                    1                         2                                        3                  4                       5                                         6                7
 The Lilly Bioethics Program: A Global Framework    DRUG                      PRECLINICAL                              CLINICAL           CLINICAL                CLINICAL                                  REGULATORY       POST-
                                                    DISCOVERY                 TRIALS                                   TRIALS:            TRIALS:                 TRIALS:                                   REVIEW           MARKETING
• The Drug Development Process
                                                                                                                       PHASE I            PHASE II                PHASE III
 Animal Testing, Care and Use

 Diversity in Clinical Trials
                                                        YEARS                 YEARS                                    YEARS              YEARS                   YEARS                                     YEARS            YEARS
 Lilly Global Patient Safety Organization
                                                        ~4-5                  ~1                                       ~1.5               ~2.5                    ~3                                        ~0.5-2           Indefinite

SUPPORTING STRONG WORKPLACE                             RESULT                RESULT                                   RESULT             RESULT                  RESULT                                    RESULT           RESULT
                                                        5k-10k                250                                      ~9                 ~5                      ~1-2                                      1                Complete

                                                                                                                                                                                            NDA SUBMITTED
                                                                                                       IND SUBMITTED
                                                                                                                                                                                                                             additional post-
ENGAGING WITH PATIENTS AND                              compounds             compounds                                compounds          compounds               compounds                                 drug approved
                                                        evaluated             evaluated                                evaluated          evaluated               evaluated                                                  marketing testing
COMMUNITIES                                                                                                                                                                                                                  as required by
                                                                                                                                                                                                                                TOTAL COST13
SUSTAINABILITY                                              $674MM                    $150MM                                   $273MM             $319MM                   $314MM                                    $48MM           $1.8B
                                                                           File Investigational New Drug(IND) application                                         File New Drug Application (NDA) with FDA
                                                                           with U.S. Food and Drug Administration (FDA)

UNITED NATIONS GLOBAL COMPACT INDEX                 	We	have	adapted	the	phase	chart	from	PhRMA	and	supplemented	it	with	cost	data	from	a	recently	published	article	on	R&D	productivity:	Paul	S,	Mytelka	D,	Dunwiddie	C,	et	al.	How to

                                                     Improve R&D Productivity: The Pharmaceutical Industry’s Grand Challenge.	Nature	Reviews	Drug	Discovery.	2010;	available	from:	doi:10.1038/nrd3078.	Accessed	October	25,	2011.
                                                    	Figures	provided	are	capitalized,	meaning	they	account	for	the	cost	of	capital	to	complete	each	phase.	The	$1.8B	total	estimated	cost	includes	the	cost	of	all	projects	that	fail	during		

                                                     the	drug	discovery	and	development	process.

                                                   1. Drug Discovery                                                        Pharmaceutical discovery—like all kinds of                 targets to pick promising leads—molecules
                                                                                                                            discovery—favors those who search in the                   that might someday be medicines.
                                                   PURPOSE: Lilly discovery scientists search for                           right places. The drug-discovery process at
                                                   biological targets within the body that play a role
                                                                                                                                                                                       To make the best use of our R&D investment
                                                                                                                            Lilly begins by focusing on specific diseases
                                                   in a given disease. They create or find unique                                                                                      and provide the greatest benefit to patients,
                                                                                                                            and patient needs. Lilly discovery scientists
                                                   molecules that might someday be medicines,                                                                                          we largely concentrate in therapeutic areas
                                                                                                                            search for biological targets within the body
                                                   and they screen millions of molecules against                                                                                       in which we have deep expertise, includ-
                                                                                                                            that play a role in a given disease. They then
                                                   the targets to pick promising leads.                                                                                                ing diabetes, neuroscience, cardiovascular
                                                                                                                            screen millions of molecules against the
                                                                                                                                                                                       diseases, and oncology. We seek to develop

     PAGE 19                                                                                                                                                                              LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                               pharmaceuticals that are “first-in-class”
                                                   (i.e., creating a treatment where none
ABOUT LILLY                                        existed) and/or “best-in-class” (i.e., improv-       TAILORED THERAPIES
                                                   ing on existing treatments).
                                                                                                        Historically, medicine has been “one size fits all.” Increasingly, this is changing. Personalized medicine
RESPONSIBILITY                                     Today, Lilly is generating potential biotech
                                                                                                        (also called tailored therapies) promises to deliver greater precision, higher value, and improved out-
                                                   solutions (using therapeutic proteins or
ENHANCING ACCESS TO MEDICINES                                                                           comes for individual patients.
                                                   antibodies to treat disease), alongside more
                                                   traditional chemistry-based work to deliver          Tailoring therapeutics is in part technical: by using emerging technologies and capabilities, the pharma-
                                                   innovative treatments for a wide range of            ceutical industry can move toward better and more predictable patient outcomes. It is also a strategy for
                                                   diseases, including cancer, multiple scle-           enhancing the social value of medicines. All medicines have potential risks and benefits; tailoring allows
 The Lilly Bioethics Program: A Global Framework
                                                   rosis, diabetes, osteoporosis, rheumatoid            us to use real-world data and information and input from those closest to patients to develop therapies
• The Drug Development Process                     arthritis, and Alzheimer’s disease. Review           that offer the most value to individuals and to society.
                                                   our current pipeline at
 Animal Testing, Care and Use                                                                           Tailoring is being built into every drug-development program at Lilly, using a variety of approaches to
                                                                                                        identify meaningful differences across patient populations. These include:
 Diversity in Clinical Trials
                                                   One of our most promising areas of
                                                   research and development concerns so-                •	phenotypic characteristics, such as age or weight,
 Lilly Global Patient Safety Organization
                                                   called “personalized medicine,” also known           •	established biomarkers, such as HbA1C levels for monitoring diabetes, and
CONDUCTING OUR BUSINESS ETHICALLY AND              as “tailored therapies.” The ultimate goal
TRANSPARENTLY                                      is to provide the right medicine, at the right       •	more novel markers emerging from new tools and technologies, such as pharmacogenomics, bioimag-
                                                   time, at the right dose, for each patient.             ing, and bioinformatics, which advance how we understand, classify, and treat patients.
PRACTICES                                          The earliest stage of new drug research and          Lilly is also engaged in the development of companion diagnostics to better assist physicians to identify
                                                   development—the discovery phase—can                  those patients who should, or should not, receive Lilly medicines.
ENGAGING WITH PATIENTS AND                         take many years. As mentioned previously,
COMMUNITIES                                        Lilly discovery scientists search for biologi-
                                                   cal targets within the body that appear to        questions such as: Is there a viable way                    2. Preclinical Trials
                                                   play a role in a given disease. Biological        to deliver the molecule to the biological
                                                   targets can be part of the body (such as          target? How is this affected by chemical                    PURPOSE: Assess the potential safety, toxicity,
ABOUT THIS REPORT                                  a protein, receptor, or gene) or foreign          composition, the size of the molecule, and                  and efficacy of compounds evaluated
                                                   (such as a virus or bacteria). Lilly scientists   natural barriers within the body’s tissues                  SUBJECTS: Laboratory and animal studies
GLOBAL REPORTING INITIATIVE INDEX                  identify, design, and synthesize promising        and organs? Should the delivery vehicle be
                                                   molecules, screening perhaps tens of thou-        an oral method, an injection, or something
UNITED NATIONS GLOBAL COMPACT INDEX                                                                                                                              Drug trials and approval processes aim to
                                                   sands, to assess their effect on the relevant     else? How fast is the drug released and
                                                                                                                                                                 prove that a new drug candidate is safe for
                                                   biological targets. Molecules that have the       distributed in the body?
                                                                                                                                                                 human patients and effective in treating
                                                   desired effect on the target and meet other
                                                                                                     Researchers probe further to determine                      the target disease. Before any human ever
                                                   design criteria become “lead” molecules
                                                                                                     what dosage might be required for the                       takes a new drug candidate, preclinical
                                                   that go on to the next phase of development.
                                                                                                     medicine to be effective, and at what level                 trials are conducted to obtain initial proof of
                                                   In this next stage, Lilly scientists learn        it might be toxic to the patient. They also                 safety and effectiveness. This may include
                                                   about how a compound is broken down and           explore practical issues, such as whether                   data from tests done in laboratory dishes or
                                                   eliminated from the body and also how it          Lilly will be able to manufacture the com-                  other devices—called in vitro research—or
                                                   might intervene in a disease. During this         pound on a large scale, and whether the                     from limited animal studies. These efforts
                                                   process, Lilly scientists use experiments in      compound will be stable enough to remain                    can take several years to complete, and
                                                   test tubes and animals as well as computer        effective and safe in the patient’s hands.                  they demonstrate whether it is warranted to
                                                   modeling and simulation to investigate                                                                        proceed to the next step.

     PAGE 20                                                                                                                                                       LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                                                                                                                                                  INNOCENTIVE BY THE NUMBERS
ABOUT LILLY                                                                                                                                                       (AS OF Q2 2011)
                                                      INNOCENTIVE: THE PROBLEM-SOLVING MARKETPLACE
                                                      In 2001, Lilly launched InnoCentive, a company designed to expand Lilly’s access to the global              250,000
                                                      scientific network. InnoCentive created a global online network that now exceeds 250,000 scientists         Approximate Total Registered Solvers
ENHANCING ACCESS TO MEDICINES                         around the world and operates as a sort of “open market” for technical challenges. Lilly scientists have    From Nearly 200 Countries
                                                      tapped into this network to obtain solutions to many technical challenges, and external scientists have
DEVELOPING INNOVATIVE MEDICINES                       received monetary rewards from InnoCentive for solving technical problems. This crowd-sourcing              12M+
                                                      approach has proved to be quite effective at solving challenges cost-effectively and efficiently.           Total Solver Reach Through Strategic
 The Lilly Bioethics Program: A Global Framework                                                                                                                  Partners
                                                      In 2005, Lilly brought in venture-capital investors to expand InnoCentive, but retained 20 percent owner-

• The Drug Development Process                        ship and a seat on the board of directors. Since then, the company has expanded its open-innovation
                                                      approach to address a broad array of problems from diverse sectors of society, including governments,
 Animal Testing, Care and Use
                                                      nonprofits, and other corporations, both within and outside of the pharmaceutical sector. Clients,          Total Challenges Posted to
 Diversity in Clinical Trials                         including Lilly scientists, NASA, the Cleveland Clinic, Procter & Gamble, the Environmental Defense

 Lilly Global Patient Safety Organization
                                                      Fund, and many others, post their problems under “pavilions” divided by topic area. At any given time,      339,726
                                                      challenges posted across the pavilions might range from traditional biochemistry conundrums, to the         Project Rooms Opened to Date
CONDUCTING OUR BUSINESS ETHICALLY AND                 creation of alternative fuel sources for impoverished women in the developing world, to removing
TRANSPARENTLY                                         contamination from plastics recycling, to how to more effectively conduct humanitarian food drops.          24,256
                                                      To learn more, visit                                                                   Total Solution Submissions
ENGAGING WITH PATIENTS AND                                                                                                                                        Total Awards Given
COMMUNITIES                                        3. Clinical Trials: Phase I                              4. Clinical Trials: Phase II
                                                   PURPOSE: Determine safety and dosage                     PURPOSE: Evaluate efficacy, assess                    Total Award Dollars Posted
SUSTAINABILITY                                                                                              side effects
                                                   AVERAGE NUMBER OF SUBJECTS: 20 to 80
ABOUT THIS REPORT                                  healthy human volunteers or patient volunteers           AVERAGE NUMBER OF SUBJECTS: 300 to                    $5K To $1M
                                                   with disease                                             400 patient volunteers with disease                   Range of Awards, Based on the
GLOBAL REPORTING INITIATIVE INDEX                                                                                                                                 Complexity of the Problem
                                                   The next stage of the R&D process                        Phase II marks the beginning of controlled
                                                   comprises three phases of clinical tri-                  testing with patients who actually have               50%
                                                   als with humans. Lilly conducts clinical                 the disease, to begin to demonstrate the              Average Success Rate
                                                   trials around the world and markets its                  medicine’s effectiveness. The total number
                                                   medicines in 125 countries. That means we                of patients is still relatively small—per-
                                                   must complete regulatory-approval pro-                   haps several hundred people. This phase
                                                   cesses in each country to bring innovative               also produces additional information about
                                                   cures to patients worldwide.                             short-term side effects and risks associated
                                                                                                            with the drug.
                                                   Phase I is intended to generate initial safety
                                                   information about the drug in humans and
                                                   assess how it behaves inside the human
                                                   body. The subjects in this phase are often
                                                   healthy volunteers (rather than people who
                                                   have the target disease), and they usually
                                                   number between 20 and 80.

     PAGE 21                                                                                                                                                        LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                               5. Clinical Trials: Phase III
ABOUT LILLY                                        PURPOSE: Evaluate efficacy, monitor adverse                  ACCELERATING INNOVATIVE DRUG DEVELOPMENT
                                                   reactions from long-term use
                                                   AVERAGE NUMBER OF SUBJECTS: 1,500 to                         Ultimately, the future of Lilly depends on bringing to patients new medicines—whether developed in our
                                                   2,500 patient volunteers with disease14                      own labs or from outside our walls. This requires the innovation and development of new strategies to
ENHANCING ACCESS TO MEDICINES                                                                                   speed the delivery of medicines. It’s critical to our success as a company, and to the patients we serve.
                                                   Phase III seeks to provide definitive proof of               That’s why Lilly has added a new approach to its drug-development strategy. This approach—unique
DEVELOPING INNOVATIVE MEDICINES                    the drug’s effectiveness and provides safety                 to pharmaceutical companies—uses external venture capital and the company’s own virtual drug
                                                   information from a much larger number of                     development organization, called Chorus, to expedite the development of compounds from Lilly and
 The Lilly Bioethics Program: A Global Framework
                                                   patients—from several hundred to several                     outside companies.
• The Drug Development Process                     thousand—who suffer from the disease. The
                                                   extensive data generated in Phase III pro-                   In typical drug development, a large number of compounds fail to make it past Phase II clinical trials.
 Animal Testing, Care and Use                                                                                   Chorus has developed more cost-effective and faster methods to reach clinical proof of concept—that
                                                   vide a sound basis for extrapolating results
                                                   to the general population and for developing                 is, to determine if a candidate drug is likely to be effective. That helps us determine whether to invest
 Diversity in Clinical Trials
                                                   the labeling information that is provided                    further in the most promising compounds.
 Lilly Global Patient Safety Organization          with the product.                                            Established in 2002, Chorus is a small, multidisciplinary drug-development group within Lilly that
CONDUCTING OUR BUSINESS ETHICALLY AND              In 2004, Lilly was one of the first pharma-                  conducts early-stage development work. Chorus operates on a “virtual” model: It consists of a group
TRANSPARENTLY                                      ceutical companies to launch a clinical-trial                of Lilly employees that manages drug-development work done by a network of hundreds of external
                                                   registry website to enable public access to                  experts and companies from around the world.
SUPPORTING STRONG WORKPLACE                        results from our clinical trials. Today, this is
PRACTICES                                                                                                       Chorus focuses on designing and executing highly focused development plans that progress com-
                                                   required by law of all pharmaceutical com-                   pounds from candidate selection to clinical proof of concept in human clinical trials. Using this
                                                   panies. The results of applicable clinical                   approach, Chorus has been able to reach decisions about 12 months earlier and at about half the cost
COMMUNITIES                                        trials of Lilly’s marketed products, per the                 of the current industry model.
                                                   FDA Amendments Act of 2007, can be found
FOSTERING ENVIRONMENTAL                            at                                   To date, Chorus has delivered data on 17 molecules. Six of these have resulted in positive proof-of-con-
SUSTAINABILITY                                                                                                  cept clinical data. And we are applying the lessons learned from Chorus to our Development Center of
                                                                                                                Excellence, which manages the clinical development of all Lilly investigational compounds.
                                                                                                                In addition, Lilly has designed, and is investing in, several venture capital funds—dubbed the Mirror
GLOBAL REPORTING INITIATIVE INDEX                                                                               Funds—created to supplement the company’s pipeline and expand access to innovation. The funds will
                                                                                                                license drug candidates from Lilly and other companies and pay for clinical development and testing
UNITED NATIONS GLOBAL COMPACT INDEX                                                                             to take the compounds through the clinical proof-of-concept stage.

                                                                                                                Our venture-capital partners get access to Chorus and Lilly molecules from the pipeline, and they
                                                                                                                share in the profits from successfully developed drugs. As an investor, Lilly also shares in fund profits.
                                                                                                                As of August 2011, one of the independent venture-capital firms participating in the Mirror Portfolio
                                                                                                                has acquired four molecules and will oversee the next phase of their development. Three of those mol-
                                                                                                                ecules were developed preclinically by researchers at major academic institutions and are being studied
                                                                                                                as potential treatments for cardiovascular, diabetes, and oncology indications; the fourth molecule was
                                                                                                                developed by Lilly and is being studied for its potential in bone healing and cancer.

                                                                                                                Lilly retains rights to buy back all Lilly molecules licensed by the funds as well as to evaluate and
                                                                                                                acquire a limited number of external compounds. Within five to seven years, the funds are designed to
                                                    	In	some	cases,	as	many	as	15,000	to	25,000	patients	are	
                                                                                                                pay for the development of a pipeline of compounds that “mirrors” the number of compounds at this
                                                     needed	for	Phase	III.
                                                                                                                stage of development in Lilly’s own pipeline.

     PAGE 22                                                                                                                                                             LILLY 2010 CORPORATE RESPONSIBILITY REPORT

                                                      ACCREDITATION, REGULATIONS,                         ANIMAL TESTING
OUR APPROACH TO CORPORATE                             AND INSPECTIONS                                     To assess the potential safety, toxicity, and efficacy of compounds for human use, Lilly researchers
                                                                                                          conduct tests in laboratory animals. Animals are used when other reasonable alternatives do not exist.
                                                      Lilly maintains the highest standards of
ENHANCING ACCESS TO MEDICINES                                                                             Safety studies are mandated by law and are conducted to understand the effects of new medicines. We
                                                      animal care and demonstrates best practice
                                                                                                          recognize we have an ethical and scientific obligation to ensure the appropriate and humane treatment
                                                      globally. All Lilly facilities are accredited
DEVELOPING INNOVATIVE MEDICINES                                                                           of animals used in research, and we have systems in place to fulfill this obligation. Lilly requires its R&D
                                                      by the Association for Assessment and
                                                                                                          staff to comply with all applicable country and local laws, regulations, and standards regarding the care
                                                      Accreditation of Laboratory Animal Care
 The Lilly Bioethics Program: A Global Framework                                                          and use of animals. We require the same of all individuals and organizations that supply animals to be
                                                      (AAALAC). All animal facilities are subject to
                                                                                                          used in Lilly research, and with which Lilly contracts for animal research services.
 The Drug Development Process                         external review and inspection. As appropriate,
                                                      in the United States, our facilities are subject    Moreover, we require application of the Lilly Animal Care and Use Principles by Lilly researchers and
• Animal Testing, Care and Use
                                                      to unannounced site inspections by the U.S.         contractors, even if these principles are more stringent than applicable local laws. Lilly also encourages
 Diversity in Clinical Trials                         Department of Agriculture. In Europe, local         animal-research and animal-supply companies globally to obtain and maintain accreditation from the
                                                      and national authorities regularly inspect          AAALAC. Through active engagement, we are helping to raise the standards of animal care and use.
 Lilly Global Patient Safety Organization
                                                      all animal facilities. AAALAC also provides
CONDUCTING OUR BUSINESS ETHICALLY AND                 an independent review and confirmation of
TRANSPARENTLY                                         appropriate animal care and use.

                                                      In the United States, Lilly’s animal care and use
SUPPORTING STRONG WORKPLACE                                                                               LILLY ANIMAL CARE AND USE PRINCIPLES
                                                      committee (which includes an independent,
                                                      third-party member) approves and oversees
                                                                                                          Lilly’s Animal Care and Use principles state that animals shall be treated humanely, with pain and stress
ENGAGING WITH PATIENTS AND                            animal research activities and care programs.
                                                                                                          minimized. Animal testing should be performed after consideration of the 3 Rs: replace animals when-
COMMUNITIES                                           Similarly, Lilly’s U.K. ethical committee
                                                                                                          ever alternatives are scientifically valid and acceptable to regulators; reduce the numbers of animals used;
                                                      reviews all animal usage in that country and
FOSTERING ENVIRONMENTAL                                                                                   and refine procedures to minimize distress. Specifically:
                                                      ensures that people using animals are appro-
SUSTAINABILITY                                        priately qualified.                                 •	Living conditions for research animals must be appropriate for their species and contribute to their
                                                                                                            health and well-being.
                                                                                                          •	Personnel who care for animals or who conduct animal studies must be appropriately qualified regard-
GLOBAL REPORTING INITIATIVE INDEX                                                                           ing the proper care and use of animals in research.
                                                   6. Regulatory Review
UNITED NATIONS GLOBAL COMPACT INDEX                                                                       •	Studies involving animals must be designed and conducted in accordance with applicable country and
                                                   PURPOSE: Review NDA for drug approval                    local regulatory guidance and the following widely recognized principles of animal care and use:
                                                   or rejection
                                                                                                             •	with due consideration of the relevance of the study to human or animal health and the
                                                                                                               advancement of scientific knowledge,
                                                   After extensive testing and study, a can-
                                                   didate drug is submitted for regulatory                   •	selecting only animals appropriate for that study,
                                                   approval. The decision of the regulatory
                                                                                                             •	using the minimum number of animals required to obtain valid results,
                                                   body determines whether or not the drug
                                                   can be marketed to patients for approved                  •	using alternative methods instead of live animals where appropriate, and
                                                   uses. The review process can take anywhere
                                                   from six months to two years or longer.                   •	avoiding or minimizing discomfort and distress to the animals.

     PAGE 23                                                                                                                                                         LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                                7. Post-Marketing Monitoring:
                                                    Informing Patients Who Use
                                                    Our Medicines                                    WORKING TOWARD DIVERSITY IN CLINICAL TRIALS
                                                    PURPOSE: Additional long-term testing            Minority populations have historically and consistently been underrepresented in clinical trials. As a
                                                    required by the FDA, and ongoing safety          result, important information about how medicines work in minority populations is not always available.
                                                    surveillance through spontaneous reporting
                                                    of adverse events                                This issue is critical because patients’ responses to medicines can vary by ethnicity, lifestyle, and
                                                                                                     genetic background. For example, African Americans and Hispanics are 2.2 times and 1.6 times more
                                                    Everyone is biochemically unique; therefore,     likely, respectively, to die from diabetes than non-Hispanic whites,15 yet combined they have histori-
  The Lilly Bioethics Program: A Global Framework   individuals may respond quite differently        cally represented only 15 percent of diabetes clinical-trial participants.16
                                                    to the same medication. Approved medi-           More diverse representation in clinical trials is needed to gain insights that will make medicines most
  The Drug Development Process
                                                    cations have been subjected to extensive         effective for all people who use them. Across the industry, pharmaceutical companies are aiming to
  Animal Testing, Care and Use                      testing for safety and efficacy. But even        better match the demographic composition of clinical-test groups with the disease-prevalence rate in
                                                    after medications are approved for general       the general population.
• Diversity in Clinical Trials                      use, Lilly continues to collect product-safety
                                                    information and monitor the safety profile       Lilly has taken a leadership role, boosting enrollment of diverse populations in trials and making trials
  Lilly Global Patient Safety Organization
                                                    of all Lilly products. In fact, the monitoring   more accessible to minority communities. We have goals across our therapeutic and product lines to
CONDUCTING OUR BUSINESS ETHICALLY AND               increases over time—through the collection       achieve greater diversity among patients enrolling in new clinical trials.
TRANSPARENTLY                                       of information from ongoing clinical studies,
                                                                                                     Our initial work has been in the United States, where we set a goal of introducing 36 new clinical-trial
                                                    spontaneous adverse-event reports vol-
SUPPORTING STRONG WORKPLACE                                                                          sites in locations with diverse populations. Since 2008, we have introduced 229 new clinical-trial sites
                                                    untarily reported directly from health care
PRACTICES                                                                                            in the United States that meet this definition. We are currently establishing a global strategy.
                                                    providers, and patients using the medicine.
                                                                                                     Lilly has partnered with a number of organizations to develop educational materials designed to raise
                                                                                                     awareness of the need for diversity in clinical trials. We also have made multiple presentations on
                                                                                                     the need for diversity in clinical trials to such organizations as the National Medical Association, the
FOSTERING ENVIRONMENTAL                                                                              National Hispanic Medical Association, and the American Medical Association’s Commission to End
SUSTAINABILITY                                                                                       Healthcare Disparities. We also have held several national, regional, and local panels reaching journal-
                                                                                                     ists, advocates, and health care providers concerning health care disparities and our clinical-trial
ABOUT THIS REPORT                                                                                    diversity strategy.

GLOBAL REPORTING INITIATIVE INDEX                                                                    To help address barriers to access to trials, our clinical-trial diversity strategy includes the following
                                                                                                     •	Translating patient materials into appropriate languages,

                                                                                                     •	Providing physician-education materials that include background on the different needs of distinct
                                                                                                       patient groups, and

                                                                                                     •	Providing assistance with patient transportation and travel reimbursement to and from certain trial sites.
                                                                                                          The Office of Minority Health. Diabetes and African Americans and Diabetes and Hispanic Americans. 2009.
                                                                                                          Available at: and
                                                                                                 Accessed November 16, 2009.
                                                                                                          B. Evelyn, K. Gray & R. Rothwell (Office of Special Health Issues, U.S. FDA), U.S. Black Participation in Clinical Trials: A Review of
                                                                                                          Selected New Molecular Entities Approved 1998-2001, Presented at the NMA Annual Meeting, Honolulu, Hawaii, 2002. Data on file, Lilly
                                                                                                          USA, LLC: B2B07092009A.

      PAGE 24                                                                                                                                                                     LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                                   AS OF AUGUST 2011
                                                                                                                                                                                             EDUCATING PATIENTS ABOUT
OUR APPROACH TO CORPORATE                                                                                                                          20 centers in the
                                                                                                                                                                                             THE BENEFIT/RISK BALANCE OF
RESPONSIBILITY                                                                                                                                     Central Northeast                         PHARMACEUTICALS
                                                                                                                        6 centers in the
ENHANCING ACCESS TO MEDICINES                                 57 centers                                                Central Northwest                                                    When a regulatory agency approves a medicine,
                                                                                          14 centers in the
                                                              in the Pacific              Mountain West                                                                    7 centers in      it has concluded that, for the overall public, the
DEVELOPING INNOVATIVE MEDICINES                                                                                                                                            New England
                                                                                                                                                                                             medication’s benefits outweigh its risks for the
                                                                                                                                                                                             conditions outlined in the product label. Still,
 The Lilly Bioethics Program: A Global Framework                                                                                                                       18 centers in the
                                                                                                              24 centers the
                                                                                                                                                                       Mid Atlantic          accurate and up-to-date safety information is
 The Drug Development Process                                                                                 Central Southwest                                                              critical for health care providers and patients
                                                                                                                                                                                             to best decide how and for whom a medication
 Animal Testing, Care and Use                                                                                                                                    57 centers in the
                                                                                                                                                                 South Atlantic
                                                                                                                                                                                             should be used. Lilly’s role in risk management
 Diversity in Clinical Trials                           Clinical Trial Therapeutic Area                                                                                                      centers on helping health care providers make
                                                                                                                                                                                             informed decisions about how and when a
                                                                                                                                    8 centers in the
• Lilly Global Patient Safety Organization                 Oncology                                                                 Central Southeast                                        medicine should be used, how to monitor the
                                                           Endocrine                                                                                                                         patient for potential adverse events, and how to
CONDUCTING OUR BUSINESS ETHICALLY AND                      Neuroscience                                                                                                                      communicate to the patient about proper use of
TRANSPARENTLY                                              Osteoporosis
                                                                                                                                                           15 centers in                     the medication.
                                                           Urology                                 3 centers in Alaska and Hawaii                          Puerto Rico
SUPPORTING STRONG WORKPLACE                                                                                                                                                                  In January 2010, Lilly launched our “Safety
                                                      		A	“diverse	clinical	site”	is	defined	as	any	clinical-trial	site	where	the	patient	population	(of	the	medical	practice,		             Matters” website (
                                                       not	necessarily	who	they	enroll	into	trials)	is	more	than	25	percent	non-Caucasian.                                                   to educate key external stakeholders (including
COMMUNITIES                                                                                                                                                                                  patients and doctors) about the role that the
                                                                                                                                                                                             pharmaceutical industry and the FDA play in
                                                   Lilly Global Patient Safety                                           an ongoing basis. This process depends on
FOSTERING ENVIRONMENTAL                                                                                                  the reporting of adverse events to identify                         ensuring medicines are safe and effective.
SUSTAINABILITY                                     Organization                                                          and minimize potential risks, including
                                                   Lilly’s global patient safety organization is a                       extremely rare events that would not have
ABOUT THIS REPORT                                                                                                        been identified in clinical trials. Often,
                                                   team of more than 300 individuals, including                                                                                            drug counterfeiting (see page 39) which
                                                   physicians, pharmacists, nurses, and other                            infrequent side effects can be observed only                      poses serious health threats to patients.
                                                   drug-safety professionals. This group leads                           after a medication has been approved and
                                                   the company’s efforts to report adverse                               used across a large, diverse patient popula-                      When safety-surveillance activities lead to
                                                   events18 and continuously monitor the safety                          tion for an extended period of time.                              a change in the benefit/risk balance of a
                                                   of Lilly’s products through their entire life                                                                                           product, we communicate these changes to
                                                                                                                         As required by law, we collect adverse-                           health care providers and patients through:
                                                   cycle, including the identification of changes                        event reports from all over the world—from
                                                   in the benefit/risk balance.                                          sources including health care providers,                          • Updates to the investigator brochure and/
                                                                                                                         patients, medical literature, and regulatory                        or informed-consent document for clinical
                                                     Adverse-Event Reporting                                                                                                                 trials,
                                                                                                                         agencies—as part of our continuous moni-
                                                   and Monitoring
                                                                                                                         toring and evaluation of all Lilly products.                      • The revision of labeling (package inserts)
                                                   To protect the safety of patients, regulatory                         We continually assess safety information,                           for marketed products, and
                                                   agencies and pharmaceutical manufac-                                  and we share new findings and emerging
                                                                                                                                                                                           • The provision of safety information to phy-
                                                   turers assess the safety of products (i.e.,                           concerns openly with regulators and health
                                                                                                                                                                                             sicians via letter, to consumers via patient
                                                   pre- and post-marketed medications) on                                care providers to appropriately manage
                                                                                                                                                                                             package inserts and medication guides,
                                                                                                                         risks associated with the use of our medi-
                                                         The	FDA	defines	an	“adverse	event”	as	any	undesirable	                                                                              and to the public via publications, press
                                                                                                                         cines. We also work diligently to combat
                                                        experience	associated	with	the	use	of	a	medical	product	                                                                             releases, and other means.
                                                        in	a	patient.

     PAGE 25                                                                                                                                                                                 LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                            CONDUCTING OUR BUSINESS


                                            ETHICALLY AND TRANSPARENTLY




• Values and Integrity
                                            VALUES AND INTEGRITY
                                            For more than 135 years, the people of Lilly have approached our

 The Importance of Stakeholder Engagement

 Advancing Public Policy                    company’s business with a deep sense of responsibility to those
 Managing Our Supply Chain
                                            we serve—patients, physicians and other health care providers,
                                            shareholders, suppliers, business partners, employees, and the                                              PERCENTAGE OF LILLY EMPLOYEES
                                                                                                                                                         WHO MUST COMPLETE ANNUAL
PRACTICES                                   communities in which we operate. Our actions are grounded in                                                  CODE OF CONDUCT TRAINING

                                            our core company values of integrity, excellence, and respect for
COMMUNITIES                                 people. These values are not simply platitudes; they are infused
                                            into the Lilly culture and are a guide for all that we do.
                                            At Lilly, how we do business is as important    Ethics, Compliance,

                                            as what we do. We strive to be a leader in
                                            corporate responsibility. We demonstrate        and Governance
GLOBAL REPORTING INITIATIVE INDEX           our values through responsible business         Our commitment to ethics and compliance
                                            practices that reflect our commitments to       is born of our commitment to integrity. Our                     NUMBER OF LANGUAGE
UNITED NATIONS GLOBAL COMPACT INDEX         strong governance principles; transparency;     policies, our Code of Business Conduct, our                TRANSLATIONS FOR OUR “RED BOOK”
                                                                                                                                                          CODE OF BUSINESS CONDUCT
                                            patient, customer, and employee privacy;        top-down compliance management sys-
                                            ethical product promotion; and stakeholder      tems, and our training programs reinforce
                                            engagement. Our participation in the public     ethical behavior.
                                            policy process also demonstrates our values
                                            and affects how we do business. This section    As a global leader in the development,
                                            of the report describes our efforts in, and     manufacture, and sale of pharmaceutical
                                            approaches to, these areas in greater detail.   products, we have implemented—and we

                                                                                            continue to refine and improve—programs
                                            It also highlights our work around ethical

                                            supply chain management.                        designed to promote ethical conduct and
                                                                                            instill a culture of compliance. We train all of
                                                                                            our employees in ethical business practices                    TOTAL AMOUNT SPENT WITH
                                                                                            and have systems in place to detect potential                  DIVERSE SUPPLIERS IN 2010
                                                                                            violations of the law and company policies.

     PAGE 26                                                                                                                                   LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                        Our Global Ethics and Compliance Program         Our chief executive officer routinely sets
                                            (GECP) takes a comprehensive approach to         “the tone at the top” by speaking directly       JOHN C. LECHLEITER, PH.D.
ABOUT LILLY                                 compliance. It includes training and com-        to employees about ethics and compliance
                                                                                                                                              CHAIRMAN, PRESIDENT, AND CEO
                                            munications designed to prevent potential        issues through his blog, through audio and
OUR APPROACH TO CORPORATE                                                                                                                     ELI LILLY AND COMPANY
                                            issues from arising, as well as reporting,       video messages, and through global town          From The Red Book (2011 edition)

                                            auditing, and monitoring to detect poten-        hall meetings.
ENHANCING ACCESS TO MEDICINES               tial compliance failings. We have invested                                                        Just as we set the bar high on the inno-
                                                                                             The global ethics and compliance orga-
                                            significant resources in our formal ethics                                                        vative medicines we bring to patients,
                                                                                             nization is headed by our chief ethics and
DEVELOPING INNOVATIVE MEDICINES             and compliance programs, which include                                                            so we must operate our business with
                                                                                             compliance officer, who reports to the CEO
                                            focused efforts on privacy, anti-corruption,                                                      absolute integrity and earn the trust of
                                                                                             and to the board of directors. The organiza-
CONDUCTING OUR BUSINESS ETHICALLY AND       and appropriate product promotion, among
                                                                                             tion is charged with providing support for       all; set the highest standards for the
TRANSPARENTLY                               other areas.
                                                                                             and assessment of compliance with global         performance of our products and for
• Values and Integrity                        Ethics and Compliance                          company policies that apply cross-function-      ourselves; and demonstrate caring and
                                            Program Oversight                                ally. All employees play a role in the success   respect for all those who share in our

 The Importance of Stakeholder Engagement                                                    of our ethics and compliance program.            mission and are touched by our work.
                                            Responsibility for ethics and compliance
 Advancing Public Policy
                                            at Lilly starts at the very top and cascades       Code of Conduct, Policies,
 Managing Our Supply Chain                  to all levels of the organization. Our board     Standards, and Procedures
                                            of directors’ public policy and compliance                                                            research, communications, securities
SUPPORTING STRONG WORKPLACE                                                                  Our ethics and compliance programs                   trading, record keeping, international
                                            committee, consisting of five indepen-
PRACTICES                                                                                    include policies, standards, and procedures.         transactions, ethical interactions with
                                            dent director members, exercises direct
                                                                                             We communicate our key compliance-                   external parties, interactions with govern-
                                            oversight of Lilly’s chief ethics and compli-
ENGAGING WITH PATIENTS AND                                                                   related expectations through the following           ment and public officials, payments, grants
                                            ance officer and the operation of the GECP.
COMMUNITIES                                                                                  vehicles:                                            and donations, meetings with health care
                                            The board’s audit committee has direct
                                            oversight of financial matters and some                                                               providers, gifts, product samples, and
FOSTERING ENVIRONMENTAL                                                                      • THE RED BOOK. We regularly update
                                            compliance-related audit matters.                                                                     many other topics. We also have policies,
SUSTAINABILITY                                                                                 and disseminate our Code of Business
                                                                                                                                                  standards, and procedures that are specific
                                                                                               Conduct, The Red Book. Available in 24
ABOUT THIS REPORT                                                                                                                                 to particular areas of our business.
                                                                                               languages, this document emphasizes
                                            LILLY COMPLIANCE STRUCTURE                         the company’s values and the importance
GLOBAL REPORTING INITIATIVE INDEX                                                                                                                  Reporting, Monitoring, and Auditing
                                                                                               of ethical decision-making, summarizes
                                                         BOARD OF DIRECTORS
                                                                                               key principles from global company             To detect possible compliance violations,
                                                                                               policies, and provides examples for            we maintain an internal disclosure system
                                                                                               employees to practice applying these           that includes a mechanism for anonymous
                                                                                               principles to their decisions and actions.     reporting. We also review business actions
                                                                  CEO                          The Red Book is designed to provide            through a system of monitoring and audits.
                                                                                               foundational guiding principles to help
                                                                                                                                              • INTERNAL REPORTING. Unless prohibited
                                                                                               our employees navigate an increasingly
                                                                                                                                                by local law, Lilly employees are required
                                                                                               complex global business environment.
                                                       SR. VP ENTERPRISE RISK                                                                   to report to the company any known or
                                                 MANAGEMENT (ERM), CHIEF ETHICS              • POLICIES, STANDARDS, PROCEDURES,                 suspected violations of the law, The Red
                                                                                               AND RELATED MATERIALS. The infor-                Book, company policies, or official orders
                                                      AND COMPLIANCE OFFICER
                                                                                               mation summarized in The Red Book is             or decrees applicable to our business.
                                                Global Ethics and Compliance Organization      amplified by policies, standards, and            Employees are encouraged to report any
                                                                                               procedures accessible to employees on            other ethical concerns or issues as well.
                                                                                               the company’s intranet. These documents          Our toll-free Ethics and Compliance Hot-
                                                                                               govern Lilly’s actions with respect to           line is staffed by an independent firm 24
                                             2 VICE PRESIDENTS, ETHICS AND COMPLIANCE
                                                                                               specific areas, including anti-corruption,       hours a day, seven days a week.
                                                Global Ethics and Compliance Professionals
                                                                                               privacy, product promotion, safety, medical

     PAGE 27                                                                                                                                      LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                                                                             they have received, read, understand,
                                            J.K. LILLY, SR., 1946
                                                                                                 and will abide by its requirements.

                                                                                                • Employees receive targeted ethics and            U.S. FOREIGN CORRUPT
OUR APPROACH TO CORPORATE                   And as to the future of this business …               compliance training related to their             PRACTICES ACT INVESTIGATION
RESPONSIBILITY                              it was founded and built on quality and               specific job responsibilities.
                                            integrity. Don’t ever do anything to                • New employees in the ethics and com-             In August 2003, we received notice that the
ENHANCING ACCESS TO MEDICINES               detract from its integrity. If we con-                pliance group participate in a training          staff of the U.S. Securities and Exchange
                                            tinue to work and follow those same                   and education session, which focuses             Commission (SEC) is conducting an investiga-
DEVELOPING INNOVATIVE MEDICINES             principles, there are no limits to where                                                               tion into the compliance by Polish subsidiaries
                                                                                                  on understanding and implementing the

                                            we can go.                                            seven elements of an effective compliance        of certain pharmaceutical companies, including
                                                                                                  program globally. Training continues on          Lilly, with the U.S. Foreign Corrupt Practices
                                                                                                  a periodic and as-needed basis.                  Act of 1977. The staff has issued subpoenas to
                                                                                                                                                   us requesting the production of documents
• Values and Integrity                      • MONITORING. In the United States, Lilly           In addition, our leaders communicate               related to the investigation. In connection
                                              maintains an ethics and compliance                regularly to reinforce that employees must
 The Importance of Stakeholder Engagement                                                                                                          with that matter, staffs of the SEC and the U.S.
                                              monitoring program for the direct obser-          conduct company business in an ethical and         Department of Justice have asked us to volun-
 Advancing Public Policy                      vation of field sales force interactions          compliant manner, making decisions and             tarily provide additional information related to
                                              with health care providers. We are also           taking actions in line with the company’s
 Managing Our Supply Chain                                                                                                                         certain activities of Lilly affiliates in a number
                                              developing and implementing a global              values of integrity, excellence, and respect       of other countries. The SEC staff has also
SUPPORTING STRONG WORKPLACE                   monitoring program structure. This                for people.                                        issued subpoenas related to activities in these
PRACTICES                                     includes an aligned global-monitoring
                                                                                                                                                   countries. We are in advanced discussions with
                                              strategy, a risk assessment and monitor-            Investigations and Corrective                    the SEC to resolve their investigation.
ENGAGING WITH PATIENTS AND                    ing plan, common monitoring processes             Actions
COMMUNITIES                                   and tools, and a process for reporting
                                                                                                We take all reports of known or suspected
                                              metrics to business leaders.
FOSTERING ENVIRONMENTAL                                                                         violations of company policies, standards,
SUSTAINABILITY                              • CORPORATE AUDITING. Our internal                  and procedures seriously, and we appro-           or to whom Lilly provides other items of
                                              auditing function, corporate audit services       priately investigate all claims of potential      value, such as educational opportunities,
ABOUT THIS REPORT                             (CAS), conducts both financial and nonfi-         wrong-doing that are brought to our atten-       • External parties whom Lilly may authorize
                                              nancial audits of all Lilly affiliates globally   tion. We seek to address inappropriate             to interact with government officials on
GLOBAL REPORTING INITIATIVE INDEX             to evaluate compliance with various com-          conduct as early as possible and to prevent        the company’s behalf,
                                              pany policies and procedures. CAS audits          future recurrences. To accomplish this, a
UNITED NATIONS GLOBAL COMPACT INDEX                                                                                                              • Prospective recipients of grants and
                                              include reviews of our anti-corruption pro-       five-stage investigation process is in place
                                                                                                                                                   donations, and
                                              gram and our policies that govern ethical         globally to conduct timely, thorough, and
                                              interactions. Other groups at Lilly routinely     professional investigations. All investigators   • Prospective business development
                                              audit our regulatory controlled functions         are trained to understand and follow this          partners.
                                              (e.g., manufacturing, environment, safety),       process and to meet local procedural and
                                              as described elsewhere in this report.            privacy requirements.
                                                                                                                                                 Transparency at Lilly
                                                Training and Communications                       Anti-Corruption Due Diligence                  Experience has taught us that transparency
                                            We believe training is a necessary part of          Lilly uses anti-corruption due diligence         in our operations can help to build trust
                                            promoting ethical behavior and guarding             processes to assess the appropriateness          with stakeholders. Transparency can also
                                            against corruption. Some examples of our            of interactions with certain external            challenge us to view our business practices
                                            programs in this area include the following:        parties, including:                              through the lens of external stakeholders
                                                                                                                                                 and, if warranted, to change those practices.
                                            • Each year, all Lilly employees must com-          • Health care providers whom Lilly pays for      By listening and responding openly to our
                                              plete training on The Red Book and certify          services, including clinical-trial research,   stakeholders’ concerns, we can improve our
                                                                                                                                                 transparency and the way we do business.

     PAGE 28                                                                                                                                       LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                        Lilly believes that transparency regarding       These faculty members are a key part of               In 2011, we began disclosing research and
                                            business practices that involve financial        our efforts to inform health care profession-         other payments as well as noncash forms of
ABOUT LILLY                                 payments to physicians helps to build trust      als about various diseases and treatment              value (such as business meals and business
                                            with the public. We also believe that fair       options. They also help other health care             travel expenses) we provide to all U.S.-based
                                            compensation is due to health care profes-       professionals educate patients about how to           physicians in the Lilly Physician Payment
                                            sionals for services rendered in the drug        use our medicines. The role these individuals         Registry (see www.lillyphysicianpayment
ENHANCING ACCESS TO MEDICINES               development process and medical educa-           play is an important aspect of our business— Our research-related pay-
                                            tion. However, we understand that these          one that is critical to Lilly’s vision to improve     ments include those made to research and
DEVELOPING INNOVATIVE MEDICINES             relationships may be misconstrued if they        individual patient outcomes.                          other institutions and include the name of
                                            are viewed as secretive. As a result, we                                                               the physician serving as principal investi-
                                                                                             While we had previously announced our
CONDUCTING OUR BUSINESS ETHICALLY AND       have taken a number of steps to provide                                                                gator for the study at each site. The new
TRANSPARENTLY                                                                                intent to voluntarily disclose payments to
                                            information on important aspects of how we                                                             payment registry, which replaces the Lilly
                                                                                             Lilly faculty, we are now obligated to disclose
                                            interact with key partners in the pursuit of                                                           Faculty Registry, is designed to help the
• Values and Integrity                                                                       payments and other noncash value to U.S.-
                                            advancements in medicine.                                                                              public better understand how we work with
                                                                                             based physicians as part of the Corporate
 The Importance of Stakeholder Engagement                                                                                                          U.S. physicians and compensate them for
                                            In 2004, Lilly was the first company to          Integrity Agreement (see box below) we
                                                                                                                                                   their services—and how these collaborations
 Advancing Public Policy                    announce that we would voluntarily dis-          entered into with the Office of Inspector
                                                                                                                                                   benefit patient care.
                                            close to the public our U.S. clinical-trial      General of the U.S. Department of Health
 Managing Our Supply Chain                  results—even unfavorable ones. We were           and Human Services in February 2009.                  For information on our political contributions,
                                            also the first company to report the results                                                           see page 36.
                                            of a third-party audit of our database (see
                                   Subsequently, much
                                            of the information has been required to be                                                             Privacy
COMMUNITIES                                 reported to the U.S. government via www.                                                               At Lilly, we work hard to balance transpar-
                                  , so Lilly’s new information                                                         ency and openness with the need to protect
FOSTERING ENVIRONMENTAL                     is posted there.                                    U.S. CORPORATE INTEGRITY                           the privacy of all of those with whom we
                                            In 2007, Lilly became the first to pub-
                                                                                                AGREEMENT                                          engage. We have a comprehensive pri-
                                            licly report the funding we provide in the                                                             vacy program, including a global privacy
ABOUT THIS REPORT                                                                               In February 2009, Lilly entered into a five-year
                                            United States to institutions in the form of                                                           office and a chief privacy officer, designed
                                                                                                Corporate Integrity Agreement (CIA) as part of     to protect the privacy rights of patients,
GLOBAL REPORTING INITIATIVE INDEX           educational grants and charitable contri-           our resolution of criminal and civil investiga-
                                            butions in support of medical education,                                                               consumers, health care professionals,
                                                                                                tions regarding the historical marketing of        employees, medical research subjects, and
UNITED NATIONS GLOBAL COMPACT INDEX         patient education, and other activities that        Zyprexa® in the United States. Under the CIA       others. As a part of this comprehensive
                                            we believe increase health care knowl-              provisions, Lilly is obligated to maintain our
                                            edge and improve patient care (see www.                                                                program, we have robust privacy policies.
                                                                                                compliance program and to comply with a            These policies govern the collection of per-
                                   Since 2008, Lilly also       set of CIA obligations, including retaining an
                                            has disclosed financial support to patient                                                             sonal information necessary to our business
                                                                                                Independent Review Organization to assess and      operations. We have implemented reason-
                                            organizations based in Europe (see www.             report on certain company systems, processes,
                                                                                                able technical, physical, and administrative
                                                                                                policies, procedures, and practices.               safeguards to protect both personal and
                                                                                                Each year, the public policy and compliance        sensitive information from unlawful use and
                                            In 2009, Lilly launched our Faculty Regis-          committee of our board of directors must adopt     unauthorized disclosure, and we employ
                                            try, an online listing of payments made to          a resolution that Lilly has implemented an         regular monitoring and auditing.
                                            external U.S. health care professionals who         effective ethics and compliance program as it
                                            are contracted as speakers for educational                                                             For more information on our privacy
                                                                                                relates to the scope of the CIA.                   policies, see
                                            programs and who provide us with advice
                                            based on their experience and expertise.

     PAGE 29                                                                                                                                         LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                        Marketing Practices                              for compliance with applicable legal
                                                                                             requirements; in some jurisdictions, they
ABOUT LILLY                                 Our commitments to ethical business              are also submitted to regulatory authorities.
                                            practices are reflected in how we market                                                            ADDRESSING PARENTS’
OUR APPROACH TO CORPORATE                   our products. We introduce a medicine to         We adhere to leading trade association             ADVERTISING CONCERNS
RESPONSIBILITY                              the market only if we believe it addresses       codes of conduct regarding interactions
                                            unmet patient needs. Once a product is           with health care professionals, including          In October 2010, we joined an initiative with
ENHANCING ACCESS TO MEDICINES                                                                the codes of the Pharmaceutical Research           the Parents Television Council (PTC) to alert
                                            approved for use, we communicate its
                                            benefits and risks, market it in compli-         and Manufacturers of America (PhRMA),              parents to broadcast television programs
                                            ance with company policies and applicable        the European Federation of Pharmaceuti-            that will contain advertisements for erectile
                                            legal requirements, and monitor results for      cal Industries and Associations, and the           dysfunction drugs. The PTC receives weekly
TRANSPARENTLY                               safety concerns.                                 International Federation of Pharmaceutical         broadcast schedules from Lilly. The advertis-
                                                                                             Manufacturers & Associations (for emerg-           ing schedules for erectile dysfunction drugs
                                            Patients and prescribers need to navigate        ing markets), as well as individual country        are made available to the public on the PTC’s
• Values and Integrity
                                            complex medical information to under-            trade-association codes. All of these codes        website,
 The Importance of Stakeholder Engagement   stand the benefits and risks of a medicine       are very similar to PhRMA’s code (see www.
                                            for a particular individual and condition.                                                         “We are grateful to Lilly for sharing their broad-
 Advancing Public Policy                                                           
                                            Purchasers of health care services and                                                              cast television ads with us so we can inform our
 Managing Our Supply Chain                  regulators need the same kind of infor-                                                             members and the public about where the ads
                                                                                             which sets industry standards for appropri-
                                            mation to provide a macro view of patient                                                           will air. This is an important first step in ad-
                                                                                             ate sales and marketing practices in the
SUPPORTING STRONG WORKPLACE                 populations’ needs.                                                                                 dressing the concerns many parents have about
                                                                                             United States.
PRACTICES                                                                                                                                       advertisements for erectile dysfunction drugs,”
                                            Providing trusted, timely, and accurate infor-                                                      said Tim Winter, president of the PTC.
ENGAGING WITH PATIENTS AND                  mation about our products is a vital part of
                                                                                               Direct-to-Consumer Advertising
COMMUNITIES                                 our engagement with customers. Our under-        Given the increasingly complex health care
                                            standing of a drug’s efficacy and safety can     system, patients are seeking more infor-
FOSTERING ENVIRONMENTAL                     change over time as a result of additional       mation about diseases and treatments,
SUSTAINABILITY                                                                                                                                accurate, and balanced. To that end, we
                                            research and real-world clinical experience.     asking questions, and evaluating their
                                                                                             options before making choices. We believe        have established a series of principles to
ABOUT THIS REPORT                           We communicate product information to                                                             help serve as a guide when designing and
                                                                                             that direct-to-consumer (DTC) advertis-
                                            our customers in several ways. These                                                              launching DTC communications. For more
GLOBAL REPORTING INITIATIVE INDEX                                                            ing—which is legal in the United States
                                            include direct interaction between our sales                                                      information about these principles, see
                                                                                             and is permitted on a limited basis in some
                                            representatives and prescribers, account                                                
UNITED NATIONS GLOBAL COMPACT INDEX                                                          other countries—provides many benefits,
                                            managers and payers; information provided                                                         Pages/advertising.aspx. We also adhere
                                                                                             including raising awareness of diseases
                                            to patients and physicians through package                                                        to PhRMA’s Guiding Principles on Direct to
                                                                                             and conditions that are often undiagnosed,
                                            labels and inserts; and, in some markets,                                                         Consumer Advertisements about Prescrip-
                                                                                             untreated, or undertreated.
                                            product websites and other direct-to-                                                             tion Medicines (see
                                            consumer advertising (see to the right). All     As a company responsible for developing          sites/default/files/631/phrmaguiding
                                            communications about our products are            new, innovative medicines, we are commit-        principlesdec08final.pdf).
                                            reviewed and approved internally (before use)    ted to providing advertising that is truthful,

     PAGE 30                                                                                                                                    LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                             THE IMPORTANCE OF STAKEHOLDER
                                             ENGAGEMENT                                                                                       LILLYPAD
                                                                                                                                              In 2010, our company launched a new blog—
RESPONSIBILITY                               Lilly participates in dialogue with a wide array of stakeholders to                              LillyPad—to extend a dialogue with the public
ENHANCING ACCESS TO MEDICINES                understand their interests, explain ours, and address differences                                on matters that are of mutual interest to us and
                                             when they arise. We approach these discussions through several                                   to those following our industry. (See http://
DEVELOPING INNOVATIVE MEDICINES                                                                                                      The blog, which includes
                                             groups at Lilly: public policy; government affairs; advocacy; health,                            posts from a variety of professionals across Lilly,
CONDUCTING OUR BUSINESS ETHICALLY AND        safety, and the environment; and communications. Employees                                       focuses on public policy issues such as health
                                             from these areas work in concert to develop and promote innova-                                  and wellness, innovation, and job creation. It
                                                                                                                                              also describes our corporate responsibility
 Values and Integrity                        tive solutions that balance the needs and responsibilities of our                                initiatives, advocacy efforts, and the work our
• The Importance of Stakeholder Engagement   company with the needs and responsibilities of the individuals we                                employees do every day to make the world a
                                                                                                                                              healthier place to live. Visitors may add com-
 Advancing Public Policy                     serve and the communities we impact.
                                                                                                                                              ments to contribute to the discussion.
 Managing Our Supply Chain
                                             This Corporate Responsibility report and our related website help
SUPPORTING STRONG WORKPLACE                  us communicate with our stakeholders. For other examples of
                                             engagement channels and communications, see page 32.
                                                                                           Lilly values the independence and credibility   • Build awareness about various dis-
                                             Engaging with Patient and                                                                       ease states, treatment options, and the
FOSTERING ENVIRONMENTAL                                                                    of external organizations, and we recog-
                                             Consumer Advocacy                             nize that an advocacy group’s scientific or       importance of adherence to treatment
                                             Organizations                                 educational agenda, perspectives, and legal       recommendations,
ABOUT THIS REPORT                                                                          obligations may differ from our own.            • Provide educational information, tools,
                                             We provide answers to often complex,
                                                                                           We follow our company principles and              and resources,
GLOBAL REPORTING INITIATIVE INDEX            difficult problems in two ways: through
                                             the discovery and development of break-       industry codes when interacting with            • Improve medical standards of care and
UNITED NATIONS GLOBAL COMPACT INDEX          through medicines and through the health      third-party patient and consumer advocacy         foster productive communication between
                                             information we offer. We believe it is        groups. Our principles are built upon the         patients and their health care providers, and
                                             critical for patients and their caregivers    concepts of compliance with legal require-      • Serve varied populations and provide
                                             to have adequate information about their      ments; open and honest communications;            educational materials that are culturally
                                             illnesses and treatment options and to be     transparency; and a diversity of funding          appropriate and respect the diversity of
                                             actively engaged in dialogue concerning the   recipients.                                       patients and caregivers.
                                             management of their health. We provide
                                                                                           We seek to establish collaborative partner-
                                             important information about our medicines
                                                                                           ships that:
                                             and the diseases they treat to health care
                                             professionals, patients, and their caregiv-   • Engage stakeholders on matters involv-
                                             ers, as appropriate. And we interact with       ing public policy, improving patient access
                                             policy makers and advocacy organizations        to treatment options, and supporting
                                             to help shape the external environment in       market-oriented solutions to the health
                                             ways that improve patient health.               care issues we all face,

     PAGE 31                                                                                                                                 LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                         Who Are Our Stakeholders?
                                             STAKEHOLDER GROUPS AND EXAMPLES OF ENGAGEMENT CHANNELS
OUR APPROACH TO CORPORATE                                           PATIENTS                                              EMPLOYEES 19                                        INVESTORS
                                              • Health care provider discussions                         • Live “global town hall” meetings                 • Daily interactions through our investor rela-
ENHANCING ACCESS TO MEDICINES                 • Educational materials and programs                       • Intranet social collaboration/networking           tions function

                                              • Product package inserts and medication guides              tools, including CEO Blog                        • Industry investor conferences
                                              • Patient advocacy groups                                  • Employee resource groups                         • Meetings in Indianapolis and major global cities
CONDUCTING OUR BUSINESS ETHICALLY AND         • Patient support and assistance programs                  • Employee surveys                                 • Quarterly earnings communications
TRANSPARENTLY                                 • Online product resources                                 • Electronic newsletters                           • Annual meeting of shareholders

                                              • Lilly Answers Center telephone line                      • Hotline for ethics, compliance,                  • Annual report and other financial disclosures
 Values and Integrity                                                                                      and privacy questions/concerns
                                              • Direct-to-consumer advertising                                                                              • Periodic investment community update
• The Importance of Stakeholder Engagement                                                                                                                    meetings

 Advancing Public Policy
                                                      HEALTH CARE PROFESSIONALS                      GOVERNMENT AND REGULATORY ORGANIZATIONS                                  SUPPLIERS
 Managing Our Supply Chain
                                              • Online medical information resources                     • Policy education materials                       • Green procurement program
SUPPORTING STRONG WORKPLACE                   • Disease-state educational programs                       • Published policy research                        • Product Stewardship Standard
PRACTICES                                     • Advisory boards                                          • Responses to written requests for information    • Supplier self-assessments and qualification

ENGAGING WITH PATIENTS AND                    • Sales-force interactions                                 • Oral and written testimony                       • Supplier audits that Lilly performs
COMMUNITIES                                   • Direct-mail communications                               • Written comments on proposed regulations         • Supplier risk-assessment process
                                              • Lilly Answers Center telephone line                      • Policy discussions                               • Policy advocacy conversations with vendors
FOSTERING ENVIRONMENTAL                       • Medication guides, package inserts                       • Advisory boards
                                              • Online registries                                        • Meetings and conferences                             NONGOVERNMENTAL ORGANIZATIONS
ABOUT THIS REPORT                             • Publications (manuscripts, posters, abstracts)           • Communication of studies
                                                                                                                                                            • Partnerships to support patients and families
                                              • Medical letters                                          • Lobbying activities
GLOBAL REPORTING INITIATIVE INDEX                                                                                                                           • Partnerships to raise awareness about
                                              • Patient-support programs                                 • Educational briefings
                                                                                                                                                              certain diseases
UNITED NATIONS GLOBAL COMPACT INDEX           • Lilly-sponsored symposia and scientific-                 • Direct legislator and policy maker engagement
                                                                                                                                                            • Advisory-board participation
                                                exchange meetings
                                                                                                                                                            • Participation in annual conferences/exhibitions
                                              • Medical and commercial booths at congresses
                                                                                                                                                            • Company communications
                                              • Interactions with Lilly physicians, scientists,
                                                and medical liaisons                                                                                        • Memberships
                                              • Contracting for clinical-trial investigation work

                                              PAYERS (INCLUDING GOVERNMENT PAYERS)                                   COMMUNITY MEMBERS                      Our business partners, including those
                                                                                                                                                            involved in research, development, commer-
                                              • Account-manager interactions                             • Employee service on boards and committees        cial, and manufacturing alliances, are also
                                              • Disease-state educational programs                         of local organizations                           important stakeholders. Our office of alliance
                                              • Lilly Answers Center telephone line                      • Participation in local volunteer opportunities   management performs about 15 “Voice of
                                                                                                         • Employee-directed philanthropy                   Alliance™” surveys per year of more than
                                              • Online medical information resources                                                                        2,000 respondents, asking both our business
                                              • Advisory boards                                                                                             partners and the Lilly employees involved in
                                                                                                                                                            those partnerships how the collaborations
                                                                                                                                                            could be improved.
                                                                                                     	Approximately	38,000	employees	as	of	June	30,	2011

     PAGE 32                                                                                                                                                LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                            ADVANCING PUBLIC POLICY                                                                         • PERSONALIZED MEDICINE: Regulatory
                                                                                                                                              and reimbursement systems need to be
ABOUT LILLY                                                                                                                                   prepared for personalized medicine, or
                                            As a biopharmaceutical company that treats serious diseases,                                      “tailored therapeutics,” which promise to
                                            we play an important role in public health and its related public                                 deliver greater precision, higher value, and
                                                                                                                                              improved outcomes for individual patients.
                                            policy debates. We believe it is important for our company to shape                               This lies at the heart of our vision at Lilly.
                                            public policy debates around the world on issues specific to the
                                                                                                                                            • RESEARCH AND DEVELOPMENT: Lilly
DEVELOPING INNOVATIVE MEDICINES             people we serve and to our other key stakeholders, especially                                     supports a vibrant research and develop-
                                            shareholders and employees. Our engagement in the public policy                                   ment environment that stimulates medical
TRANSPARENTLY                               arena helps address the most pressing issues related to ensur-                                    innovation, enables medical progress, and
                                                                                                                                              protects patient safety while balancing the
 Values and Integrity
                                            ing that patients have access to needed medications—leading to                                    trade-off between benefits and risks. Lilly
                                            improved patient outcomes. Through public policy engagement,                                      follows our Code of Business Conduct for
 The Importance of Stakeholder Engagement                                                                                                     medical research and adheres to regula-
                                            Lilly provides a way for all of our locations globally to shape the                               tory requirements around the world to
• Advancing Public Policy
                                            policy environment in a manner that supports access to innovative                                 generate important information regarding
 Managing Our Supply Chain                  medicines. We also look for ways to engage on issues specific to                                  those medicines. (For more information,
                                                                                                                                              see page 16 and following.)
SUPPORTING STRONG WORKPLACE                 local business environments.
PRACTICES                                                                                                                                   • INTELLECTUAL PROPERTY: Strong intel-
                                            We develop our positions with the needs         efforts center on three key areas, which are      lectual property (IP) is the foundation of
ENGAGING WITH PATIENTS AND                  of patients foremost, but we also remain        described in more detail below: innova-           our industry; it is critical to driving innova-
COMMUNITIES                                                                                                                                   tion and stimulating economic growth in
                                            mindful of the requirements of civil society    tion, health care delivery, and pricing and
                                            (including community groups, NGOs, labor        reimbursement. In addition, we support            countries throughout the world. Strong
                                            unions, indigenous groups, charitable           legislation that reflects our commitment          IP systems foster an innovative culture,
                                            organizations, faith-based organizations,       to bioethics (see the Developing Innovative       whereby local innovators can develop new
ABOUT THIS REPORT                           professional associations, and founda-          Medicines section, beginning on page 16.)         products and technologies knowing that
                                            tions). We look for solutions that promote                                                        their inventions and creativity are secure.
                                                                                            Our positions on these policy issues are all      Moreover, strong IP protection afforded by
GLOBAL REPORTING INITIATIVE INDEX           improved patient outcomes and strengthen
                                                                                            grounded in sound business practices that         effective patent systems and data protec-
                                            our relationships with governments, which
UNITED NATIONS GLOBAL COMPACT INDEX                                                         reflect our efforts around transparency and       tions provides incentives for increases in
                                            bear the primary responsibility for public-
                                                                                            our ethical interactions with the medical         technology transfer, foreign direct invest-
                                            health issues and concerns. We also play
                                                                                            community. For more on our ethical busi-          ment, and local research and development
                                            a pivotal role in protecting public health by
                                                                                            ness practices, see page 26.                      (R&D) capacity. (For more on this topic,
                                            fighting the production and distribution of
                                            counterfeit medicines (see page 39 for a                                                          see the Access and Affordability discus-
                                                                                              Innovation Policies                             sion on page 34.)
                                            discussion of counterfeit medicines).
                                                                                            At Lilly, innovation is our driving force and
                                                                                                                                            • FOLLOW-ON BIOLOGICS: Globally, govern-
                                                                                            the most important thing we do for the
                                            Positions on Issues Important                   people we serve. Our policies reflect our
                                                                                                                                              ments have or are developing regulatory
                                                                                                                                              pathways to approve follow-on biologics
                                            to Lilly and Our Stakeholders                   company’s dedication to the discovery and
                                                                                                                                              (FOBs) as alternatives to innovator-
                                                                                            development of medicines that help people
                                            Through our policy research, development,                                                         developed, biologic, “large molecule”
                                                                                            live longer, healthier lives.
                                            and stakeholder dialogue activities, Lilly                                                        medicines. An FOB is not a generic—i.e.,
                                            focuses on a number of dynamic areas that       Lilly’s innovation-related policies and prin-     a product approved as an identical copy of
                                            are important to our company, our industry,     ciples include the following:                     an already-approved product. Rather, an
                                            and the people we serve. Our public-policy                                                        FOB is a highly similar (yet not identical)

     PAGE 33                                                                                                                                  LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                         version of an already-approved product.        just appropriate use guided by an informed      care budgets by line items (medicines,
                                             Any regulatory pathway to authorize FOBs       health care professional. Appropriate use       physicians, etc.) without an appreciation of
ABOUT LILLY                                  should protect patient safety and product      means supporting the right drug for the         how costs and savings are interconnected
                                             integrity, respect proprietary informa-        right patient and putting policies in place     across the health system.
                                             tion, and contain intellectual property        to support adherence to the prescribed
RESPONSIBILITY                                                                                                                             • PATIENT EDUCATION: Lilly believes an
                                             provisions that help ensure the research       treatment plan.
                                                                                                                                             informed patient is a better participant in
ENHANCING ACCESS TO MEDICINES                and development of innovative, lifesaving
                                                                                           • ACCESS AND AFFORDABILITY: Tack-                 his or her own care and can achieve better
                                             biological products.
                                                                                             ling the issue of access to medicines,          outcomes with access to approved patient
                                              Health Care Delivery Policies                  especially among the poorest in society,        information. In addition to developing
                                                                                             requires the best efforts of governments,       patient-information programs, Lilly sup-
TRANSPARENTLY                               Even when governments are the primary            the private sector, multilateral institu-       ports and partners with numerous local
                                            payers for health care, Lilly believes that      tions, and civil society. We are committed      and national initiatives, including those
 Values and Integrity                       effective health care systems should be          to playing our role, predominantly through      addressing multicultural health dispari-
                                            market-based, to best address the chal-          new innovation and, when possible, by           ties, to improve patient care. For more
 The Importance of Stakeholder Engagement                                                    developing new solutions in partnership         information, see page 54.
                                            lenge of improving access, quality, and
• Advancing Public Policy                   value for today and for the future. Lilly        with governments and other stakeholders.
                                                                                                                                           • SUPPLY CHAIN: Lilly believes govern-
                                            identifies the following principles as key       In addition, Lilly does not pursue patents
 Managing Our Supply Chain                                                                                                                   ments around the world need to increase
                                            elements to achieving that balance:              in least-developed countries, enabling
                                                                                                                                             enforcement activities and penalties
                                                                                             qualified generic companies to supply
SUPPORTING STRONG WORKPLACE                 • Protecting and encouraging patient choice                                                      related to counterfeit and substandard
                                                                                             those markets. For more detailed discus-
PRACTICES                                     and decision-making in managing the                                                            medicines. To protect the health and
                                                                                             sion on this topic, see page 8.
                                              health of patients and their families,                                                         safety of our patients, Lilly partners with
ENGAGING WITH PATIENTS AND                                                                 • NON-COMMUNICABLE DISEASES: Non-                 governments to combat counterfeiting.
COMMUNITIES                                 • Enabling patients as responsible par-
                                              ticipants in their health, while requiring     communicable diseases (NCDs), such as           Pharmaceutical counterfeiting crosses
                                              all participants in the health care            diabetes, cancer, and heart disease are         geographic boundaries, impacts patients
                                              arena—including health care providers,         placing an increasing burden on patients,       suffering from a variety of diseases, and
                                              regulators, insurers and other payers,         health care systems, and economies              poses a real and growing threat to patient
ABOUT THIS REPORT                             and innovators—to remain accountable           around the world. We believe our company        safety and worldwide public health. For
                                              to patients,                                   has an important role to play in tackling       more on our approach to counterfeit medi-
GLOBAL REPORTING INITIATIVE INDEX                                                            NCDs and other critical public-health           cines, see page 39.
                                            • Protecting and promoting market-based          challenges, primarily through the products
UNITED NATIONS GLOBAL COMPACT INDEX           competition by rewarding providers and         we make. We also support a public-policy        Pricing and Reimbursement Policies
                                              innovators based on the quality and value      environment that enables company-driven
                                              provided to the patient, and                                                                 Pricing and reimbursement policies that are
                                                                                             commercial solutions, in partnership with     focused on controlling medicine costs alone
                                            • Improving the quality and efficiency of        governments and other stakeholders, to        can have the unintended consequence of
                                              health care delivery by reducing waste         issues associated with NCDs.                  reducing the quality of health today, imped-
                                              and system costs, and by closing the
                                                                                           • INTEGRATED AND COORDINATED CARE:              ing medical progress, and denying improved
                                              gap in health disparities.
                                                                                             Lilly encourages the transition from a        health opportunities to future patients.
                                            Our health care delivery policies and            component-based health care system to         Lilly’s policies around pricing issues include
                                            positions focus on the following issues:         a comprehensive, integrated health care       the following:
                                                                                             delivery system. Too many health care
                                            • ROLE OF PHARMACEUTICALS: The poten-
                                                                                             systems operate in silos—for example,         • HEALTH TECHNOLOGY ASSESSMENT:
                                              tial of new medicines to bring dramatic
                                                                                             multiple physicians providing treatment         Ideally, health technology assessment
                                              benefits to society can best be realized
                                                                                             for a patient without full knowledge of the     (HTA) is a multidisciplinary process that
                                              through the appropriate and effective use
                                                                                             patient’s treatment plans with his or her       summarizes information about the medi-
                                              of medicines—not overuse, not underuse,
                                                                                             other physicians; or payers viewing health      cal, social, economic, and ethical issues

     PAGE 34                                                                                                                                 LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                         related to the use of a health technology
                                             (such as a diagnostic, procedure, drug,
ABOUT LILLY                                  or device) in a systematic, transparent,        POSITIONS ON MEDICARE/MEDICAID
                                             unbiased, and robust manner. Its aim is to
                                             inform the formulation of safe, effective       Lilly believes that a competitive private market is the most effective means of delivering efficient
                                             health policies that are patient-focused        and high-quality care for patients. The prescription-drug benefit in the U.S. Medicare program is an
ENHANCING ACCESS TO MEDICINES                and seek to achieve the best value.             example of how a competitive marketplace can deliver value to both patients and payers.
                                             Lilly believes HTA processes should be
                                             appropriately used by public and private        The Medicare Part D program continues to provide unprecedented coverage and choice for seniors
                                             health systems to improve patient care          and disabled Americans. Average premiums for Part D coverage in 2011 will be $30—just $1 more
CONDUCTING OUR BUSINESS ETHICALLY AND        and physician decision-making. Some             per month compared to 2010 and considerably lower than originally projected when the program was
TRANSPARENTLY                                health systems will evaluate the value and      established. According to 2011 Congressional Budget Office figures, Medicare will save $217.8 billion,
                                             appropriate use of pharmaceuticals and          or 32.9 percent, from 2006 to 2014, compared to 2004 projections. Part D recipients can choose the plan
 Values and Integrity                        other health technologies to make their         that best meets their needs rather than getting a one-size-fits-all government program. They have access
                                             formulary and reimbursement decisions           to the medicines they need and are saving money.
 The Importance of Stakeholder Engagement
                                             and to use their resources wisely. HTA          Governments have a role in ensuring that high-quality care is available to vulnerable patients, such
• Advancing Public Policy                    processes should be transparent, include        as the elderly, people with disabilities, and people with very low incomes. In the United States, the
                                             participation from all stakeholders with        biopharmaceutical industry helps the government fulfill this obligation by participating in public-health
 Managing Our Supply Chain
                                             direct knowledge of the therapeutic area,       programs, thereby offering substantial discounts to support patient access to the medicines they need.
SUPPORTING STRONG WORKPLACE                  and be focused on clinical and patient-
PRACTICES                                    reported outcomes.                              Recently, the U.S. government greatly expanded its role in health care, not only broadening the scope
                                                                                             of Medicaid coverage to new patient populations, but also requiring substantial increases in the rebates
ENGAGING WITH PATIENTS AND                  • VALUE-BASED PRICING: Lilly believes            paid by industry. In 2010, federal health care reform legislation—the Patient Protection and Affordable
COMMUNITIES                                   that the prices of our medicines reflect       Care Act—significantly increased and expanded Medicaid rebate taxes, increasing the minimum rebate
                                              the value they provide to patients, provid-    percentage to 23.1 percent from 15.1 percent for innovative medicines, while also expanding rebate
FOSTERING ENVIRONMENTAL                       ers, payers, and society as a whole. We        taxes to include medicines used through Medicaid managed-care plans. In addition, innovator biophar-
SUSTAINABILITY                                incorporate our understanding of those         maceutical companies are providing a 50 percent discount on branded pharmaceuticals for Medicare
                                              values, based on available data, when          beneficiaries who reach the coverage gap (or “donut hole”).
ABOUT THIS REPORT                             establishing prices.
                                                                                             Despite these dramatic rebate increases, there is continued pressure in the United States to intensify the
GLOBAL REPORTING INITIATIVE INDEX           • DIFFERENTIAL PRICING: Differential             use of price controls over pharmaceuticals in response to budgetary pressures and the need to reduce
                                              pricing of medicines, either by varying        the federal deficit. Discussed price controls include expanding Medicaid rebates into the Medicare drug
UNITED NATIONS GLOBAL COMPACT INDEX           prices based on patient ability to pay         program and granting the government authority to negotiate prices within Medicare. The move toward
                                              within a country, or varying prices based      increasingly substantial price controls in Medicare and Medicaid risks future research into the treatments
                                              on national wealth across developed and        most needed by the patient populations those programs serve. If there is limited funding for medicines for
                                              developing countries, can balance the          seniors or people with disabilities, venture capital for research into new, innovative treatments targeted for
                                              desire to have affordable prices for low-      these population segments will decrease, ultimately harming Medicare and Medicaid patients.
                                              income populations while also rewarding
                                              innovation. This enables access and con-       The success of the Medicare Part D program in providing participating seniors with broad access to
                                              tinued research and development, which         innovative medicines while controlling costs is evidence that the private market works. Expanded
                                              benefits patients, public and private health   government price controls in the United States threaten the ability of the biopharmaceutical industry to
                                              care administrators, and the industry. To      continue to discover new cures and treatments and jeopardizes the ability of the innovative industry to
                                              be effective, differential pricing must be     be a vibrant generator of high-quality U.S. employment opportunities.
                                              supported by a policy environment that is
                                              free of reference pricing and that prevents
                                              the diversion of discounted medicines to
                                              higher-income markets.

     PAGE 35                                                                                                                                             LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                        • PRICE CONTROLS: Competitive market
                                              conditions are the most efficient way
ABOUT LILLY                                   of allocating resources and reward-             COMPARATIVE EFFECTIVENESS RESEARCH
                                              ing innovation. Given the absence of
                                              genuine market conditions in many               Lilly supports the development of high-quality, timely, and relevant comparative effectiveness research
                                              countries, Lilly is committed to engaging       (CER) in the United States to help inform individual treatment decisions made by physicians and
ENHANCING ACCESS TO MEDICINES                 with governments and other parties to           patients, to explore opportunities for broader improvements in health care systems, and to help address
                                              discuss principles and pragmatic public         public health challenges. Lilly supports an open scientific process and debate on the development of new
DEVELOPING INNOVATIVE MEDICINES               policy approaches that will enable the          and innovative clinical endpoints, study designs, and analytical methods. Because broader definition
                                              development of government pricing and           and communication of value are in greater demand by payers and other stakeholders, a greater range of
CONDUCTING OUR BUSINESS ETHICALLY AND         reimbursement systems that reflect the          clinical endpoints should be embraced as options within CER in the United States.
TRANSPARENTLY                                 value of products, include the patient
                                              perspective, and reward innovation.             We believe:
 Values and Integrity
                                            • ROLE OF GENERICS: Lilly believes that           • CER should be clinically focused to improve patient outcomes and the science and practice of medi-
 The Importance of Stakeholder Engagement     generic drugs have an important role in           cine in a way that does not impede access to care.

• Advancing Public Policy                     the prescription drug marketplace. The          • CER should not focus on short-term cost cuts. Analysis of cost-effectiveness must be separate from
                                              use of high-quality generics may reduce           analyses of clinical value. Although cost factors play an important role in patient/consumer decision-
 Managing Our Supply Chain                    expenditures in some areas, thereby free-         making and reimbursement, this separation from clinical effect is necessary to emphasize that CER
                                              ing funds to enable access to innovative          studies focus on the effectiveness and quality of health care rather than simply on cost.
                                              drugs for those patients who most benefit.
PRACTICES                                                                                     • CER development should be an inclusive process. Academic centers, patient advocates, health plans,
                                              A vibrant generic market with price com-
                                              petition at the end of the innovation life        biopharmaceutical and device companies, hospitals and other providers, and other qualified research
                                              cycle is the most economically efficient          bodies can all contribute to improved standards of care and better-quality outcomes for patients.
                                              and best serves public health.                  • Comparative research can help to identify the most critical medical-care questions across the spectrum
FOSTERING ENVIRONMENTAL                                                                         of health care products and services, including diagnostics, procedures, drugs and devices, care delivery
                                            Political Financial Support                         processes, and health benefit design. CER should not be narrowly focused on pharmaceutical treatments.
                                            When engaging in lobbying efforts or mak-
GLOBAL REPORTING INITIATIVE INDEX           ing political contributions, we comply with
                                            the laws that govern such activities. All
UNITED NATIONS GLOBAL COMPACT INDEX         Lilly employees must also comply with the       needs of patients. When reviewing U.S. can-              • Is the candidate dedicated to improving
                                            company’s global policies, core values, and     didates for support, we consider a number                  the relationship between business
                                            legal obligations, which are outlined in our    of factors. For example:                                   and government?
                                            written Code of Business Conduct, The Red       • Has the candidate historically voted or                • Does the candidate represent a state or
                                            Book (see page 27).                               announced positions on issues of impor-                  district where Lilly operates a facility or
                                            Elected officials, no matter what level, have     tance to Lilly, such as pharmaceutical                   has a large concentration of employees
                                            an impact on public policy issues affecting       innovation and health care?                              or retirees?
                                            Lilly. We lobby and make political contribu-    • Has the candidate demonstrated leader-                 • Would Lilly support have an impact on his
                                            tions only where allowed under local law.         ship on key committees of importance to                  or her campaign?
                                            In the United States, we are committed            our business?
                                                                                                                                                     We are proud to have been recognized by the
                                            to backing candidates of any party who          • Does the candidate demonstrate potential               Center for Political Accountability as a leader
                                            support public policies that contribute to        for legislative leadership?                            in accountability and political disclosure.
                                            pharmaceutical innovation and the health

     PAGE 36                                                                                                                                            LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                        Our annual Report of Political Financial                                                              What follows is a list of U.S.-based organiza-
                                            Support provides details of our company’s                                                             tions to which Lilly contributes a minimum
ABOUT LILLY                                 political contributions; our memberships in                                                           of $50,000 a year. Organizations with which
                                                                                              In 2010, Lilly:
                                            organizations that report lobbying activity                                                           Lilly holds a board seat are noted to reflect
OUR APPROACH TO CORPORATE                                                                     • Gave a total of $1,599,375 in political finan-
                                            to the U.S. government and to which we                                                                our greater degree of involvement in setting
RESPONSIBILITY                                                                                  cial support in the United States, of which
                                            contribute $50,000 a year or more; and the                                                            priorities for these organizations.
                                            activities of our Political Action Commit-          $458,250 was corporate contributions and
ENHANCING ACCESS TO MEDICINES                                                                                                                     • Biotech Industry Organization
                                            tee, the Lilly PAC, which is funded solely by       $1,141,125 was contributed through the Lilly
                                                                                                PAC. For the full list, visit     (board seat)
DEVELOPING INNOVATIVE MEDICINES             employee contributions.
                                                                                                                                                  • Business Roundtable
                                            Lilly employees in the United States may            PAC%20Report%202010.pdf.
TRANSPARENTLY                               choose to make voluntary contributions to                                                             • Civil Justice Reform Group
                                            the Lilly PAC. Lilly PAC donations, which         • Spent $7.46 million on federal lobbying activi-
                                                                                                                                                    (steering committee)
                                            are made in accordance with its budget,             ties in the United States. This information is
 Values and Integrity
                                            are determined annually by the Lilly PAC            reported to the U.S. Congress in accordance       • Community Oncology Alliance
 The Importance of Stakeholder Engagement   governing board, which comprises 11                 with the Lobbying Disclosure Act of 1995.
                                                                                                                                                  • Healthcare Leadership Council
• Advancing Public Policy                   U.S.-based employees from various groups                                                                (board seat)
                                            within the company. Support is divided
 Managing Our Supply Chain                  equally between the federal and state levels    Memberships                                           • Indiana Chamber of Commerce
                                            and allocated among various candidates                                                                  (board seat)
SUPPORTING STRONG WORKPLACE                                                                 In addition to direct political contribu-
                                            according to specific recommendations                                                                 • National Patient Advocate Foundation
PRACTICES                                                                                   tions, Lilly maintains memberships in
                                            from Lilly’s government affairs department
                                                                                            organizations that report lobbying activity
                                            and employee PAC members.                                                                             • National Health Council
ENGAGING WITH PATIENTS AND                                                                  to the U.S. federal government. We sup-
COMMUNITIES                                                                                 port organizations that champion public               • National Urban League (board seat)
                                                                                            policies that contribute to pharmaceutical
FOSTERING ENVIRONMENTAL                                                                                                                           • Pharmaceutical Research and
                                                                                            innovation, healthy patients, and a healthy
SUSTAINABILITY                                                                                                                                      Manufacturers of America (board seat)
                                                                                            business climate.
ABOUT THIS REPORT                                                                                                                                 • U.S. Chamber of Commerce



     PAGE 37                                                                                                                                        LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                            MANAGING OUR SUPPLY CHAIN                                                                       Lilly Support of the
ABOUT LILLY                                                                                                                                 Pharmaceutical Supply
                                            At Lilly, we manage our supply chain to help maintain a safe and                                Chain Initiative
                                            uninterrupted supply of our medicines. Within our own operations                                In early 2009, Lilly adopted the
                                            and the broader pharmaceutical industry, we work to support                                     Pharmaceutical Industry Principles for
ENHANCING ACCESS TO MEDICINES                                                                                                               Responsible Supply Chain Management,
                                            the United Nations Global Compact principles, ensure adher-
                                                                                                                                            as set forth by the Pharmaceutical Supply
DEVELOPING INNOVATIVE MEDICINES             ence to labor laws, and protect the environment. We partner with                                Chain Initiative (PSCI), an industry group
                                            our suppliers around the world to encourage them to adopt the                                   in which Lilly is an active participant.
TRANSPARENTLY                               same global leadership standards that Lilly has set for itself. We                              PSCI principles were designed to align
                                                                                                                                            with the principles of the United Nations
 Values and Integrity
                                            also aspire to broaden the participation of small and diverse busi-                             Global Compact; they represent high-level
                                            nesses in the Lilly supplier base to levels more reflective of the                              expectations set for industry suppliers in
 The Importance of Stakeholder Engagement                                                                                                   the areas of ethics, labor, health and safety,
                                            wider business community.                                                                       the environment, and related management
 Advancing Public Policy
                                                                                                                                            systems. Upon adopting the principles, Lilly
• Managing Our Supply Chain                                                                                                                 revised and updated our Supplier Code of
                                            Lilly’s Supply Chain at a Glance                Kingdom. Finishing operations, includ-
                                                                                            ing labeling and packaging, take place at       Conduct to reflect these principles.
PRACTICES                                   Lilly maintains relationships with thousands    a number of sites throughout the world.         Through our participation in the PSCI,
                                            of suppliers of materials and services. We      In January 2010, we sold one of our U.S.        Lilly is proud to stand alongside 12 other
ENGAGING WITH PATIENTS AND                  categorize suppliers into three tiers, which    sites, Tippecanoe Laboratories in West          pharmaceutical companies that share a
COMMUNITIES                                 help to identify their type of impact from a    Lafayette, Indiana, to an affiliate of Evonik   goal of providing suppliers and service
                                            supply risk perspective.20                      Industries AG. We entered into a nine-year      providers with common health and safety,
FOSTERING ENVIRONMENTAL                                                                     supply and services agreement whereby
                                            In 2010, most of our bulk manufacturing                                                         environmental, labor, ethics, and business
                                                                                            Evonik will manufacture active final and        management standards. Together with our
                                            occurred at Lilly-owned sites, including
                                                                                            intermediate-step active pharmaceutical         industry peers, we are working to educate
ABOUT THIS REPORT                           four in the United States as well as sites
                                                                                            ingredients for certain Lilly human and         suppliers and ensure that our partners
                                            in Ireland, Puerto Rico, and the United
GLOBAL REPORTING INITIATIVE INDEX                                                           animal health products.                         operate in a way that is consistent with our
                                                                                                                                            own company values.
                                                                                                                                            Lilly fully embraces the PSCI vision: that
                                            LILLY SUPPLIERS BY TYPE                                                                         through the application of the principles,
                                                                                                                                            better social, economic, and environmen-
                                            TIER A suppliers provide goods and services that Lilly deems to pose the least risk for         tal outcomes will result for those involved
                                            Supplier Code of Conduct violations. This includes general office supplies, travel services,    in the pharmaceutical supply chain. This
                                            IT equipment, catering, and other routine services.                                             includes improved conditions for workers,

                                            TIER B suppliers provide raw materials and other common commodities used for
                                            packaging and manufacturing operations. This includes packaging materials, waste                 	Supply	risk	is	the	risk	associated	with	Lilly’s	dependence	

                                            disposal services, and energy.                                                                    on	a	third	party	for	either	services	or	materials	that	are	
                                                                                                                                              critical	to	the	operation	of	our	business.	Supply	risk	can	
                                                                                                                                              come	from	many	factors,	including	but	not	limited	to	
                                            TIER C suppliers provide active pharmaceutical ingredients, including specialty chemicals.        supplier	financial	stability,	ability	to	produce	or	provide	
                                            Suppliers in this tier include active ingredient suppliers, contract manufacturers, and           services	in	a	quality	manner,	or	the	impact	of	a	natural	
                                                                                                                                              disaster	on	the	supplier’s	site.	This	risk	is	monitored	on	
                                            research and development labs.                                                                    an	annual	basis,	and	mitigation	plans	are	implemented	
                                                                                                                                              and	monitored	to	minimize	it.	

     PAGE 38                                                                                                                                     LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                        expanded economic development, and a            Supply Chain Management:
                                            cleaner environment for local communities.
ABOUT LILLY                                 As a member of the PSCI, Lilly is com-          Maintaining Quality, Safety,                     JIM THOMSON
                                            mitted to influencing positive social and       and Security of Supply                           CHAIR, EUROPEAN ALLIANCE FOR ACCESS
OUR APPROACH TO CORPORATE                                                                                                                    TO SAFE MEDICINE
                                            environmental change in the pharmaceuti-

RESPONSIBILITY                                                                              Our ability to manufacture quality medi-
                                            cal industry, and we will work to build our
                                                                                            cines for patients depends on the quality        At the European Alliance for Access to
ENHANCING ACCESS TO MEDICINES               suppliers’ capabilities in these areas.
                                                                                            and availability of the materials used in the    Safe Medicine, we are raising public
                                            To learn more about Lilly’s management of       manufacturing process. In 2008, we intensi-      awareness of the dangers posed by
                                            environmental impacts throughout our supply     fied our focus on implementing a proactive       counterfeit medicines available in
                                            chain, see the Fostering Environmental Sus-     supply-chain risk management (SCRM) pro-         the legitimate supply chain and over
TRANSPARENTLY                               tainability section, beginning on page 63.      cess. This annual process assesses the risk      the Internet. As we undertake major
                                                                                            associated with our supplier base based          projects each year, Lilly’s much-valued
 Values and Integrity                                                                       on nine factors. We are also developing          support helps bring our message to
                                            Upholding Human Rights                          global maps that show supplier locations,        wider audiences and effect real change.
 The Importance of Stakeholder Engagement   throughout the Supply Chain                     identifying potential risks for the relevant
                                                                                                                                             We are tremendously proud to have
                                                                                            geographic areas, and creating mitigation
 Advancing Public Policy                    Lilly maintains a long-standing practice of                                                      Lilly stand shoulder-to-shoulder with

                                                                                            plans to further protect our supply chain.
• Managing Our Supply Chain                 complying with local minimum-age laws                                                            us in this important work.
                                            and requirements and does not employ            Enterprise wide, our manufacturing policy
SUPPORTING STRONG WORKPLACE                 child labor, or forced or compulsory labor,     committee oversees the maintenance of our
PRACTICES                                   in any of our facilities globally. In 2011,     inventory of critical raw materials. These
                                            Lilly began revising our global standards       inventory levels are monitored quarterly to
ENGAGING WITH PATIENTS AND                  and procedures to include specific lan-         assure they are adequate. With the SCRM         In 2010, the counterfeit-drugs market was
COMMUNITIES                                                                                 plan in place, Lilly supply chain, quality,     projected to be a $75 billion industry.21
                                            guage about human rights, including our
                                            expectation that vendors abide by Lilly         technical, and procurement resources            Criminals are drawn to it by the prospect of
                                            human-rights standards as one piece of          teamed up to understand and respond to          high profits and low risk, as offenders are
                                            our Supplier Code of Conduct. To view the       the impact on our suppliers in Japan follow-    rarely prosecuted. Because of its unregu-
ABOUT THIS REPORT                           current Lilly Supplier Code of Conduct, visit   ing the tragic earthquake and tsunami that      lated environment, full anonymity, and
                                        struck the country in 2011. As a result of      access to patients, the Internet is a hot spot
GLOBAL REPORTING INITIATIVE INDEX           Pages/ConductCode.aspx.                         these risk-mitigation efforts, we suffered      for counterfeiters. Criminal organizations
                                                                                            no disruptions of supply.                       dupe customers into buying counterfeit
UNITED NATIONS GLOBAL COMPACT INDEX         As part of Lilly’s ongoing supply-chain                                                         medicines through fake online “pharma-
                                            risk management, Lilly suppliers in Tiers                                                       cies,” which use images of trademarked or
                                            B and C must complete a supplier self-          Our Approach to Counterfeit                     branded pharmaceutical products.
                                            assessment questionnaire. Tier A suppliers
                                                                                            Medicines                                       In every part of the world, patients are
                                            must indicate that they support the PSCI
                                            principles and sign a statement testify-        Counterfeit medicines pose a real and grow-     unknowingly encountering counterfeits
                                            ing to this effect. Suppliers in Tiers B and    ing threat to patient safety and worldwide      that look like the actual medicine—from
                                            C must complete the annual question-            public health. Pharmaceutical counterfeit-      the appearance of the package to the size
                                            naire and be available for audits, at Lilly’s   ing crosses geographic boundaries and           and color of the pill. These are dangerous
                                            discretion. In 2011, together with the other    affects patients suffering from a variety of    imposters that may contain inactive and
                                            PSCI companies, Lilly is exploring the best     diseases. Medicines commonly involved in
                                            way to ensure and monitor compliance            counterfeiting include those used for erec-
                                            among suppliers.                                tile dysfunction, oncology, cardiovascular      21
                                                                                                                                                	Source:	P.	Pitts,	21st Century Health Care Terrorism: The
                                                                                            disease, and mental health, preventing the           Perils of International Drug Counterfeiting, The Center for
                                                                                            proper treatment of these conditions.                Medicine in the Public Interest,	Sept.	20,	2005.	

     PAGE 39                                                                                                                                     LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                        useless ingredients or even toxic sub-                           are critical, and Lilly is committed to work-
                                            stances.22 In every case, they are unreliable.                   ing with a wide range of public and private
ABOUT LILLY                                                                                                                                                   JOHN C. LECHLEITER, PH.D.
                                            In some cases, they can cause harm to                            partners. To this end, Lilly is a founding
                                            patients, including death.                                       member and steering group participant of         CHAIRMAN, PRESIDENT, AND CEO
OUR APPROACH TO CORPORATE                                                                                                                                     ELI LILLY AND COMPANY
                                                                                                             the Alliance for Safe Online Pharmacies, a

RESPONSIBILITY                              Lilly believes that governments around
                                                                                                             broad coalition of stakeholders who have
                                            the world need to increase enforcement                                                                            The value proposition for supplier
ENHANCING ACCESS TO MEDICINES                                                                                an interest in protecting patient safety
                                            activities and penalties related to coun-
                                                                                                             and ensuring patient access to safe and
                                                                                                                                                              diversity is very clear: Diversity fosters
                                            terfeit and substandard medicines. Lilly                                                                          creativity. Creativity drives innovation.
DEVELOPING INNOVATIVE MEDICINES                                                                              legitimate online pharmacies. In Europe,
                                            is actively engaged in efforts to com-                                                                            And innovation, ultimately, leads to
                                                                                                             Lilly is active in the European Alliance for

                                            bat counterfeiting, and we partner with                                                                           business success.
CONDUCTING OUR BUSINESS ETHICALLY AND                                                                        Access to Safe Medicines to further patient
TRANSPARENTLY                               governments and others to protect the
                                                                                                             education about the dangers of counterfeit
                                            health and safety of our patients. In 2006,
 Values and Integrity                       we established an anti-counterfeit office.
                                            This office coordinates Lilly’s response to                                                                       impacting supplier diversity is by engaging
 The Importance of Stakeholder Engagement   counterfeit drugs, including:                                    Supplier Diversity at Lilly                      not only Tier 1 but also Tier 2 vendors as
 Advancing Public Policy                                                                                                                                      part of its efforts. (Tier 1 vendors are those
                                            • Working with global stakeholders in the                        Diversity in our workforce is critical, but      that have direct contracts with Lilly; Tier 2
• Managing Our Supply Chain                   supply chain to secure the integrity of Lilly                  equally important is diversity in our supplier   vendors are those that have contracts with
                                              products through legitimate distribution                       networks. Supplier diversity development         Lilly Tier 1 vendors.) Lilly’s Tier 2 initiative
SUPPORTING STRONG WORKPLACE                   channels,                                                      meets a business need by helping Lilly’s
                                                                                                                                                              is designed to create indirect opportunities
                                            • Adding enhanced anti-counterfeiting tech-                      supplier base be more reflective of the          for small and diverse vendors. Tier 2 spend
                                              nology for Lilly products and packaging in                     diverse marketplace. A supply base that          expectations are communicated in Tier 1
                                              our retail product portfolios,                                 is reflective of the changing demographic        vendor contracts and monitored quarterly.
                                            • Seeking to deter major counterfeiters of                       patient population fosters creativity and        Through second quarter 2011, Lilly spent
FOSTERING ENVIRONMENTAL                       Lilly products through targeted investiga-                     innovation. Since 2005, the U.S. Small Busi-     approximately $254 million with diverse and
SUSTAINABILITY                                tions, Internet monitoring, litigation, and                    ness Administration (SBA) has recognized         small businesses—$169 million with Tier 1
                                              prosecution, and                                               Lilly as “outstanding” in our efforts to pro-    and $85 million with Tier 2 suppliers.
ABOUT THIS REPORT                                                                                            mote and maintain supplier diversity.
                                            • Working with government and non-                                                                                Lilly requires that businesses that are
GLOBAL REPORTING INITIATIVE INDEX             government organizations and trade                             Lilly’s supplier diversity development mis-      included in company supplier-diversity
                                              associations to strengthen, enact, and                         sion is to:                                      spend reports be certified as a diverse
UNITED NATIONS GLOBAL COMPACT INDEX           enforce anti-counterfeiting laws and raise                                                                      and/or small business. Diverse and small
                                                                                                             • Access additional expertise from small
                                              awareness with health care professionals                                                                        businesses are defined as businesses with
                                                                                                               and diverse suppliers—a source of talent,
                                              and patients about the dangers of coun-                                                                         51 percent ownership, management, and
                                                                                                               fresh perspectives, and cutting-edge
                                              terfeit drugs.                                                                                                  control by an ethnic minority; a woman; a
                                            This global problem requires a sustained,                                                                         gay, lesbian, bisexual, or transgendered
                                                                                                             • Encourage small and diverse businesses
                                            long-term commitment. To stop this dan-                                                                           person; a veteran; a person with disabilities;
                                                                                                               to grow as they work with Lilly, and
                                            gerous trend, collaboration and cooperation                                                                       or as defined by SBA regulations based on
                                                                                                             • Attract diverse talent to the communities      industry-size standards.
                                                                                                               where Lilly operates—creating a greater
                                             	Examples	of	harmful	ingredients	recently	found	in	
                                                                                                               quality of life.                               Lilly’s goal is to achieve 10 to 15 percent
                                              counterfeit	drugs	include	arsenic,	boric	acid,	brick	dust,	                                                     of its external spend with small and diverse
                                              cement	powder,	chalk	dust,	floor	polish,	leaded	road	          Because of its contracts with the federal        suppliers. In 2010, our goal was to reach
                                              paint,	nickel,	shoe	polish	(to	produce	the	sheen	on	the	
                                              tablet),	and	talcum	powder.	Source:	G.	Jackson,	“Faking	
                                                                                                             government, Lilly is required to comply with     $445 million in diverse-supplier spend-
                                              It:	The	Dangers	of	Counterfeit	Medicine	on	the	Internet,”	     government contracting rules related to          ing, but we actually achieved $474 million.
                                              International Journal of Clinical Practice.	63	(2),	pp.	181-   supplier diversity, but we strive to go beyond
                                              184,	Feb.	2009.                                                                                                 Moving forward, Lilly will strive to maintain
                                                                                                             these mandates. One of the ways Lilly is         our “outstanding” rating from the SBA for

     PAGE 40                                                                                                                                                      LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                             SUPPORTING STRONG


                                             WORKPLACE PRACTICES



                                             Our legacy dates back 135 years to our founder, Colonel Eli Lilly.
                                             More than a century ago, his vision and his commitment to patients,

                                             employees, and communities set a strong tone for our company
• Creating a Supportive and Rewarding Work   that continues today. Our business has prospered because of
  Environment                                                                                                                                            TOTAL GLOBAL WORKFORCE23
                                             our people—people with a talent for innovation and a passion for
 Diversity and Inclusion
                                             making a difference by finding treatments for the most stubborn
 Employee Health, Safety, and Wellness       diseases; people whose talent is matched by their generosity;
                                             and people with strong values and a determination to prevail,
                                             regardless of the challenges.                                                                                     33%
                                                                                                                                                     REDUCTION IN SERIOUS INJURY AND
FOSTERING ENVIRONMENTAL                                                                                                                                 LOST TIME RATES SINCE 2007
SUSTAINABILITY                               Colonel Lilly’s values—integrity, excellence, and respect for
ABOUT THIS REPORT                            people—continue to shape our practices today. At Lilly, we strive

                                             to provide our employees an engaging and rewarding working
                                             environment built on a foundation of trust. We believe we have
UNITED NATIONS GLOBAL COMPACT INDEX          created a workplace with fair labor practices, where employees
                                                                                                                                              APPROXIMATE NUMBER OF LANGUAGES
                                             are respected for their contributions.                                                          SPOKEN AT INDIANAPOLIS HEADQUARTERS

                                             CREATING A SUPPORTIVE AND REWARDING
                                             WORK ENVIRONMENT                                                                                                      10%
                                                                                                                                                        ESTIMATED PERCENTAGE OF
                                             As a pharmaceutical company, our mission     words— particularly where employees                         WORKFORCE AT HEADQUARTERS
                                             is to make medicines that help people live   were concerned. “Intellectual capital” may                 BORN OUTSIDE THE UNITED STATES
                                             longer, healthier, more active lives. Our    be the modern term for it, but even early
                                             employees are essential to us accomplish-    on, Lilly management understood that the
                                             ing that mission.                            knowledge and skills of Lilly people were
                                                                                                                                                   17,409	U.S.	employees	and	20,657	outside	U.S.	
                                                                                                                                                   Employee	data	as	of	June	30,	2011.	Note	also	
                                                                                          the company’s most important assets. In                  that	the	majority	of	Lilly’s	workforce	are	full-
                                             The early leaders of our company recog-
                                                                                          1916, the board of directors asked one of                time	employees.	
                                             nized that actions do speak louder than

     PAGE 41                                                                                                                           LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                                                                         Compensation and Benefits                        support these bodies and work productively
                                                                                                                                              with them. The vast majority of our workers
ABOUT LILLY                                      EXCERPTS FROM J.K. LILLY, JR.’S 1916        We expect excellence from our employ-            globally are not covered under traditional
                                                 REPORT ON THE SUBJECT OF EMPLOYMENT         ees; in return, we provide competitive

                                                                                                                                              collective bargaining agreements. In some
OUR APPROACH TO CORPORATE                                                                    compensation and benefits packages. Our
                                             The responsibility of handling employ-                                                           countries where we operate, governments
RESPONSIBILITY                                                                               pay-for-performance philosophy links             mandate working conditions, such as salary
                                             ees from the time of their selection is         individual and company performance with
ENHANCING ACCESS TO MEDICINES                                                                                                                 increases, minimum wages, bonuses, num-
                                             one of the most important responsibili-         compensation to help employees under-

                                                                                                                                              ber of weekly working hours, vacation time,
                                             ties of management.                             stand the relationship between the work          and overtime rates. These vary by country,

                                                                                             they do and the company’s bottom line.           and we follow these mandates wherever
                                             When loyalty from above has been                Lilly’s pay programs enable us to reward
CONDUCTING OUR BUSINESS ETHICALLY                                                                                                             they are required. Several of our affiliates
AND TRANSPARENTLY                            secured, loyalty from the ranks may             employees commensurate with perfor-

                                                                                                                                              have employee councils that meet monthly
                                             readily be observed.                            mance, while managing costs through our          with management to discuss workforce-

SUPPORTING STRONG WORKPLACE                                                                  business cycles.                                 related issues that directly impact them,
PRACTICES                                    The good will of the employees is not

                                                                                             Through our annual Performance Manage-           such as company policies and organiza-
                                             based on wages alone.
                                                                                                                                              tional changes.

• Creating a Supportive and Rewarding Work                                                   ment (PM) review process, we evaluate
  Environment                                … the health and well-being of his              employee performance and development,
                                             people are as fully dependent upon the          both at midyear and at year end. The review      Learning and Development
 Diversity and Inclusion                                                                     process, which is required for 100 percent
                                             conditions which confront them outside
 Employee Health, Safety, and Wellness       the factory as well as those existing           of our employees, includes a set of tools        Employee development is a process—

                                                                                             and resources designed to link employee          linked to performance management—that
ENGAGING WITH PATIENTS AND                                                                   work efforts to the company’s priorities         emphasizes ongoing knowledge and skill
COMMUNITIES                                                                                  and business goals. Each PM plan sets            development for individual Lilly employees.
                                                                                             an employee’s objectives for the year and        Developing employees is critical to our suc-
FOSTERING ENVIRONMENTAL                      the founder’s grandsons, J.K. Lilly, Jr., to    expected results.                                cess. By enhancing employee knowledge and
SUSTAINABILITY                                                                                                                                skills, we help our company remain viable
                                             seek out the best corporate practices for
                                                                                             Globally, Lilly offers employees a wide          in an increasingly competitive environment.
                                             hiring and developing people. He tapped the
                                                                                             array of benefits (which vary depending on       For that reason, we provide employees with
                                             premiere management experts of the time
                                                                                             location). These include health plans for        opportunities to build careers that reward
GLOBAL REPORTING INITIATIVE INDEX            and traveled the United States visiting other
                                                                                             individuals and spouses (including same-         them personally and professionally, while
                                             organizations considered to have progres-
                                                                                             sex partners) and direct family members;         helping our company advance its vision to
UNITED NATIONS GLOBAL COMPACT INDEX          sive employee policies. The result was the
                                                                                             disability benefits; life insurance; and
                                             150-page 1916 Report on the Subject of                                                           improve patient outcomes.
                                                                                             retirement programs. In certain locations,
                                             Employment, which continues to guide our
                                                                                             we also offer health plan benefits to retirees   Lilly employees receive approximately 40
                                             company nearly 100 years later.
                                                                                             and their eligible partners, spouses, or         hours of required training each year and
                                             Today, we offer our workforce competi-          survivors. Many of the benefits are flexible     may have access to additional learning and
                                             tive compensation and benefits packages         and allow employees to tailor programs           development programs based upon their
                                             and provide a wide variety of opportunities     to individual needs. In the United States,       functional expertise and career aspirations.
                                             for personal growth. Lilly welcomes and         we offer the same standard benefits to all
                                                                                                                                              Included within employee development is
                                             encourages a diverse, multicultural work-       regular-hire employees, demonstrating how
                                                                                                                                              a set of training programs to encourage a
                                             force, and we are committed to upholding        we promote fairness within the company.
                                                                                                                                              diverse, nondiscriminatory, and respectful
                                             the principles of nondiscrimination. In
                                                                                             We recognize the importance of freedom of        working environment. We require diversity
                                             addition, our unwavering focus on employee
                                                                                             association in the workplace and respect         training for new hires in the United States;
                                             well-being fosters a culture of health and
                                                                                             the right of our employees to join asso-         supervisors in the United States complete
                                             safety. All of these topics are discussed in
                                                                                             ciations of their choosing. Lilly interacts      additional diversity training.
                                             greater detail in this section of the report.
                                                                                             with works councils and unions in several
                                                                                             countries outside the United States; we

     PAGE 42                                                                                                                                    LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                         Our core diversity training includes the fol-      initiatives is the annual Corporate Youth        Other training offerings include:
                                             lowing programs, among others:                     Summit, at which attendees interact with
ABOUT LILLY                                                                                                                                      • Programs to enhance employees’
                                                                                                senior Lilly leaders and learn tips on how
                                             • THE DYNAMICS OF TRUST: a course                                                                     performance,
                                                                                                to succeed in business and in life.
OUR APPROACH TO CORPORATE                      that helps employees examine the trust                                                            • Programs to increase employees’ impact,
RESPONSIBILITY                                 disparity among people of different             • SUMMER INTERNSHIPS: Each year
                                                                                                 in the United States, more than 150             • Programs to grow employees’ careers,
ENHANCING ACCESS TO MEDICINES                                                                    individuals—many nonwhite and/or                • Tuition reimbursement for job-related
                                             • WORKING FOR INCLUSION: an online
                                                                                                 female—participate in summer internship           courses,
DEVELOPING INNOVATIVE MEDICINES                course divided into four one-hour sections
                                                                                                 programs designed to help us recruit,           • Mentoring programs and leadership
                                               that provides participants with insights
                                                                                                 retain, and develop a diverse workforce.          retreats, and
CONDUCTING OUR BUSINESS ETHICALLY              and tools to move toward more inclusive
                                                                                                 We extend full-time job offers to about 50
AND TRANSPARENTLY                              behaviors.                                                                                        • An online career center.
                                                                                                 percent of participants. We also have an
                                             Our succession-management process                   extensive Master of Business Administra-        Our long-term responsibility is to ensure
PRACTICES                                    identifies leaders with a proven track record       tion (MBA) internship program throughout        Lilly has a talent pipeline for the future. Just
                                             of success and capability in their areas of         Australia, Canada, China, Europe, Japan,        as Lilly has to think many years in advance
• Creating a Supportive and Rewarding Work   expertise. We work to develop women and             and Latin America. In the United States,        to plan our drug pipeline, we need to do the
  Environment                                diverse employees for consideration for             we seek to recruit female MBA talent            same for our people pipeline. Our global
                                             future openings in key positions.                   through a partnership with the Forté            succession-management process identifies
 Diversity and Inclusion                                                                         Foundation, a consortium of major corpo-        and develops future generations of leaders
                                             Managers from each division assess                  rations and top business schools.
 Employee Health, Safety, and Wellness                                                                                                           and plans for the succession of key positions,
                                             employees at lower levels to determine
                                                                                               Although we do not have as many open              so we can place the right person in the right
                                             which workers have the potential to take
ENGAGING WITH PATIENTS AND                                                                                                                       leadership position at the right time.
                                             on more senior roles. These employees             positions as we did at times in the past, Lilly
                                             are provided development opportunities,           maintains a campus recruiting initiative at
FOSTERING ENVIRONMENTAL                      including leadership training and execu-          many of the top colleges and universities         Engaging Employees
SUSTAINABILITY                               tive mentors. For example, more than 150          in the United States, including Historically
                                             senior women leaders have participated in         Black Colleges and Universities. In addition,     Effective employee collaboration is critical
ABOUT THIS REPORT                            our Women in Leadership Retreat since its         to gain exposure to diverse talent, we align      to Lilly’s success, and we use a variety of
                                             launch in 2005. Lilly also conducts leader-       with a number of national organizations,          programs and tools to engage our employ-
GLOBAL REPORTING INITIATIVE INDEX            ship retreats globally for employees who          including Reaching Out MBA, National Soci-        ees and foster and promote teamwork.
                                             represent diverse talents and backgrounds.        ety of Hispanic MBAs, National Black Data         Even in a challenging business environ-
UNITED NATIONS GLOBAL COMPACT INDEX                                                                                                              ment, we believe it’s important to invest
                                                                                               Processing Associates, National Black MBA
                                             Lilly also sponsors a wide array of cul-          Association, National Organization of Black       in employee development.
                                             tural and educational programs designed           Chemists and Chemical Engineers, National
                                             to develop and support women, people                                                                We are especially excited about our new
                                                                                               Society of Black Engineers, and the Consor-
                                             of diverse backgrounds, and people with                                                             signature employee-engagement program—
                                                                                               tium for Graduate Study in Management.
                                             disabilities both internally and externally,                                                        Connecting Hearts Abroad—that is allowing
                                             including the following:                                                                            200 employees to volunteer, on company

                                             • CENTER FOR LEADERSHIP DEVELOPMENT
                                                                                               Leadership Development                            time, for two weeks in 10 different countries
                                                                                                                                                 around the world. Our volunteers are work-
                                               (CLD): Lilly is a long-time corporate partner   In our business environment, effective lead-      ing in communities where people lack access
                                               with the Center for Leadership Develop-         ership is essential. Our Global Leadership        to basic resources, including quality health
                                               ment in Indianapolis, which fosters the         Development program offers a variety of           care. The program, which we launched in
                                               development of minority youth. In 2009,         programs and activities, including experien-      2011, is helping employees from all dif-
                                               the Lilly CLD Achievement Center was            tial learning programs, online training, and      ferent operational areas learn about the
                                               opened, thanks in part to a $1.4 million gift   teaching opportunities, designed to build         diverse populations our company is trying to
                                               from the Lilly Foundation. One of the CLD’s     leadership skills.                                serve. We are confident our colleagues who

     PAGE 43                                                                                                                                       LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                         volunteer for these experiences will return     Work-Life Balance
                                             home as better employees and stronger
ABOUT LILLY                                  leaders. More than 1,800 Lilly employees        We recognize that employees have compet-
                                                                                             ing needs between their work lives and
                                                                                                                                             RESTRUCTURING AT LILLY
                                             from 52 countries applied to the program.
OUR APPROACH TO CORPORATE                                                                    their home lives. That’s why we aim to
                                             For more on this initiative, see page 60.                                                       In 2009, in the face of a challenging business
RESPONSIBILITY                                                                               create a work environment that supports
                                             We also recently launched a new tool for                                                        environment, we began a company restructur-
                                                                                             efforts to balance work and personal life
ENHANCING ACCESS TO MEDICINES                business-oriented social collaboration.                                                         ing to reduce our payroll, as we looked toward
                                                                                             responsibilities. Globally, we offer a number
                                             “The Loop,” an internal social-networking                                                       the expirations of several important Lilly
DEVELOPING INNOVATIVE MEDICINES                                                              of programs, varying by location, to assist
                                             site, offers employees a new platform for                                                       patents. We set a goal of reducing our global
                                                                                             employees in maintaining work-life bal-
                                             collaborating across teams, functions,                                                          workforce by 5,500 people by the end of 2011.
CONDUCTING OUR BUSINESS ETHICALLY                                                            ance. We take a holistic approach, offering
                                             and geographies. Through it, our work-                                                          This figure excludes strategic additions in
AND TRANSPARENTLY                                                                            benefits and services including flexible work
                                             force can tap into each other’s expertise,                                                      high-growth emerging markets and Japan, as
                                                                                             arrangements, personal leaves, on-site
                                             insights, and creativity.                                                                       well as additions due to acquisitions.
SUPPORTING STRONG WORKPLACE                                                                  health services and fitness centers, on-site
PRACTICES                                                                                    child care, employee conveniences such          We intend to meet our workforce goal where
                                             The Loop piloted in the fall of 2010 with a
                                             small group of employees and grew to more       as campus credit unions, and family             possible in part through normal attrition
• Creating a Supportive and Rewarding Work                                                   support programs.                               and by slowing hiring. In the United States,
                                             than 10,300 Lilly users by the summer of
  Environment                                                                                                                                reallocated employees can remain at Lilly
                                             2011. Available to all employees, this online
 Diversity and Inclusion                     forum has helped our employees meet                                                             during a 12-week transition period, during
                                                                                             Recruitment and Hiring                          which they may look for job opportunities
                                             new experts within the company, expand
 Employee Health, Safety, and Wellness
                                             internal professional networks, and make        Practices                                       inside and outside the company and access
                                             new friends.                                                                                    outplacement and transition services. We also
ENGAGING WITH PATIENTS AND                                                                   As a global company, we search around           offer severance benefits for eligible employees.
COMMUNITIES                                                                                  the world for top leadership and talent.
                                             We recently launched another online
                                             employee-engagement and networking tool,        To address the medical needs of millions        While reductions have been spread across
FOSTERING ENVIRONMENTAL                                                                                                                      our global workforce, the impact on Indiana
                                             The Bridge, aimed at creating a global con-     of people, we must have a diverse group
SUSTAINABILITY                                                                                                                               employees has been higher than in other parts
                                             versation about the role Lilly and our people   of employees who understand the varying
                                             play in making the world a better place. The    needs of the diverse people we serve.           of our operations. Between September 2009 and
                                             Bridge offers a location for Lilly employees    We transfer employees from location to          May 2011, Lilly reduced its number of full-time
GLOBAL REPORTING INITIATIVE INDEX            to learn about volunteer opportunities,         location primarily for leadership devel-        employees worldwide by about 4,100 people, or
                                             share their stories of volunteerism, seek       opment and staffing of critical skill           nearly 75 percent of the target.
UNITED NATIONS GLOBAL COMPACT INDEX          a matching gift, or nominate a colleague        requirements. We hire locally and promote
                                                                                                                                             Lilly strives to comply with all minimum-
                                             for a company community-service award,          from within whenever possible.
                                                                                                                                             notice periods governing workforce reductions
                                             among other topics. Our goal is to develop                                                      and other significant operational changes.
                                             The Bridge into a powerful tool that will
                                             amplify what Lilly and our people are doing
                                             to strengthen communities and improve
                                             the lives of patients around the world.

     PAGE 44                                                                                                                                 LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                            DIVERSITY AND INCLUSION
                                            At Lilly, embracing diversity is at the core of our long-held value                               PRIVACY CONCERNS
                                            of respect for people. It is the lens through which we understand                                We were the first in our industry to formally
                                            and respond to the unique needs of the millions of individuals who                               implement a policy to protect the privacy of
ENHANCING ACCESS TO MEDICINES                                                                                                                our employees’ genetic information, with the
                                            depend on our medicines. We’re proud of our diversity and the                                    goal of ensuring that such information cannot
DEVELOPING INNOVATIVE MEDICINES             essential role it plays in helping us accomplish our mission: making                             be used to discriminate in employment and

                                            medicines that help people live longer, healthier, more active lives.                            benefit-related decisions.


SUPPORTING STRONG WORKPLACE                 Lilly works to attract and retain talented     Our commitment to diversity goes beyond         we hire our employees. We have been work-
PRACTICES                                   employees who bring the varying perspec-       our own employees. We partner with              ing for several years to do this, and we are
                                            tives and skills we need to operate on a       advocacy groups, professional societies,        seeing good results. Recently, we were hon-
 Creating a Supportive and Rewarding Work   global level. Diversity fosters creativity,    community organizations, public and private     ored to have been named for the first time
 Environment                                creativity drives innovation, and innova-      health care administrators, and others to       to DiversityInc’s list of “Top 50 Companies
                                            tion leads to better patient outcomes          help reduce health disparities and address      for Diversity,” which is widely recognized as
• Diversity and Inclusion
                                            and enhanced business success. Without         the unique health care needs of all commu-      the premiere third-party diversity assess-
 Employee Health, Safety, and Wellness      diverse ideas, we simply cannot remain         nities. Our diversity commitment extends        ment in the United States. In the 2011 list,
                                            viable in a rapidly changing environment.      through the full spectrum of our business,      Lilly ranked 39th out of 535 companies that
ENGAGING WITH PATIENTS AND                                                                 including our clinical-trial strategy and our   completed the survey.
COMMUNITIES                                 Ensuring a nondiscriminatory work environ-
                                                                                           supply chain (see page 24 and page 40
                                            ment is a key priority for us at Lilly. For                                                    In recent years, we have increased our lead-
                                                                                           for more on these topics).
FOSTERING ENVIRONMENTAL                     Lilly employees, embracing diversity means                                                     ers’ accountability for developing diverse
SUSTAINABILITY                              understanding, respecting, and valuing dif-    We are working to further embed diversity       talent. Our senior leaders have performance
                                            ferences, including but not limited to race,   within the culture at Lilly by integrating it   objectives focusing on mentoring and
ABOUT THIS REPORT                           religion, gender, sexual orientation, work     into every aspect of our business—from our      career-path planning for women and diverse
                                            style, national origin, and age.               clinical trial and marketing practices to how   employees globally. In addition, Lilly’s senior


                                                         MARKETPLACE                                     WORKPLACE                                          SUPPLIER
                                                           We must know                                 We must leverage the                   We must strengthen our supplier base
                                                         OUR PATIENTS                                  individual strengths of                   and invest in our community with
                                                                                                         OUR PEOPLE                                     OUR PARTNERS

                                                        Clinical trial diversity                      Recruiting and staffing                 Supplier networking and business events

                                                          Patient education                                  Retention                           Partnerships with diverse supplier
                                                                                                                                                       certification entities
                                                            Partnerships                             Employee resource groups
                                                                                                                                                Identification of spend opportunities
                                                                                                                                                   amid supplier rationalization
                                                                                                    Flexible work arrangements

     PAGE 45                                                                                                                                 LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                        vice president of global human resources       EMPLOYEE VOICE
                                            and diversity reports directly to our chief
ABOUT LILLY                                 executive officer. Our top leaders also        Liliana Gehring
                                            receive updates quarterly on our diver-
OUR APPROACH TO CORPORATE                                                                  Project Management Director; Leader, Organization of Latinos
                                            sity strategy, while our board of directors
                                            receives reports annually.
ENHANCING ACCESS TO MEDICINES               Our Code of Business Conduct, The Red          Coming to America from Argentina at 13, I didn’t speak English. None of my family did. I had been an
                                            Book, guides our approach to a nondis-         excellent student, but here I was lost. I wondered, how am I going to fit in? How will I learn the language?
                                            criminatory environment. Our code requires     The culture? But, over time, I found my way.
                                            employees to “behave so that the workplace
                                            is free of improper conduct and harass-        After college, I worked for Ford, then Lilly. I started as one of very few female engineers in a male-dominated
                                            ment, and other inappropriate forms of         environment. I had to learn to adapt, make connections, stand up for what I believe in. The more I overcame,
SUPPORTING STRONG WORKPLACE                 discrimination.” (For more on The Red Book,    the more optimistic I was about what can be achieved through perseverance.
PRACTICES                                   see page 27.) In addition to The Red Book,
                                                                                           That’s why I’m passionate about the Organization of Latinos at Lilly. Through community health and
                                            we have an Equal Employment Opportu-
                                                                                           education outreach programs, such as Project Stepping Stone, I can share my personal story with students,
 Creating a Supportive and Rewarding Work   nity Policy and a Global Policy on Personal
                                                                                           showing them what they, too, can accomplish with determination.
 Environment                                Information Privacy and Security.
                                                                                           I believe everyone deserves a chance. Throughout my 20 years at Lilly, I’ve been able to share this belief within
• Diversity and Inclusion
                                                                                           the company and our community. When people are given a chance, they surprise you by doing great things.
 Employee Health, Safety, and Wellness      Employee Resource Groups
                                            Lilly offers 10 employee-led resource
                                            groups that connect people from diverse
                                            backgrounds. These include the Lilly African
FOSTERING ENVIRONMENTAL                     American Network; the Organization of
                                                                                              WOMEN IN SOUTH KOREA
SUSTAINABILITY                              Latinos; the Lilly India Network; the Global
                                            Women’s Network; the Middle Eastern               South Korea, where men maintain the traditional primary earner role, is still striving toward gender equal-
ABOUT THIS REPORT                           Network at Lilly; the Chinese Culture Net-        ity in the workplace. Our operations in South Korea have made a strong effort to elevate women to leader-
                                            work; the Eli Lilly Asian Network; PRIDE;         ship roles in our company and to make female sales representatives more comfortable in their positions.
GLOBAL REPORTING INITIATIVE INDEX           the Network for Emphasizing Abilities
                                            First; and Veterans and Servicemembers            In 2007, our Asia Women’s Network (AWN) employee resource group in South Korea developed a
UNITED NATIONS GLOBAL COMPACT INDEX                                                           program to foster the development of women in our Asian operations. Since it was established, the AWN
                                            at Lilly. About 3,000 employees—most of
                                            them U.S.-based—are members of these              has conducted gender-equality workshops, held networking meetings, and invited guest speakers to talk
                                            organizations.                                    to employees, in an effort to boost leadership development of and retain talented female employees.

                                            Employee resource groups help us build            The group also created a mentoring program, pairing new female sales-force employees with more expe-
                                            competencies in specific cultural areas. The      rienced female workers in an effort to lower the high turnover rate of new female sales reps. The women
                                            purpose of the groups is to:                      meet one-on-one on a bimonthly basis. The program is bearing fruit: all of the 18 new female sales reps
                                                                                              in the country hired since December 2009 stayed with the company for a full year.
                                            • Support Lilly values and business goals,
                                              including the company’s commitment to          “Historically, women were untapped human resources in Korea, like in other Asian countries, in both the
                                              creating an inclusive work environment,         public and private sectors,” said Eunice Kim, who helped launch the Korean women’s networking group.
                                                                                              As a result of the group’s efforts, “We now see significantly higher female leadership presence, more
                                            • Provide networking opportunities among
                                                                                              engaged employees, and better business performance.”
                                              employees with common interests or
                                              cultures, and
                                            • Create learning opportunities for Lilly
                                              employees at all levels.

     PAGE 46                                                                                                                                            LILLY 2010 CORPORATE RESPONSIBILITY REPORT

                                              HUMAN RIGHTS                                         “IT GETS BETTER”
RESPONSIBILITY                                                                                      Our employee resource group PRIDE, formerly known as GLEAM (Gay and Lesbian Employees,
                                              In 2010, for the fifth consecutive year, Lilly        Advocates, and More), recently participated in the “It Gets Better” online video campaign, aimed at
ENHANCING ACCESS TO MEDICINES                 received a perfect score of 100 on the Human          gay youth. Author Dan Savage launched the campaign in September 2010 following the suicides of
                                              Rights Campaign (HRC) “Best Places to Work:           several gay and lesbian teenagers. The campaign was designed to inspire hope for young people who
DEVELOPING INNOVATIVE MEDICINES               Corporate Equality Index.” The index measures
                                                                                                    were bullied and harassed because of their sexual orientation. What started as a grassroots project
                                              an organization’s efforts toward creating an
CONDUCTING OUR BUSINESS ETHICALLY                                                                   has grown into thousands of personal stories of encouragement delivered by celebrities, politicians,
                                              equitable environment for lesbian, gay, bisexual,
AND TRANSPARENTLY                                                                                   and ordinary Americans. PRIDE’s eight-minute video, which was posted on YouTube in January
                                              and transgender (LGBT) employees. The HRC’s
                                              survey questions employers about nondiscrimi-         2011, features several Lilly employees who tell their own stories of life as a gay or lesbian person.
SUPPORTING STRONG WORKPLACE                                                                         PRIDE, which has more than 300 members, meets on a regular basis and hosts educational and
PRACTICES                                     nation policies, diversity training programs,
                                              employer-provided domestic partner insurance          networking events that are open to all employees, regardless of sexual orientation.
 Creating a Supportive and Rewarding Work     coverage, and employer-sponsored LGBT em-
                                                                                                    To view the video, go to
 Environment                                  ployee resource groups, among other criteria.

• Diversity and Inclusion

 Employee Health, Safety, and Wellness

ENGAGING WITH PATIENTS AND                  Fighting for Inclusion                                version of this bill passed, we were pleased             Employee Diversity Data
                                                                                                  that our advocacy was part of a strong, col-
                                            In the United States, anti-immigration and            lective voice that helped improve the final              In 2010, approximately 53 percent of our
                                            English-only legislation, as well as “defense         version. Incidentally, we were also pleased              U.S. workforce was male and 47 percent
SUSTAINABILITY                              of marriage” legislation, can make it difficult       that the U.S. District Court for the Southern            was female. Global numbers were 54 per-
                                            to recruit new and educated workers and               District of Indiana blocked enforcement of               cent male, 46 percent female.
ABOUT THIS REPORT                           retain good employees. We are proactive in            certain aspects of the law, including the                Minority employees made up approximately
                                            working in the legal system to ensure that            English-only provisions.
                                                                                                                                                           19 percent of our U.S. workforce, breaking
                                            the communities in which we operate are
                                                                                                  We also have been raising our voice in                   down as follows: 8 percent African American;
                                            open and welcoming. We are coming from
UNITED NATIONS GLOBAL COMPACT INDEX         the perspective of a large Indiana employer           opposition to legislation banning same-sex
                                            with a global and diverse workforce.                  marriages and civil unions. We are pro-
                                                                                                  foundly concerned about the legislation’s                2010 MINORITY EMPLOYEES
                                            Many of Lilly’s employees are scientists,             impact on our employees and on our state,                (PERCENT BREAKDOWN, U.S. ONLY)
                                            medical doctors, pharmacists, and engi-               and we see the issue fundamentally as one
                                            neers who are critical to the research and            of equality and fairness.                                 8% African American
                                            development of new medicines. We recruit
                                            worldwide for these highly skilled people             Our CEO has publicly argued against pass-
                                                                                                  ing an amendment that could eventually
                                                                                                                                                            7% Asian
                                            in an intensely competitive environment for
                                            excellent employees. Our ability to thrive in         make the same-sex ban a part of the state
                                                                                                  constitution. Although Indiana already has
                                                                                                                                                            3% Latino
                                            our home state of Indiana is dependent on
                                            an environment that is welcoming. That’s
                                            why we opposed a proposed Indiana law
                                                                                                  a statutory ban on same-sex marriages, a
                                                                                                  constitutional ban would make it impossible               1% Two or more races
                                            that, among other things, would require that
                                            only English be used in official public meet-
                                                                                                  for a court to overturn. We believe dis-
                                                                                                  criminatory legislation is not just bad public           <2% American Indian/Alaska
                                                                                                  policy; it is also bad for business.                              native and Native Hawaiian/
                                            ings, documents, and communications from
                                                                                                                                                                    other Pacific Islander
                                            the state. While we were disappointed any

     PAGE 47                                                                                                                                                 LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                        7 percent Asian; 3 percent Latino; 1 percent
                                            two or more races; and less than 1 percent
ABOUT LILLY                                 each American Indian/Alaska native and
                                            Native Hawaiian/other Pacific Islander.
                                                                                                            DIVERSITY IN SESTO
RESPONSIBILITY                              Our 13-member board of directors included                       Our manufacturing operations in Sesto, Italy, have seen terrific results following a focused and concert-
                                            three women and one person of color. Over-                      ed effort on diversity development. In 2009, the Italian government provided about €180,000 ($260,000)
ENHANCING ACCESS TO MEDICINES               all, our senior leadership24 is 22 percent                      in support of our Develop Female Managers initiative at the facility.
                                            female. For all management, women                               Lilly’s investment in diversity development led to an increase in the percentage of women in leader-
                                            compose 36 percent. In the United States                        ship positions, including managers, senior managers, and directors, from 17 percent in 2007 to
                                            for all management, minorities make up                          21 percent in 2010.
AND TRANSPARENTLY                           15 percent, while senior management make
                                            up 10 percent.                                                  Our Italian operations have been actively recruiting more women not only from the pharmaceutical
SUPPORTING STRONG WORKPLACE                                                                                 industry but from a broader spectrum of companies and from universities. We have also focused
                                            Our 14-member executive committee,                              on creating an environment that is supportive of working mothers, including offering six months of
                                            which reports directly to our CEO, includes                     part-time work for women when they return from maternity leave and summer camps for children of
                                            three women, one Latino, and one                                Lilly employees.
 Creating a Supportive and Rewarding Work
                                            African American.
                                                                                                            Today, 68 percent of managers are women, and 54 percent of the manufacturing employee pipeline is
                                            24	“
                                                Senior	leadership”	is	defined	as	the	approximately	150	
 Diversity and Inclusion                       top	positions	at	Lilly.
                                                                                                            female. In addition, 27 percent of our executives on the Italian leadership team are women.

• Employee Health, Safety, and Wellness

                                            EMPLOYEE HEALTH, SAFETY, AND WELLNESS                                                                                 Safety Progress and
FOSTERING ENVIRONMENTAL                                                                                                                                           Performance
                                            Placing our employees’ health and safety among our highest                                                            At Lilly, we recognize that the closer we
ABOUT THIS REPORT                           priorities is consistent with the Lilly value of respect for people.                                                  get to preventing all injuries from occur-
                                            Our employees are our greatest asset, and we want them to                                                             ring, the harder we must collectively work
GLOBAL REPORTING INITIATIVE INDEX                                                                                                                                 to improve our safety performance. This is
                                            operate in the safest environment possible.                                                                           our unwavering commitment to excellence,
                                                                                                                                                                  which drives us forward.
                                            Lilly’s management systems for employee                       safety committees. An estimated 75 percent
                                            health and safety are incorporated into the                   of our global workforce members utilize                 When we talk about preventing injuries at
                                            broader health, safety, and environment                       health and safety committees to assist                  Lilly, we like to say: “good medicine is no
                                            policy we established in the early 1990s                      in the management of local occupational                 accident.” We can’t continue to serve our
                                            (see page 64). Lilly employees around                         health and safety programs. This number                 patients if our employees are hurt or unable
                                            the globe regularly collaborate on injury-                    continues to increase.                                  to be productive. Many of our employees
                                            prevention programs and activities. From                                                                              spend large amounts of time driving, where
                                                                                                          Our health and safety programs are tailored             they risk motor-vehicle accidents. Others
                                            reducing ergonomic risks to enhancing
                                                                                                          to each of our business areas, includ-                  are in laboratories where they work with
                                            business processes that ensure company
                                                                                                          ing sales and marketing, manufacturing,                 potentially dangerous materials. Still others
                                            compliance, every organization at Lilly is
                                                                                                          research and development, and adminis-                  face ergonomic-injury risks from working
                                            involved in activities to protect employees
                                                                                                          trative global services. Successful injury              in a manufacturing setting. Our ultimate
                                            from injury and illness.
                                                                                                          prevention requires every employee to be                goal is for no employee to ever be hurt
                                            Lilly does not formally measure the per-                      vigilant about keeping himself or herself               on the job.
                                            centage of our total workforce represented                    and others safe.
                                            in joint management/worker health and

     PAGE 48                                                                                                                                                         LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                                                                                         We had one motor-vehicle fatality in 2010.       own workforce through medical-care plans
                                            INJURY PREVENTION GOALS FOR 2013                                 This event reinforced Lilly’s senior leader-     and services and programs to encourage
ABOUT LILLY                                 (WITH A 2007 BASELINE)                                           ship support for behind-the-wheel driver         healthier lifestyles and physical, mental,
                                                                                                             training for all global employees who oper-      and emotional well-being. We want our
                                                 50% reduction in serious injury rate                        ate company vehicles. Our motor-vehicle          employees to be healthy and productive for
                                                                                                             safety program focuses on improving              the work they do at Lilly and in their lives
ENHANCING ACCESS TO MEDICINES                    50% reduction in lost time injury rate                      defensive-driving skills.                        outside of the workplace.

DEVELOPING INNOVATIVE MEDICINES                  50% reductionratemotor vehicle
                                                               in                                              Injury Prevention Approach                     In the United States, Lilly offers health-plan
                                                                                                                                                              coverage to employees, retirees, and their
                                                                                                             In 2010, we took a new approach to injury-       eligible dependents, and plan participants
                                                                                                             prevention education, implementing our           may obtain some Lilly-manufactured medi-
                                            In 2008, we established new goals to reduce                      Injury Prevention Corporate Initiative. This     cines at no cost. In the United States, Lilly
                                            employee injuries. We report our progress                        initiative focuses on vital behaviors for the    provides coverage for preventive-care ser-
PRACTICES                                   against these targets to senior manage-                          top four causes of serious injuries at our       vices (such as annual physicals and cancer
                                            ment and the public. Lilly measures health                       company—ergonomic risk; slips, trips, and        screenings) that go well beyond the require-
 Creating a Supportive and Rewarding Work   and safety performance globally using rates                      falls; motor-vehicle collisions; and everyday    ments established under federal health care
 Environment                                of serious injuries and lost-time injuries.25                    safety. It includes safety-related information   reform. Outside the United States, we deliver
                                            As noted above, our goal is to reduce both                       in 12 languages, which was used by leaders       competitive benefit packages and health
 Diversity and Inclusion                    rates by 50 percent by the end of 2013, com-                     at all levels of the company to discuss injury   coverage that vary depending upon location.
• Employee Health, Safety, and Wellness     pared with 2007.26                                               prevention with employees.                       In many countries, our employees receive
                                            Our third safety goal is to reduce collisions                    Each of our business areas routinely             government-provided medical benefits.
                                            per million miles—i.e., the rate of vehicle                      analyzes injury data to improve injury-pre-      At our Indianapolis headquarters, we have
                                            accidents—by 50 percent by the end of 2013,                      vention systems. We have placed significant      on-site fitness centers and have worked
FOSTERING ENVIRONMENTAL                     also compared with 2007. Our global sales                        emphasis on employee behaviors to help           with our cafeteria vendors to provide a
SUSTAINABILITY                              and marketing divisions recently imple-                          workers identify their own roles in prevent-     wider range of healthier dining choices and
                                            mented a comprehensive health, safety, and                       ing injuries. This approach is critical for us   snacks—some of which are subsidized.
ABOUT THIS REPORT                           environment program, called hseDIREC-                            to achieve our 2013 injury-prevention goals.     In 2011, we have been enhancing on-site
                                            TIONS, to help our sales force achieve this                                                                       fitness and recreation facilities. We provide
GLOBAL REPORTING INITIATIVE INDEX           goal. In addition to motor-vehicle safety, the                   Lilly’s risk-management programs cover
                                                                                                             all aspects of the business, with intense        showers and bike racks for our more than
                                            hseDIRECTIONS initiative covers personal                                                                          150 Indianapolis employees who commute
                                            security, ergonomic risk, and sustainable                        emphasis on mitigating catastrophic events.
                                                                                                             We recently expanded our globally integrated     to work by bicycle. We have also made our
                                            fleets. The program has also helped to                                                                            headquarters smoke free.
                                            minimize distracted driving by employees.                        Process Safety Management program with
                                                                                                             increased focus on dust-explosion preven-        Other efforts to support employee physi-
                                                                                                             tion at all applicable manufacturing sites.      cal and emotional health include free
                                             	The	“serious	injury	rate”	is	defined	by	the	number	of	
                                                                                                             In addition, we have increased the scope         gym memberships (both on-site and off
                                              work-related	injuries	and	illnesses	that	require	medical	
                                              treatment	beyond	immediate	first	aid	per	100	employees	
                                                                                                             of laboratory safety at Lilly to put greater     campus), disease-management and smok-
                                              working	full	time	for	a	year.	The	“lost-time	injury	rate,”	    emphasis on safety risks from discovery          ing-cessation programs, support groups
                                              which	reflects	the	severity	of	serious	injuries,	equals	the	   chemistry through process development.
                                              number	of	serious	injuries	that	result	in	an	employee	
                                                                                                                                                              for new mothers, health coaching, and a
                                              missing	at	least	one	day	of	work,	per	100	employees	                                                            comprehensive employee-assistance pro-
                                              working	full	time	for	a	year.	                                   Promoting Employee Wellness                    gram, including on-site psychologists. We
                                             	Recent	acquisitions	are	not	included	in	the	data	in	this	
                                                                                                                                                              also promote financial well-being through
                                              report;	we	estimate	that	the	impact	of	recently	acquired	
                                                                                                             As one of the world’s largest providers of
                                              entities	on	our	overall	safety	and	environmental	perfor-       medicines, we strive to make people’s lives      a variety of financial advisory programs.
                                              mance	data	is	minimal.	We	are	working	to	integrate	the	        better—and we want the same for our own
                                              performance	metrics	of	recently	acquired	entities	for	
                                              future	reporting	years.	                                       employees. We promote the wellness of our

     PAGE 49                                                                                                                                                    LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                           Health and Safety Data
                                            Serious Injury Rate                                  Serious Injuries
RESPONSIBILITY                              per 100 employees                                    percent breakdown            38%
ENHANCING ACCESS TO MEDICINES               2.0                                                                               Ergonomic Risk
DEVELOPING INNOVATIVE MEDICINES                                                                                               Slip/Trip/Fall
                                            1.5                                                                               Motor Vehicle
AND TRANSPARENTLY                                                                                                             Collision
                                            1.0                                                                               Struck by/Against/
                                                                                                                              Caught between
                                                                                                                              5% Other

 Creating a Supportive and Rewarding Work   0.5
                                                                                                 Our serious injury rate has dropped by 33
 Diversity and Inclusion                                                                         percent since 2007. Reductions in areas
• Employee Health, Safety, and Wellness                                                          such as slips, trips, and falls and motor-
                                                      2007          2008    2009   2010   2013
                                                                                          Goal   vehicle collisions have been partially offset
ENGAGING WITH PATIENTS AND                                                                       by an increase in ergonomic-risk injuries
COMMUNITIES                                                                                      and illnesses, predominantly in administra-
                                                                                                 tive areas.

                                            Lost-Time Injury Rate                                Lost-Time Injuries
GLOBAL REPORTING INITIATIVE INDEX           per 100 employees                                    percent breakdown            36%
                                                                                                                              Ergonomic Risk
                                            0.75                                                                              21%
                                            0.50                                                                              Struck by/Against/
                                                                                                                              Caught between
                                                                                                                              10% Other

                                                                                                 Our lost-time injury rate has dropped by 33
                                                                                                 percent since 2007. Slip, trip, and fall inju-
                                                        2007         2008   2009   2010   2013   ries continue to be the largest contributor to
                                                                                                 lost-time cases.

     PAGE 50                                                                                       LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                        Motor Vehicle Collision Rate
ABOUT LILLY                                 collisions per million miles driven

OUR APPROACH TO CORPORATE                    12
                                              8                                                                                                                Motor vehicle safety is measured in colli-
                                                                                                                                                               sions per million miles, and collisions are
CONDUCTING OUR BUSINESS ETHICALLY                                                                                                                              reported around the globe. Our implementa-
AND TRANSPARENTLY                                                                                                                                              tion of behind-the-wheel training, our Global
                                                                                                                                                               Mobile Electronic Device policy, and other
SUPPORTING STRONG WORKPLACE                                                                                                                                    defensive-driving techniques have begun to
PRACTICES                                     2
                                                                                                                                                               have a positive impact on this rate. However,
                                                                                                                                                               we realize that it will require significant effort
 Creating a Supportive and Rewarding Work     0
                                                                                                                                                               to reach our 2013 goal.
 Environment                                             2007                 2008                 2009                2010                 2013
 Diversity and Inclusion

• Employee Health, Safety, and Wellness

COMMUNITIES                                   FOSTERING GOOD EMPLOYEE HEALTH
FOSTERING ENVIRONMENTAL                       Lilly is frequently recognized for the on-site health    Employee Health Services offers employees
SUSTAINABILITY                                care services we provide to our workforce in the         medical and other health-related services closely
                                              United States. Each year, our corporate health           linked with the health insurance benefits we offer.
ABOUT THIS REPORT                             services department in Indianapolis logs more than       Personal health coaches are available for
                                              31,000 clinical visits for employees’ personal needs,    assistance in managing certain diseases and
                                              such as emergency medical services, allergy              lifestyle challenges. We also offer a no-cost
UNITED NATIONS GLOBAL COMPACT INDEX           injections, preventive health care, Body Mass Index      tobacco cessation program, including nicotine
                                              calculations, laboratory work, and care for              replacement products, and a free healthy weight
                                              occupational injuries and illnesses. The corporate-      management program that includes counseling
                                              based Employee Health Services (EHS) staff               calls with a registered dietician or health educator.
                                              includes board-certified physicians, clinical psychol-
                                                                                                       Lilly has twice won the American College of
                                              ogists, a pharmacist, and registered nurses.
                                                                                                       Occupational and Environmental Medicine’s
                                              In certain locations, our company provides on-site       Corporate Health Achievement Award (in 1997
                                              mammograms, gynecology clinics, laboratory work,         and 2003) and has garnered the C. Everett Koop
                                              and physical therapy facilities. Our colonoscopy         Award for excellence in health promotion (1998).
                                              program, which has performed more than 15,000            In 2010, our health and wellness programs
                                              exams since 1995, has one of the largest screening       received the top award for large companies in
                                              databases for colon cancer in the world.                 Indiana from Healthiest Employers, LLC.

     PAGE 51                                                                                                                                                     LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                        Workplace Awards                                 • BEST PLACES TO WORK (#26)                 Examples of regional awards include:
                                                                                               The Scientist magazine (2010)
ABOUT LILLY                                 Lilly is frequently ranked as one of the best                                                • GREAT PLACE TO WORK® INSTITUTE,
                                            companies in the world at which to work.         • 50 BEST FERTILITY- AND ADOPTION-            Japan (included in top 25), best work-
OUR APPROACH TO CORPORATE                   Recent recognitions include the following         FRIENDLY COMPANIES                           places in Japan (2010)
RESPONSIBILITY                              global awards:                                    Conceive magazine (2010)
                                                                                                                                         • GREAT PLACE TO WORK® INSTITUTE,
ENHANCING ACCESS TO MEDICINES               • TOP 50 COMPANIES FOR DIVERSITY                 • TOP 100 EMPLOYERS FOR WOMEN MBAS            Spain (7th in all sectors, 3rd in pharmaceu-
                                              Lilly ranked 39th out of 535 companies that      Fortune magazine (2010)                     ticals), among companies with more than
DEVELOPING INNOVATIVE MEDICINES               completed the DiversityInc survey (2011).                                                    1,000 employees (2010)
                                                                                             • TEN BEST COMPANIES FOR BLACKS
                                              This was the first time Lilly made the list.    IN TECHNOLOGY                              • DELOITTE BEST COMPANY TO WORK
AND TRANSPARENTLY                           • TOP COMPANIES FOR EXECUTIVE WOMEN               Black Data Processing Associates            FOR SURVEY
                                              National Association of Female Executives       (2006–2010)                                 South Africa, voted best company in the
SUPPORTING STRONG WORKPLACE                   (2009–2011)                                                                                 chemical/pharmaceutical sector
                                                                                             • TOP 50 EMPLOYERS
                                            • TOP 100 BEST PLACES TO WORK,                     Minority Engineer and Equal Opportunity
 Creating a Supportive and Rewarding Work    BEST PLACES TO WORK HALL OF FAME                  magazines (2009)
 Environment                                 Working Mother magazine (1995–2011)             • TOP DIVERSITY EMPLOYER FOR AFRICAN
                                                                                                                                           MARKETPLACE DIVERSITY
 Diversity and Inclusion                    • TOP 50 EMPLOYER                                  AMERICANS, TOP PHARMACEUTICAL AND
                                                                                              BIOTECH COMPANY LIST
                                                                                                                                           AND INCLUSION AWARDS
                                              Careers & the disABLED magazine (2010)
• Employee Health, Safety, and Wellness                                                       Black EOE Journal (2009)
                                                                                                                                           Lilly also has earned recognition for its com-
                                            • MOST ADMIRED COMPANIES FOR
ENGAGING WITH PATIENTS AND                                                                   • TOP DIVERSITY EMPLOYER FOR                  mitment to diversity and inclusion in the
                                             MINORITIES IN RESEARCH SCIENCE
COMMUNITIES                                                                                   HISPANICS, TOP PHARMACEUTICAL                marketplace:
                                             24th Black Engineer of the Year Science,
                                             Technology, Engineering and Math (STEM)          AND BIOTECH COMPANY LIST
FOSTERING ENVIRONMENTAL                                                                                                                    •	PRESIDENT’S AWARD , National Hispanic
                                             Conference (2010)                                Hispanic Network magazine (2009)
SUSTAINABILITY                                                                                                                               Council on Aging (2010)
                                            • BEST ADOPTION-FRIENDLY WORKPLACES              • TOP DIVERSITY EMPLOYER FOR WOMEN,
                                                                                                                                           •	CORPORATE CIRCLE PARTNERS AWARD ,
ABOUT THIS REPORT                             (4th among pharmaceutical companies,            TOP PHARMACEUTICAL AND BIOTECH
                                                                                                                                             for advancing issues facing patients and
                                              36th in America), the Dave Thomas               COMPANY LIST
GLOBAL REPORTING INITIATIVE INDEX                                                                                                            addressing health care disparities, National
                                              Foundation for Adoption (2010)                  Professional Woman’s Magazine (2009)
                                                                                                                                             Medical Association (2009)

     PAGE 52                                                                                                                               LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                      ENGAGING WITH


                                      PATIENTS AND COMMUNITIES



                                      Lilly is committed to being a leader in corporate responsibility,
                                      which includes being an active participant in the communities we


                                      serve. We have a robust history of community involvement and
                                      believe we can make an impact that extends far beyond the medi-
                                      cines we make. Many of our donations—including those provided                                          TOTAL CHARITABLE CONTRIBUTIONS
                                                                                                                                                   GIVEN BY LILLY IN 2010
• Strengthening Communities           through the Eli Lilly and Company Foundation—focus on improving
 Employee Volunteerism and Giving     access to medicines and quality health care for millions of people
                                      around the globe. (See the “Enhancing Access to Medicines”

SUSTAINABILITY                        section on page 8 for a discussion of Lilly programs and initia-
ABOUT THIS REPORT                     tives aimed at reducing barriers to care.)
                                                                                                                                                LILLY’S RANKING BY FORBES
                                                                                                                                            AMONG AMERICA’S 10 MOST GENEROUS
GLOBAL REPORTING INITIATIVE INDEX                                                                                                               COMPANIES, BASED ON 2009

                                      STRENGTHENING COMMUNITIES
                                                                                                                                               DONATIONS AS A PERCENTAGE
UNITED NATIONS GLOBAL COMPACT INDEX                                                                                                                OF OPERATING INCOME

                                      Globally, our company donates substantial     communities, for the people we serve, and
                                      amounts of products and cash every year,      for our company. We aim to demonstrate

                                                                                                                                                    $   16
                                      and our employees volunteer their time and    leadership by using our resources and our

                                      skills to scores of charitable causes and     deep expertise to make a meaningful, mea-
                                      programs. In 2010, Lilly gave approximately   surable, and sustainable difference.
                                      $430 million in charitable contributions,                                                                 GIVEN BY LILLY FOUNDATION
                                                                                    At the local level, we focus our community
                                      including cash, products, and other in-kind                                                               TO INDIANA ORGANIZATIONS
                                                                                    investments on programs that improve
                                      donations, up from $405 million the previ-
                                                                                    patient outcomes, especially in Lilly’s
                                      ous year. About 85 percent of that amount
                                                                                    therapeutic areas of expertise, such as
                                      was in the form of product donations. In

                                                                                    diabetes, cancer, and mental health. In
                                      October 2010, Forbes ranked Lilly among
                                                                                    addition, we look for ways to enhance the
                                      America’s 10 most generous companies,
                                                                                    quality of life in communities in which Lilly
                                      based on 2009 donations as a percentage of
                                                                                    has a presence. In Indiana, for example,
                                      operating income.                                                                                        NUMBER OF LILLY EMPLOYEES
                                                                                    we are making significant commitments to                    WHO PARTICIPATED IN OUR
                                      In recent years, we have more closely         improve K–12 education, with a priority on                 2010 GLOBAL DAY OF SERVICE

                                      aligned our investments with our business     math and science.
                                      objectives to drive better results for our

     PAGE 53                                                                                                                        LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                  Lilly Foundation
ABOUT LILLY                           Charitable Giving 2010
                                                                                                           THINKING LOCALLY
                                      percent breakdown
                                                                                     37%                   As one of the largest employers in our headquarters state of Indiana, we have a big impact on our local
                                                                                     Health Care           economy. In 2010, for example:
ENHANCING ACCESS TO MEDICINES                                                        17%
                                                                                     Employee              •	The Lilly Foundation gave more than $16 million to Indiana organizations.
                                                                                     Matching Gifts
DEVELOPING INNOVATIVE MEDICINES                                                                            •	Lilly employees gave more than $7 million to charitable organizations with a presence in Indiana.28
                                                       $30M                          20%
                                                       TOTAL                         United Way
CONDUCTING OUR BUSINESS ETHICALLY                                                                          •	Lilly spent just over $1 billion with more than 1,300 Indiana vendors.
AND TRANSPARENTLY                                                                    10%
                                                                                     Education             •	Lilly paid 11,500 Indiana employees an average salary and benefits of $150,952 each.
SUPPORTING STRONG WORKPLACE                                                          16%                   For information on our Indiana impact, by county, visit
PRACTICES                                                                            Community
                                                                                                                The total figure includes Lilly Foundation matching grants for employee donations.
                                      CHARITABLE DONATIONS27
                                      ($ MILLIONS)
• Strengthening Communities

 Employee Volunteerism and Giving                                   2007     2008      2009      2010    Patient Assistance Programs                                                 their diseases. Lilly believes an informed
                                                                                                                                                                                     patient is a better participant in his or her
                                                                                                         Not everyone who needs our medicines is                                     own care and can achieve better health
FOSTERING ENVIRONMENTAL               Product and                    240       297      335       373
                                                                                                         able to get them. In the United States, Lilly                               outcomes than a patient with access to
SUSTAINABILITY                        Other In-Kind
                                                                                                         TruAssist provides access to products for                                   less information.
                                                                                                         eligible patients through several patient
                                                                                                         assistance programs. The majority of                                        We support and partner with numerous
                                      Cash                             75       53        70       57
                                                                                                         our product donations are made through                                      local and national organizations, includ-
                                                                                                         TruAssist, which serves as the umbrella                                     ing those addressing multicultural health
UNITED NATIONS GLOBAL COMPACT INDEX   Total                          315       350      405       430    program for Lilly’s many patient assistance                                 disparities, to improve patient care. In the
                                      Contributions                                                      efforts. For more information, see page 14                                  United States, for example, minority groups
                                                                                                         or visit                                            often suffer heightened rates of certain
                                           Total	charitable	donations	include	funding	from	both	Lilly	                                                                               diseases, including diabetes, which is one
                                           and	the	Lilly	Foundation.
                                                                                                                                                                                     area of therapeutic focus for us.
                                                                                                         Patient Education
                                                                                                                                                                                     Our prevention-related interventions include
                                                                                                         We understand the health challenges                                         materials printed in multiple languages for
                                      This section of the report highlights our                          patients and their families face, and we                                    traditionally underserved communities.
                                      work in several key areas: patient assis-                          provide hundreds of millions of dollars in
                                      tance, patient education, community                                                                                                            We partner with a number of organizations
                                                                                                         product donations each year to help. But
                                      outreach, employee volunteerism and giv-                                                                                                       to provide education and support—including
                                                                                                         product contributions tell only part of the
                                      ing, and hunger relief through our Elanco                                                                                                      through the programs described below—to
                                                                                                         story. Lilly goes beyond medicine to help
                                      animal health division.                                                                                                                        patients and their families.
                                                                                                         patients improve their health and manage

     PAGE 54                                                                                                                                                                            LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                  Cancer Programs                                       Diabetes Programs


                                        Oncology on Canvas                                    F.A.C.E. Diabetes Campaign                        Lilly Camp Care Package
                                      The Lilly Oncology On Canvas : Expres-
                                                                                            The Fearless African Americans Connected          For more than 10 years, Lilly Diabetes has
CONDUCTING OUR BUSINESS ETHICALLY     sions of a Cancer Journey Art Competition             and Empowered (F.A.C.E.) Diabetes cam-            been one of the largest providers of insulin
AND TRANSPARENTLY                     and Exhibition honors the journeys people             paign is a grassroots movement to help            and glucagon, educational materials, volun-
                                      face when confronted with a cancer diag-              African Americans overcome key barriers to        teers, scholarships, and special guests to
SUPPORTING STRONG WORKPLACE           nosis. The biennial competition invites               success in living with type 2 diabetes. African   diabetes camps through the comprehensive
                                      individuals diagnosed with any type of                Americans are disproportionately affected         Lilly Camp Care Package. Lilly Diabetes
                                      cancer—as well as their families, friends,            by the disease. According to the American         is dedicated to providing these personal-
COMMUNITIES                           caregivers, and health care providers—to              Diabetes Association, African Americans in        ized tools and resources to help children
                                      express, through art and narrative, the life-         the United States are 1.8 times more likely       manage everyday experiences with diabetes
• Strengthening Communities           affirming changes that give their cancer              to have diabetes than non-Hispanic whites.        while they’re at camp—and long after.
                                      journeys meaning. The result is a compel-             About one-quarter of African Americans            In 2010, 94 diabetes camps participated in
 Employee Volunteerism and Giving     ling art collection that provides insights            between the ages of 65 and 74 have the            the Camps in Color program, an art-therapy
                                      into the wide range of emotions experi-               disease. Supported by Lilly, the F.A.C.E. Dia-    based initiative that gives children a creative
                                      enced by those touched by cancer.                     betes campaign offers programs and tools          outlet to express their feelings about dia-
                                                                                            to help people make lifestyle changes to          betes individually or as a group. Requesting
                                      Oncology On Canvas is presented by Lilly
ABOUT THIS REPORT                                                                           manage their disease. For more, see www.          camps also received nearly $2 million in
                                      in partnership with the National Coalition
                                                                                                                  insulin product and more than 22,000 edu-
                                      for Cancer Survivorship, a nonprofit cancer
GLOBAL REPORTING INITIATIVE INDEX                                                                                                             cational bookpacks for campers. Further,
                                      organization that advocates for quality                 Diabetes Conversations
                                      cancer care for all people touched by cancer                                                            inspirational speaker and U.S. Olympian
                                      and provides tools that empower people                Created by Healthy Interactions in col-           Kris Freeman (who was diagnosed with type
                                      to advocate for themselves. Winners are               laboration with the International Diabetes        1 diabetes at age 19) visited approximately
                                      selected by an independent panel of judges,           Federation, Lilly Diabetes sponsors the           1,500 youngsters during his annual diabetes
                                      typically including past winners, cancer              Diabetes Conversations program, featuring         summer camp tour, sharing his message
                                      survivors, and representatives from media             Conversation Map™ education tools. This           of hope and determination. Lilly Diabetes
                                      and patient advocacy groups.                          innovative education method uses a unique,        employees also found meaningful ways to
                                                                                            visual approach to facilitate interactive         connect with their camp communities by
                                                                                            group participation and empower people            volunteering support services such as camp
                                                                                            with diabetes to become actively involved         administration, art and athletic activity
                                                                                            in managing the disease. The education            planning and support, counseling, and med-
                                        In 2011, Lilly received a “Partnership in Hope”
                                                                                            tools, available in 35 languages, have been       ical services, based on their qualifications.
                                        award from CancerCare, a U.S. nonprofit orga-
                                                                                            launched in more than 105 countries since         Lilly also provides general camp tuition
                                        nization that provides free, professional support
                                                                                            2008. For more information, see www.              support, and in early 2011 donated 88
                                        services to people affected by cancer. The
                                                                                                              scholarships to the American Diabetes
                                        organization recognized Lilly’s support of its
                                        counseling and education programs, especially                                                         Association’s “campership” program. The
                                        for people diagnosed with lung, breast, and                                                           camperships, equivalent to $88,000, gave
                                        pancreatic cancers.                                                                                   low-income children with diabetes the
                                                                                                                                              opportunity to attend diabetes camp for
                                                                                                                                              approximately one week.

     PAGE 55                                                                                                                                    LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                                                                 Mental Health Programs

                                        Peers for Progress
                                      In 2007, Lilly announced a $15 million com-      Reintegration Awards and                         In Our Own Voice
DEVELOPING INNOVATIVE MEDICINES       mitment over five years to support Peers for   Scholarships
                                      Progress. This program, administered by                                                         In Our Own Voice (IOOV) is a unique public
CONDUCTING OUR BUSINESS ETHICALLY     the American Academy of Family Physicians      People who are managing or recover-              education program developed by the
AND TRANSPARENTLY                     Foundation, is designed to enhance peer        ing from mental illness often hear the           National Alliance on Mental Illness, in which
                                      support for those with diabetes. Support       word “reintegration.” It refers to the steps     two trained consumer speakers share com-
SUPPORTING STRONG WORKPLACE           from peers can offer ongoing emotional,        involved with reentering the community and       pelling personal stories about living with
PRACTICES                             social, and practical assistance to improve    getting back to living as normal a life as       mental illness and achieving recovery. The
                                      outcomes. Peers for Progress advances and      they can. Key to reintegration is the support    program has been funded by Lilly since its
ENGAGING WITH PATIENTS AND                                                           of family, friends, and mental health profes-    inception. IOOV is an opportunity for those
                                      promotes peer-support programs around
COMMUNITIES                                                                          sionals. Since 1996, Lilly has partnered with    who have struggled with mental illness to
                                      the world by extending the evidence base
                                      for peer support; establishing peer support    The Center for Reintegration to present Lilly    gain confidence and to share their individual
• Strengthening Communities
                                      as a core component of health care and         Reintegration Awards and Scholarships.           experiences of recovery and transformation.
 Employee Volunteerism and Giving     prevention; and building a network of peer-    The goal of these programs is to recognize       IOOV presentations are given to consumer
                                      support organizations around the world.        mental health professionals, family and          groups, students, law-enforcement officials,
FOSTERING ENVIRONMENTAL                                                              friends of individuals with mental illness,      educators, providers, faith community
                                      For more information, see www.peersfor
SUSTAINABILITY                                                                       and individual patients for their exceptional    members, politicians, professionals,
                                                                                     contributions and achievements in helping        inmates, and interested civic groups.
                                                                                     those battling serious mental illness.
GLOBAL REPORTING INITIATIVE INDEX                                                    Over the years, the Lilly Reintegration
                                                                                     Awards have recognized approximately
UNITED NATIONS GLOBAL COMPACT INDEX                                                  175 individuals and programs in the mental
                                                                                     health field. The Lilly Reintegration Scholar-
                                                                                     ships are designed to assist people with           Give an Hour
                                                                                     schizophrenia, related schizophrenia-
                                                                                     spectrum disorders, or bipolar disorder          Lilly is continuing its history of supporting
                                                                                     acquire the educational and vocational           programs that serve the men and women
                                                                                     skills necessary to integrate into society,      who have served the United States. The Lilly
                                                                                     secure jobs, and regain their lives. Over        Foundation has provided a grant to Give an
                                                                                     the years, these scholarships have sup-          Hour and the American Psychiatric Foun-
                                                                                     ported approximately 1,200 students. The         dation to heed the call of a growing public
                                                                                     graduation rate for the Lilly Reintegration      health crisis—the unmet mental health
                                                                                     Scholars is 85 percent—far higher than the       needs of returning soldiers and their fami-
                                                                                     national average of 60 percent for incom-        lies—to help U.S. veterans returning from
                                                                                     ing freshmen. For more information about         Iraq and Afghanistan. The grant will be used
                                                                                     Lilly’s Reintegration Awards or for details      to recruit and educate volunteer mental
                                                                                     on the Reintegration Scholarship program,        health professionals who will become part
                                                                                     visit                     of a network aiming to bridge the gap in
                                                                                                                                      mental health services for soldiers return-
                                                                                                                                      ing from service, as well as their families.

     PAGE 56                                                                                                                            LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                                                                  Other Non-Communicable                         General Patient Outreach
ABOUT LILLY                                                                           Disease Programs                               Programs

                                        Welcome Back Awards                             Hearts in Harmony™
                                      Our Welcome Back Awards, established in         Sponsored by Lilly, Mended Hearts, and
CONDUCTING OUR BUSINESS ETHICALLY     1998, honor individuals who have perse-         Daiichi Sankyo, Inc., Hearts in Harmony
AND TRANSPARENTLY                     vered in overcoming depression, helped
                                                                                                                                       Lilly for Better Health™
                                                                                      provides information about the physical and
                                      others to do the same, or dedicated             the often-overlooked emotional aspects         Lilly for Better Health is a patient-focused
SUPPORTING STRONG WORKPLACE           significant amounts of time and effort          of recovering from a heart attack or other     resource available to community and health
                                      to spread awareness of the illness. Each        heart-related event. The program gives         advocacy organizations, public and private
                                      year, an independent panel of national          patients and their loved ones information      health care providers, policymakers, and
COMMUNITIES                           mental health experts selects honorees          about the importance of fitness, nutrition,    others interested in improving the health
                                      in five categories: lifetime achievement,       and adherence to therapies prescribed by       and well-being of their communities.
• Strengthening Communities           de-stigmatization, community service,           their physicians. Unique to this program       Lilly for Better Health includes a website,
                                      primary care, and psychiatry. Winners           is information about the benefits of music     conference exhibits, and printed materials,
 Employee Volunteerism and Giving     receive $10,000 to be donated to the non-       therapy and maintaining emotional health       and reaches tens of thousands of custom-
                                      profit organization of their choice; lifetime   during the recovery process. For more          ers directly each year at community events,
                                      achievement honorees receive $15,000            information, visit www.healthyheartsin         programs, and health care conferences,
                                      for their preferred nonprofit.                                           offering valuable education materials and
ABOUT THIS REPORT                                                                                                                    interactive assessment tools on a variety of
                                                                                                                                     health topics. In 2010, we distributed more
GLOBAL REPORTING INITIATIVE INDEX                                                                                                    than 450,000 patient-education resources to
                                                                                                                                     individuals and organizations. The website,
UNITED NATIONS GLOBAL COMPACT INDEX                                                                                                  which was updated in 2011, spotlights Lilly
                                                                                                                                     partnerships and programs that focus on
                                                                                                                                     wellness, prevention, and disease man-
                                                                                        Know Fibro                                   agement and offers on-demand access to
                                                                                      Fibromyalgia is a chronic pain disorder that   health education materials.
                                                                                      affects millions of Americans, but it can be   Many Lilly for Better Health resources are
                                                                                      hard to diagnose. Women are more likely        available in both English and Spanish, with
                                                                                      to be diagnosed with the disease, although     select tools in Mandarin. We have also been
                                                                                      men also develop it. Know Fibro offers         using multimedia platforms such as YouTube
                                                                                      information about the disease and provides     and e-reader software to further reach and
                                                                                      tools to help manage symptoms. For more        engage patients and caregivers. Learn more
                                                                                      information, visit          at and www.

     PAGE 57                                                                                                                           LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                                                                   including depression, diabetes, heart health,    Commitment to Communities
                                                                                       and schizophrenia, is available in English and
ABOUT LILLY                                                                            Spanish, with select topics in Mandarin. More    We look for ways we can make a differ-
                                                                                       information can be found at www.Health           ence, both in the communities where our
OUR APPROACH TO CORPORATE                                                                                                               facilities are based and in the broader
RESPONSIBILITY                                                                                                                          global community in which we operate. For
                                                                                                                                        information about Lilly programs that are
                                                                                                                                        designed to improve patients’ access to
DEVELOPING INNOVATIVE MEDICINES                                                                                                         medicines, such as our leadership around
                                                                                                                                        multidrug-resistant tuberculosis, see
                                         A Healthy You! America’s Guide
CONDUCTING OUR BUSINESS ETHICALLY                                                                                                       page 11 of this report.
                                      to Healthy Living/Buena Salud,
                                      Buena Vida                                                                                        In our headquarters state of Indiana, we
SUPPORTING STRONG WORKPLACE           Lilly created A Healthy You! America’s Guide                                                      have made significant commitments in the
                                                                                            Healthy Family Home                         area of education. Our two largest invest-
PRACTICES                             to Healthy Living, a free pocket-sized health
                                      and wellness booklet that provides useful        The YMCA of the U.S.A. and Lilly have            ments are in The Mind Trust and the Indiana
ENGAGING WITH PATIENTS AND            information on various health topics, as         partnered to create Healthy Family Home          Science Initiative.
                                      well as an extensive state-by-state listing      to help American families make small
                                      of helpful resources throughout the coun-        changes in habits that can make a big dif-
• Strengthening Communities                                                            ference in health. Healthy Family Home is
                                      try. The booklet is available in print and
                                      online at and       designed to work in any home and in any
 Employee Volunteerism and Giving
                                      is also available in Spanish (Buena Salud,       community and allows families to pick the
FOSTERING ENVIRONMENTAL               Buena Vida).                                     actions and health goals that make the
SUSTAINABILITY                                                                         most sense for them. The expectation is
                                      Lilly recently partnered with the National       that the program will empower families
ABOUT THIS REPORT                     Council of La Raza (NCLR) to provide the         to make wholesome choices each day to
                                      Spanish booklet to thousands of Hispanic
                                                                                                                                          Indiana Science Initiative
                                                                                       sustain an improved quality of life.
GLOBAL REPORTING INITIATIVE INDEX     Americans to help them lead healthier                                                             The Lilly Foundation provided $1.5 million
                                      lifestyles and learn about prevention and                                                         in funding to support the Indiana Science
                                      management of chronic illnesses, such as                                                          Initiative ( and
                                      heart disease, cancer, and diabetes. NCLR is                                                      extend it to more schools throughout the
                                      the largest national Hispanic civil rights and                                                    state. This initiative helps kindergarten
                                                                                           RENÉE D. JENKINS
                                      advocacy organization in the United States.                                                       through eighth-grade teachers effectively
                                                                                       VICE PRESIDENT, CORPORATE DEVELOPMENT            integrate proven inquiry-based learning
                                                                                       NATIONAL URBAN LEAGUE
                                                                                                                                        curricula into their classrooms. To further

                                                                                                                                        support these teachers, Lilly is establishing
                                                                                       Lilly has a stellar reputation at the
                                                                                                                                        a Lilly Science Coach volunteer program in
                                                                                       Urban League, and the company is our             the Indianapolis area in which Lilly scien-
                                        Health Education Answers                       lead partner within the pharmaceuti-             tists will be assigned to specific teachers
                                                                                       cal industry. Our relationship has been          to help them with classroom experiments,
                                      Health Education Answers is an online            ongoing for nearly 30 years, and Lilly
                                      health-education program designed to help                                                         talk about real-world science, and serve as
                                                                                       has supported a variety of programs              role models for students. Lastly, to ensure
                                      improve patient care through educational
                                                                                       with us over the decades. Currently, the         the program is efficiently implemented, Lilly
                                      outreach. The program offers interac-
                                                                                       Lilly Foundation is funding an education         has provided several of its Six Sigma black
                                      tive resources, such as health screeners,
                                                                                       program we are piloting in several high          belts to help optimize program processes
                                      quizzes, knowledge builders, and self-
                                      management tools to help individuals
                                                                                       schools, focusing on career paths in             (see page 62 for more on the black belts).

                                      and families prevent or manage health            science and technology.
                                      conditions. Information on 13 topic areas,

     PAGE 58                                                                                                                              LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                                                                    providing access to an excellent education for
                                                                                        all children is the key to our city’s future.
ABOUT LILLY                               DAVID HARRIS
                                      FOUNDER AND CHIEF EXECUTIVE OFFICER               For more information, see www.themind              DIABETES AND DISASTERS
OUR APPROACH TO CORPORATE             THE MIND TRUST                           and

RESPONSIBILITY                                                                                                                             In the wake of natural disasters, millions
                                      To transform our schools, we need                                                                    of individuals can be left stranded in their
ENHANCING ACCESS TO MEDICINES         many pieces to come together to form              Disaster Relief                                    homes without power, utilities, or a way
                                      a new dynamic in public education,”                                                                  out. These situations can be dangerous for
DEVELOPING INNOVATIVE MEDICINES                                                         When disasters strike, Lilly responds with         anyone, but they can be especially hazardous
                                      said, “The Mind Trust is purposefully             cash and product contributions to help peo-
                                      building an integrated network of                                                                    for people with diabetes. The management of
CONDUCTING OUR BUSINESS ETHICALLY                                                       ple in desperate situations. Every disaster is     diabetes requires daily medicines, which can
AND TRANSPARENTLY                     entrepreneurial education ventures—a              different, prompting a wide variety of needs.      make individuals particularly vulnerable in
                                      network whose collective impact will              When responding, we take great care not to         an emergency.
SUPPORTING STRONG WORKPLACE           far exceed the sum of its parts. Lilly            overburden the local infrastructure, so that
PRACTICES                             recognizes the importance of improving            our product donations are meaningful and           Lilly teamed up with the American College
                                      education, not only to have a pipeline of         impactful. We donate items that are specifi-       of Endocrinology to create a disaster-
                                      talent for its own employee base, but             cally requested by relief agencies, partnering     preparedness plan for people with diabetes.
                                      also to strengthen the overall fabric of          with them to best leverage our support.            The comprehensive checklist, available in
                                      the Indianapolis community. With Lilly’s                                                             both English and Spanish, was developed
• Strengthening Communities                                                             We also join with the Partnership for Quality
                                      help, and through future investments                                                                 following Hurricane Katrina in 2005. In the
                                                                                        Medical Donations (PQMD), which brings             years since, more than 10 million copies of
 Employee Volunteerism and Giving     from other community leaders, the                 together international medical-product             Power of Prevention®: Diabetes Disaster Plan
                                      Grow What Works campaign will lay the             companies and humanitarian organizations
FOSTERING ENVIRONMENTAL                                                                                                                    have been distributed throughout the United
SUSTAINABILITY                        groundwork for lasting, positive change           to advance the quality of product donations

                                                                                                                                           States. Copies of the plan are available for free
                                      in public education.                              through standards, education, and research.        download at
ABOUT THIS REPORT                                                                       Lilly is a charter member of PQMD—which
                                                                                        officially incorporated in 2000—and one of         The disaster preparedness plan suggests the
GLOBAL REPORTING INITIATIVE INDEX                                                       our employees sits on the PQMD executive           items patients should have on hand to keep
                                                                                        committee. (For more information, visit            themselves—and others—safe in the event
UNITED NATIONS GLOBAL COMPACT INDEX                                                                                                        of an emergency. For example, to ensure the
                                                                                                                                           safety of others, the kit suggests an empty
                                                                                        In 2010, Lilly gave $4.2 million in donations      water bottle or a similar container to hold
                                                                                        in the wake of natural disasters. One of our       used syringes, needles, and lancets used
                                                                                        biggest efforts followed the devastating           for medications.
                                           The Mind Trust
                                                                                        earthquake in Haiti in January 2010. Lilly
                                      In 2011, Lilly joined with The Mind Trust, an     sent insulin and antibiotics—items that are
                                      Indianapolis-based nonprofit, to launch the                                                        the recent 25th anniversary of the Chernobyl
                                                                                        critically needed following any disaster. Our
                                      Grow What Works campaign in an effort to                                                           nuclear power plant disaster. Through
                                                                                        support for Haiti’s recovery also included
                                      transform public education in our head-                                                            Project HOPE, we provided cancer medi-
                                                                                        a grant by the Lilly Foundation to fund
                                      quarters city. Lilly invested $2.5 million, our                                                    cines that were airlifted to Belarus by the
                                                                                        the transportation of two self-contained
                                      largest-ever education-focused grant.                                                              U.S. State Department.
                                                                                        medical clinics from the United States to
                                      Since its founding in 2006, The Mind Trust        rural Haitian villages. The 40-by-8-foot         Finally, we recently began a pioneering
                                      has been strategically building a network of      “container clinics” are operated by Heart to     partnership with the American Red Cross
                                      the nation’s best education-reform organi-        Heart International, a U.S.-based humani-        to provide trained Lilly nurses and medical
                                      zations in Indianapolis. The organization’s       tarian organization.                             technicians who can volunteer at natural
                                      latest fundraising campaign has set a goal of                                                      disaster sites. Lilly will give these employ-
                                                                                        We also partner with several government
                                      $18 million to improve public education for                                                        ees up to one paid week off to help out
                                                                                        and nongovernmental organizations, provid-
                                      underserved populations. Lilly believes that                                                       when needed.
                                                                                        ing products for special programs, such as

     PAGE 59                                                                                                                               LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                      EMPLOYEE VOLUNTEERISM AND GIVING
ABOUT LILLY                                                                                                                            STEVEN C. ROSENTHAL
                                      Our corporate volunteer programs harness the power of our                                        EXECUTIVE DIRECTOR
                                      employees within their communities. In 2011, we took a new—                                      CROSS-CULTURAL SOLUTIONS

                                      and unique—approach to employee volunteerism, building on                                          Lilly employees are some of the most
ENHANCING ACCESS TO MEDICINES                                                                                                          exceptional people we’ve worked with.
                                      our long tradition of innovation and caring. And we’re particularly
                                                                                                                                       And Lilly is one of the most extraordi-
DEVELOPING INNOVATIVE MEDICINES       proud of the result.                                                                             nary companies we have ever worked
CONDUCTING OUR BUSINESS ETHICALLY                                                                                                      with. The vision Lilly executives have
                                      Through Connecting Hearts Abroad, we are        in 12 countries. The organization has sent
AND TRANSPARENTLY                                                                                                                      shown in creating the Connecting Hearts
                                      sending 200 “Lilly Ambassadors” each year       more than 25,000 volunteers to developing
                                                                                                                                       Abroad program, and the humanity the
                                      on two-week assignments to provide assis-       countries around the world.
                                      tance in developing communities in Asia,
                                                                                                                                       volunteers have shown with their ser-
PRACTICES                                                                                                                              vice, is truly inspiring and demonstrates
                                      Africa, and Central and South America,
ENGAGING WITH PATIENTS AND            where people lack access to the most basic      Lilly Global Giving Program                      the company’s excellence and compas-
COMMUNITIES                           of resources. The goal is not just to help                                                       sion. Lilly’s commitment to sending
                                                                                      Our business is global. Our company is
                                      others, but to spark employees’ innovative                                                       200 employees each year to serve as
                                                                                      global. And so is our role as a good corporate
 Strengthening Communities            ideas to make Lilly a better company.                                                            ambassadors in Africa, Asia, and Latin
                                                                                      citizen. That’s why we recently introduced
                                                                                      the Lilly Global Giving program, in partner-
                                                                                                                                       America shows Lilly’s commitment to
• Employee Volunteerism and Giving    We selected 200 employees from 38 coun-                                                          its own mission of improving the lives
                                      tries to participate in the first year of the   ship with the GlobalGiving Foundation (www.
FOSTERING ENVIRONMENTAL                                                                                    of people who lack resources to obtain

                                      program. (More than 1,800 Lilly employees
SUSTAINABILITY                                                                                                                         quality health care.
                                      applied for the opportunity). No special-       Through this program, Lilly employees
                                      ized skills or expertise were required—just     around the world can contribute to a wide
                                      a passion for making a difference. We’re        variety of projects that are personally mean-
                                      giving our employees life-changing, eye-                                                         DONNA CALLEJON
GLOBAL REPORTING INITIATIVE INDEX                                                     ingful—and have their donations matched
                                      opening experiences that we believe will        dollar-for-dollar by the Lilly Foundation.       CHIEF BUSINESS OFFICER
UNITED NATIONS GLOBAL COMPACT INDEX   make them more passionate and knowl-            The program, which kicked off in 2011, gave      GLOBALGIVING FOUNDATION

                                      edgeable world citizens. It’s an investment     each eligible Lilly employee the opportunity
                                      in developing communities, an investment        to direct a $50 credit toward a project of his
                                                                                                                                         Many companies struggle to find ways
                                      in our employees, and an investment in          or her choosing through Lilly Global Giving.     to ensure their employee-engagement
                                      Lilly’s future.                                                                                  programs reflect the increasingly
                                                                                      Through Lilly Global Giving, employees may       multinational nature of their business
                                      The Lilly volunteers are providing hands-       support hundreds of different grassroots         footprint. Through Lilly Global Giving,
                                      on support in four categories: health care;     programs, including projects that:               Lilly employees have the opportunity to
                                      caregiving for children and the elderly;
                                      teaching; and community development.            • Provide insulin and insulin supplies to        support great causes around the globe
                                      Each service assignment includes eight            patients in Guatemala,                         and have the company match those

                                      or nine Lilly employees from a variety of       • Improve the diagnosis and care of people
                                                                                                                                       contributions—it’s a win-win.
                                      business functions, from lab technicians to       with tuberculosis in India,
                                      marketing associates to manufacturing spe-      • Teach farmers in Zambia about animal
                                      cialists. Management, hourly, and salaried        management and sustainable farming,
                                      employees all have a chance to participate.                                                      By participating in Lilly Global Giving,
                                                                                      • Provide an education for orphaned chil-        employees may select, contribute to, and
                                      We’re partnering with Cross-Cultural              dren in Cameroon, or                           follow the progress of global programs that
                                      Solutions, an international nonprofit that      • Help restore acres of rainforest in Brazil,    are addressing causes they care about.
                                      operates short-term volunteer programs            among hundreds of other projects.

     PAGE 60                                                                                                                               LILLY 2010 CORPORATE RESPONSIBILITY REPORT

                                      ELANCO COMMUNITY WORK
RESPONSIBILITY                        Elanco focuses on enriching lives through food           husbandry training to help families improve their         “food backsack” program. Four out of every five chil-
                                      and pet companionship. We aim to transform               daily nutritional intake and generate income in sus-       dren in the Indianapolis public schools rely on free
ENHANCING ACCESS TO MEDICINES         animal agriculture and provide trusted solutions         tainable ways. We are contributing several million         or reduced meals at schools. These same children,
                                      for animal production, herd management, and pet          dollars in the next two years to begin this effort         however, often go hungry on the weekends and in
DEVELOPING INNOVATIVE MEDICINES       medicines. We focus our corporate responsibility         and will continually assess the funding to reach our       the summer when school is not in session.
                                      work where we have the deepest expertise and in-         goal of hunger relief in emerging economies. At the
CONDUCTING OUR BUSINESS ETHICALLY                                                                                                                        In the summer of 2011, we donated $17,500 to
                                      terest—animal health and animal production—and           same time, we’re working in our own backyard to
AND TRANSPARENTLY                                                                                                                                        spread the word about the Indianapolis summer
                                      can therefore have the greatest impact. Two key          help create a hunger-free community for children in
                                                                                                                                                         meals program, which offered free meals to any
                                      areas for us are fighting world hunger and provid-       Indianapolis by 2015.
SUPPORTING STRONG WORKPLACE                                                                                                                              local child or teen under the age of 18. The weekend
                                      ing leadership in agriculture.
PRACTICES                                                                                      Our partnership with Heifer began in 2009 in the          backsack program, available during the school
                                      FIGHTING WORLD HUNGER                                    Lampung province of Indonesia, where a five-year          year, sends children home for the weekend with
ENGAGING WITH PATIENTS AND                                                                     project is providing 2,100 families with cattle, ducks,   six child-friendly meals, such as oatmeal or pasta.
                                      A growing wave of food insecurity threatens more
                                      than 1 billion people around the world, accord-          plants, and trees. In 2010, we expanded our focus         This program currently serves about 3,000 children,
                                      ing to the United Nations Food and Agriculture           to the Copper Belt region of Zambia, where we             and Elanco will help extend it to support 10,000
 Strengthening Communities
                                      Organization. With food costs on the rise, and the       will ultimately assist some 6,210 families. In addi-      children in 2011. Elanco contributed $100,000 to
• Employee Volunteerism and Giving    world’s population continuing to increase, more          tion to the gifts of animals, Elanco and Heifer are       this program, which is coordinated by city and
                                      and more families are living in poverty. Today,          working jointly to establish local milk market outlets,   state organizations and several nonprofits, includ-
FOSTERING ENVIRONMENTAL                                                                        improve production and conservation practices, and        ing Gleaners Food Bank ( and
                                      one out of every six people on the planet goes
SUSTAINABILITY                                                                                 train animal health workers.                              Second Helpings (
                                      hungry. And more than 25,000 people die each
ABOUT THIS REPORT                     day from hunger and malnutrition.                        In 2011, we announced our third project—this one           AGRICULTURAL LEADERSHIP
                                      The United Nations projects that world population        in the Hebei province of China, where more than            For more than 14 years, Elanco has supported the
GLOBAL REPORTING INITIATIVE INDEX                                                              20 million families live on less than one U.S. dollar a
                                      will jump from about 6.7 billion people today to 9                                                                  National FFA Organization, formerly known as
                                      billion by 2050. This rise in population, coupled        day. In Hebei, Elanco and Heifer will deliver the gifts    the Future Farmers of America. FFA is a youth or-
                                      with increasing affluence and other factors, is          of livestock and hands-on training to 800 families.        ganization that nurtures leadership, responsibility,
                                      expected to increase the demand for food by 100                                                                     and personal growth and encourages students to
                                                                                               Elanco employees have also been inspired by the
                                      percent over the next 40 years.                                                                                     pursue careers in agriculture. Nationwide member-
                                                                                               hunger cause, donating approximately $200,000
                                                                                                                                                          ship is more than 500,000.
                                      At Elanco, we’re looking for ways to improve food        (including a Lilly Foundation match) to Heifer
                                      production to help meet these demands. Indeed,           International in just two years.                          We are proud to be a “five-star sponsor,” one of
                                      we believe our industry has a moral obligation to                                                                  approximately 15 companies to provide more than
                                                                                               FIGHTING HUNGER IN INDIANAPOLIS
                                      provide the world with safe, healthy, and affordable                                                               $100,000 to FFA each year. We also sponsor and host
                                                                                               We’re also working to ease problems of hunger in
                                      food. To help us in our efforts, we’re partnering with                                                             the FFA’s annual national convention in Indianapolis.
                                                                                               our home state of Indiana. Our hope is that the work
                                      organizations that are tackling poverty and hunger
                                                                                               we do in Indianapolis will establish a model that we       Our support of the organization ties in to our goal of
                                      issues in developing countries and in our home
                                                                                               can mirror in other cities where we have operations.       helping to ease world hunger. To meet this challenge,
                                      communities in the United States.
                                                                                                                                                          we must develop agricultural leaders and visionaries
                                                                                               We recently donated the time of a full-time senior
                                      Our vision on hunger is twofold. We have com-                                                                       who can come up with innovative solutions to feed
                                                                                               staff person to help coordinate the Childhood
                                      mitted to end hunger for 100,000 families—or                                                                        an increasing world population.
                                                                                               Hunger Initiative, a public/private partnership
                                      600,000 individuals—globally by 2025 through a
                                                                                               that is creating greater awareness of summer food
                                      partnership with Heifer International (www.heifer.
                                                                                               programs for children and is expanding a weekend
                                      org), a nonprofit that provides gifts of livestock and

     PAGE 61                                                                                                                                                 LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                  Employee Matching Gifts                            employees walk the Great Wall to raise funds     Six Sigma Programs
                                                                                         to fight multidrug-resistant tuberculosis.
ABOUT LILLY                           Program                                            And in Greenfield, Indiana, our Elanco animal    Lilly is one of many companies to incorporate
                                      Through the Employee Matching Gifts                health division takes on several projects that   the principles of Six Sigma, a business-
OUR APPROACH TO CORPORATE                                                                                                                 management strategy that uses a set of
                                      Program, the Lilly Foundation assists many         fight hunger, boost the human-animal bond,
RESPONSIBILITY                                                                                                                            quality-management methods to improve
                                      qualified U.S.-based, tax-exempt pub-              and improve the environment and local com-
                                      lic charities by matching the gifts of Lilly       munity in many ways.                             manufacturing processes and other opera-
                                      employees and retirees to qualified educa-                                                          tions. Recently, we began putting the skills
                                                                                         Our largest Day of Service effort is in India-   of our Six Sigma-trained employees toward
DEVELOPING INNOVATIVE MEDICINES       tional institutions, cultural organizations, and   napolis. In 2010, some 8,500 Lilly employees
                                      specific health care organizations. In addi-                                                        voluntary good in two different programs.
                                                                                         spent a day planting roughly 1,600 trees and
CONDUCTING OUR BUSINESS ETHICALLY     tion, employee and retiree gifts to support        72,000 shrubs and plants along a six-mile        We’re offering the time and talents of our
AND TRANSPARENTLY                     human-services organizations are matched           stretch of highway between the airport and       Six Sigma “black belt” trained employees to
                                      through an annual United Way initiative. The       downtown, as part of a city beautification       volunteer (on company time) for local non-
                                      Employee Matching Gifts Program allows             project. The fall 2010 beautification project    profit (non-health care) organizations to help
                                      Lilly employees and retirees to help deter-        represented the third time we had part-          them improve their own operations. In 2010,
ENGAGING WITH PATIENTS AND            mine how the Lilly Foundation will spend a         nered with Keep Indianapolis Beautiful, Inc.     32 Lilly volunteers offered their management
COMMUNITIES                           portion of its philanthropic resources.            Lilly contributed $1 million to the project,     expertise to 29 projects, including helping
                                                                                         which was matched by a federal grant.            the Indianapolis library system to find cost
 Strengthening Communities                                                                                                                savings to cover a projected $1.5 million
                                      Employee Volunteer                                                                                  budget shortfall. Another project was with a
• Employee Volunteerism and Giving
                                      Recognition Program                                United Way Campaign                              local foodbank and addressed the capacity to
FOSTERING ENVIRONMENTAL                                                                                                                   fill “backsacks” with food for children on the
                                      In 1995, the Lilly Foundation established the      Lilly has been a long-standing supporter of
SUSTAINABILITY                                                                                                                            weekends during the school year. The result
                                      Employee Volunteer Recognition Program             the United Way. In fact, our support dates
                                                                                                                                          increased project capacity from serving 2,000
                                      to encourage and recognize Lilly employees         back to the 1800s, when Colonel Eli Lilly
ABOUT THIS REPORT                                                                                                                         kids to 8,000 kids—increasing filled back-
                                      for their volunteer service. Through the           sponsored the Charity Organization Society,
                                                                                                                                          sacks from 88,000 to 352,000. As resources
GLOBAL REPORTING INITIATIVE INDEX     program, a $250 grant is awarded to quali-         a forerunner of the United Way. Over 92
                                                                                                                                          continue to decline and community needs
                                      fied U.S.-based, tax-exempt public charities       years, Lilly has raised more than $220 mil-
                                                                                                                                          continue to rise, nonprofit organizations can
UNITED NATIONS GLOBAL COMPACT INDEX   in which Lilly employees have a continuing,        lion for the charity.
                                                                                                                                          benefit from the expertise of our Six Sigma-
                                      active involvement through their generous
                                                                                         In 2010, we donated $11.6 million to the         trained volunteers.
                                      investment of time and expertise.
                                                                                         organization, exceeding our goal of $11.5
                                                                                                                                          In a separate Six Sigma program, we offer
                                                                                         million. The check represented the contri-
                                                                                                                                          the skills of our black belts to partner with
                                      Lilly Global Day of Service                        butions of our U.S. employees and retirees,
                                                                                                                                          our health care customers where there is
                                                                                         along with a matching gift from the Lilly
                                      In 2008, Lilly launched our annual Global                                                           an identified opportunity to work together
                                                                                         Foundation. The funds, which go to the
                                      Day of Service, which ranks among the larg-                                                         to improve patient outcomes. One example
                                                                                         Central Indiana and other chapters of the
                                      est single-day volunteer initiatives of any                                                         was the use of Lean Six Sigma in a hospital
                                                                                         United Way, make up nearly 25 percent of
                                      company in the United States. In 2010, more                                                         environment, which resulted in stream-
                                                                                         the United Way of Central Indiana’s 2010
                                      than 24,000 employees in more than 30                                                               lined insulin dispensing and administration
                                                                                         annual campaign goal.
                                      global locations volunteered in their com-                                                          processes, a system with less variability and
                                      munities on a single day in October.               In 2009, the United Way gave Lilly its           increased efficiency. In addition to improved
                                                                                         prestigious Spirit of America® Award,            patient safety, annualized overall cost
                                      Employees from Algeria to Venezuela donate         the organization’s highest national honor        savings of $75,000 were estimated follow-
                                      time and energy to improve the health and          that recognizes corporations and their           ing implementation, primarily due to the
                                      well-being of communities around the               employees for exceptional philanthropic          elimination of rework done in the pharmacy
                                      world. In Turkey, employees plant trees to         commitment and community involvement.            due to misplaced vials.
                                      assist with reforestation efforts. In China,

     PAGE 62                                                                                                                                LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                      FOSTERING ENVIRONMENTAL





                                      COMMITMENT AND APPROACH


                                      Healthy lives and a healthy environment. What we do today
ENGAGING WITH PATIENTS AND            matters tomorrow. Lilly is committed to making medicines that                                         AMOUNT OF ENERGY SAVED IN 2010
                                      help people live longer, healthier, more active lives. As part of that,                             THROUGH INTEGRATING AND ENHANCING
                                                                                                                                            CHILLED WATER COMPRESSORS AT
FOSTERING ENVIRONMENTAL               we aspire to contribute to a healthy environment by thoughtfully                                       OUR MANUFACTURING FACILITY IN
                                                                                                                                              LIVERPOOL, UNITED KINGDOM
                                      incorporating environmental sustainability into our business.

• Commitment and Approach
                                      The medicines we make require the use of       Our performance in meeting our envi-

 Product Stewardship                  valuable resources, including energy, water,   ronmental goals, though—in particular
 Performance in Operations            and raw materials. We know that the way        increasing energy efficiency and reducing
                                      we operate our business today can have a       corresponding greenhouse gas (GHG) emis-                 WATER SAVED IN 2010 AT OUR SITE
 Summary Data Table                                                                                                                        IN FEGERSHEIM, FRANCE, (16 PERCENT
                                      long-lasting impact. Lilly takes a holistic    sions—demonstrates our commitment to                     OF TOTAL USE AT THE SITE) AFTER
                                      approach to understanding and manag-           reduce our environmental footprint. (See               INSTALLING A NEW REVERSE OSMOSIS
ABOUT THIS REPORT                                                                                                                              UNIT FOR WATER PURIFICATION
                                      ing our environmental impacts across the       the details of our approach and perfor-
GLOBAL REPORTING INITIATIVE INDEX     product life cycle. To operate most sustain-   mance on page 73.) We have also set

                                      ably, we are committed to conducting our       environmental goals to lessen the use of
UNITED NATIONS GLOBAL COMPACT INDEX   business in an environmentally, socially,      water and reduce waste. We believe that
                                      and financially responsible manner.            implementing cost-effective, more sustain-
                                                                                     able solutions is a powerful and ongoing
                                      Climate change is an issue that is compel-                                                            RECYCLING RATE IN 2010 AT LILLY’S
                                                                                     source of business value.                              SITE IN CAROLINA, PUERTO RICO, UP
                                      ling governments, companies, and citizens
                                                                                                                                             FROM 11 PERCENT IN 2007, SAVING
                                      to act. However, we do not believe it poses    This section covers the broad range of our             MORE THAN $1.3 MILLION ANNUALLY
                                      significant risks or opportunities for our     environmental activities, from our approach
                                      business. Current and anticipated regula-      and management systems, to our work

                                      tory requirements will have some financial     addressing environmental issues across

                                      implications for Lilly, but we account for     the value chain, to performance data and
                                      these in our routine business planning, and    examples illustrating progress in our
                                      we do not anticipate they will impact our      operations.                                              AMOUNT OF LAND PROTECTED AT
                                                                                                                                            LILLY’S MANUFACTURING FACILITY IN
                                      business strategy.
                                                                                                                                          CLINTON, INDIANA, THROUGH A PROJECT
                                                                                                                                           WITH THE HEALTHY RIVERS INITIATIVE
                                                                                                                                          THAT WILL SHOWCASE THE COMPATIBILITY
                                                                                                                                              OF CONSERVATION AND FARMING

    PAGE 63                                                                                                                        LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                                                                           IMPROVING ENVIRONMENTAL PERFORMANCE ACROSS THE PRODUCT LIFE CYCLE
ABOUT LILLY                                                                                                     MATERIALS, WATER AND ENERGY, HSE MANAGEMENT SYSTEMS AND STANDARDS
                                        SCOPE OF HEALTH, SAFETY,
ENHANCING ACCESS TO MEDICINES           •	The data in this section cover Lilly’s global
                                          operations, including subsidiaries, unless
DEVELOPING INNOVATIVE MEDICINES           stated otherwise.

CONDUCTING OUR BUSINESS ETHICALLY       •	Following World Resource Institute guidance,         RESEARCH AND                      MATERIALS AND                     MANUFACTURING                    SALES AND
AND TRANSPARENTLY                                                                              DEVELOPMENT                       NATURAL RESOURCES                                                  MARKETING
                                          performance data and progress toward envi-                                                                               Measuring, reporting, and
                                                                                               We consider environmen-           Lilly, customers, and gov-        reducing Lilly’s environmental   Lilly continually works to
                                          ronmental goals are reported on an adjusted          tal factors from the earliest     ernments worldwide are            impacts from manufacturing       improve the fuel efficiency of
SUPPORTING STRONG WORKPLACE               basis accounting for mergers, acquisitions,          stages of design and devel-       increasingly focused on the       are central to the company’s     our sales force vehicles, to
PRACTICES                                                                                      opment. Our design for            materials and chemicals           sustainability program. This     meet our goal to reduce overall
                                          and divestitures, as appropriate, to ensure                                                                              includes our most signifi-
                                                                                               environment initiatives           used in products. We work                                          fleet fuel use 10 percent glob-
                                          comparability, unless stated otherwise.              include green chemistry,          to consume less materi-           cant areas of environmental      ally by 2013. At Lilly sales and
ENGAGING WITH PATIENTS AND                                                                     environmental product risk        als, water, and other natural     impact—energy use and green-     marketing offices around the
COMMUNITIES                             •	Years are calendar years, unless stated otherwise.   assessments, and an Envi-         resources when possible, to       house gas emissions, water       world, we’ve also established
                                                                                               ronmental Development             reduce our overall environ-       use, and waste—as well as        projects to reduce energy use
                                                                                               Review (EDR) process to eval-     mental footprint. We comply       our progress in green procure-   while increasing employee
FOSTERING ENVIRONMENTAL                 •	Dollars refers to U.S. dollars.                                                                                          ment, other air emissions,
                                                                                               uate potential environmental      with all relevant chemicals                                        environmental awareness and
SUSTAINABILITY                                                                                 issues and opportunities dur-     registration and materials        biodiversity, and compliance.    action. See page 76 for more
                                                                                               ing the scale-up of medicine      management regulations.           Our manufacturing HSE com-       information.
                                                                                               production to manufactur-         See page 70 for more infor-       mittee ensures compliance to
• Commitment and Approach                                                                      ing levels. See page 68 for       mation.                           all HSE regulations, policies,
                                      Life Cycle Approach                                      more information.                                                   procedures, and standards,
 Product Stewardship                                                                                                                                               while making certain that we
                                      At each stage of the pharmaceutical product                                                                                  drive continuous improvement
                                                                                                                                                                   throughout the manufacturing
 Performance in Operations            life cycle, there are distinct environmental,                                                                                organization. See page 73 for

 Summary Data Table                   health, and safety impacts and opportuni-                                                                                    more information.

                                      ties for improvement. The graphic at right
ABOUT THIS REPORT                     provides an overview of Lilly’s impacts and
                                      how we work to minimize them. Page num-
GLOBAL REPORTING INITIATIVE INDEX     bers refer to additional information about
                                      our efforts throughout this section.

                                      How We Manage Environmental                              PRODUCT TRANSPORT                 PRODUCT USE                       PRODUCT END-OF-LIFE
                                      Issues                                                   AND PACKAGING                     Lilly is committed to under-
                                                                                                                                 standing the potential effects
                                                                                                                                                                   Medicines are intended to
                                                                                                                                                                   be used in their entirety by
                                                                                               Lilly’s packaging guidelines—
                                                                                               which cover areas such as         of pharmaceutical products        patients. As a result, typi-
                                        Policies and Standards                                 reducing materials use,           in the environment as well as     cal models of take-back,
                                                                                               using materials with reduced      in humans, and we support         reuse, and recycling in other
                                      Several policies and standards define our                environmental impact              using science-based evalua-       sectors, designed to cap-
                                                                                               including recycled content,       tions to assess and minimize      ture value from products
                                      commitments and guide our efforts in                     and designing packaging           the environmental risks of        after use, do not apply to
                                      this area.                                               to enhance recyclability—         our pharmaceutical products.      our industry. We are working
                                                                                               provide a common basis for        Through collaborations with       with customers and partners
                                                                                                                                 industry partners, academic       to better understand and
                                      • Our Health, Safety, and Environment                    incorporating sustainability
                                                                                               considerations into packaging     researchers, and regulatory       ensure an effective approach
                                        Policy sets environmental expectations in              decision-making. We track the     agencies, we continually work     to product end-of-life issues.
                                        terms of compliance and environmental                  GHG emissions of our product      to further understand and pro-    See page 72 for more
                                                                                               transportation and distribution   actively address any potential    information.
                                        protection for our people and operations               vendors, and are committed to     impacts from the production,
                                        (see                   working with them to reduce       distribution, use, and disposal
                                                                                               those impacts. See page 71        of our products. See page 71
                                        practices/Pages/health.aspx).                          for more information.             for more information.

    PAGE 64                                                                                                                                                           LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                  • Our Environmental Standard provides
                                        more detailed requirements and estab-
ABOUT LILLY                             lishes the core governance requirements         LILLY’S HEALTH, SAFETY, AND ENVIRONMENT POLICY
                                        to manage significant environmental and
                                        energy-related aspects of our operations.       Encourages and expects each employee to be environmentally responsible and to conduct work practices
                                        This standard requires Lilly’s opera-           in a safe manner in accordance with established policies, standards, and procedures. These practices are
ENHANCING ACCESS TO MEDICINES           tions to identify relevant environmental        considered an essential measure of performance for all employees.
                                        issues, evaluate impacts, and reduce risks
                                        through continuous improvement.                 Builds health, safety, and environment considerations into all phases of the business, including product and
                                                                                        technology discovery and development, facility design, operation and maintenance, and product delivery.
                                      • Our Management System Standard
CONDUCTING OUR BUSINESS ETHICALLY       and Verification and Corrective Action          Strives for an injury-free workforce and minimizes environmental impact through implementation of
                                        Standard define requirements to ensure          programs in our facilities and the surrounding communities that reduce risks to employees, neighbors, the
                                        compliance with Lilly HSE standards,            public at large, and the environment.
PRACTICES                               applicable regulatory requirements, and
                                                                                        Encourages and promotes waste minimization, the sustainable use of natural resources, recycling,
                                        other external HSE standards to which
                                                                                        energy efficiency, resource conservation, and resource recovery.
ENGAGING WITH PATIENTS AND              the corporation subscribes. This includes
COMMUNITIES                             identifying, reporting, assessing, and
                                        investigating HSE-related compliance and
FOSTERING ENVIRONMENTAL                 performance gaps; implementing and
                                                                                        HSE Governance                                          The manufacturing HSE committee ensures
                                        evaluating the effectiveness of corrective                                                              compliance to all HSE regulations, policies,
                                        and preventive actions; providing an effec-   Lilly’s formal HSE governance structure
• Commitment and Approach
                                                                                                                                                procedures, and standards, while ensuring
                                        tive system for verifying compliance; and     ensures that the management of HSE
                                                                                                                                                that Lilly is using the appropriate metrics
                                        notifying management of events, issues,       issues is integrated throughout the com-
 Product Stewardship                                                                                                                            and goals to assess performance and drive
                                        and trends that could negatively affect       pany’s business.
                                                                                                                                                continuous improvement throughout the
 Performance in Operations              Lilly, our employees, our contractors, or     Our global HSE committee—which includes                   manufacturing organization. This committee
 Summary Data Table                     the communities surrounding our facilities.   senior executives from key areas of the                   has recently adopted an operational-excel-
                                      • Our Global Engineering Standards govern       business, representing research and                       lence standard that reflects the ownership
ABOUT THIS REPORT                       many environmental aspects of our             development, manufacturing, quality, ethics               of HSE by the manufacturing organization.
                                        operations. Our Energy Minimization Engi-     and compliance, and our business units—                   This strategy is defined by sets of controls
                                        neering Standard, for example, ensures        sets the company’s strategic direction in                 that assure strong process performance
                                        that Lilly’s new and retrofitted construc-    this area, ensures proper governance, and                 and high product quality; the strategy also
                                        tion projects minimize energy use and         plays a central role in monitoring corpo-                 addresses expectations for our manufactur-
                                        associated greenhouse gas emissions.          rate performance and ensuring continuous                  ing partners globally.
                                      • Our Product Stewardship Standard cov-         improvement. In addition, the public policy
                                                                                                                                                Executives and lead teams in each of our
                                        ers the entire value chain—from product       and compliance committee of Lilly’s board
                                                                                                                                                business groups as well as Lilly Research
                                        discovery and development, through            of directors monitors our performance.
                                                                                                                                                Laboratories and Lilly Corporate Center
                                        manufacturing, sales and marketing,           The global HSE lead team works closely                    manage governance for HSE in each of
                                        distribution, and use, to recycling of        with the global HSE committee to set appro-               those areas.
                                        manufacturing by-products and final dis-      priate metrics and goals, assess company
                                        posal. This standard provides a systematic    performance, and ensure compliance with                      Management Systems
                                        way to manage product and process risks       all HSE regulations, policies, procedures,
                                        in our supply chain and our operations and                                                              All Lilly business units have an HSE manage-
                                                                                      and standards globally. This group also                   ment system aligned with our Management
                                        during the use of our products. See page      serves as an advisory body to the other
                                        68 for more detail.                                                                                     System Standard, which establishes
                                                                                      operational HSE lead teams.                               requirements for system elements, includ-
                                                                                                                                                ing leadership responsibilities, identification

    PAGE 65                                                                                                                                        LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                  and prioritization of environmental aspects,     development, and general and administra-                            Lilly’s Environmental Goals
                                      metrics and targets, compliance, training,       tive. The scope includes environmental
ABOUT LILLY                                                                                                                                             Setting, driving toward, and communicat-
                                      verification, and corrective action, among       management systems, as well as health
                                                                                                                                                        ing our progress toward HSE performance
                                      others. The standard is consistent with          and safety.
OUR APPROACH TO CORPORATE                                                                                                                               goals is central to our HSE management
                                      third-party standards such as ISO 14001, the
RESPONSIBILITY                                                                         Each year, we audit a significant portion                        approach.
                                      Occupational Health and Safety Assessment
                                                                                       of our sites globally, utilizing a risk-based
ENHANCING ACCESS TO MEDICINES         Scheme (OHSAS 18001), and the Ameri-                                                                              In 2008, Lilly established six HSE goals
                                                                                       approach, and then reassess those sites
                                      can Chemical Council’s Responsible Care                                                                           to minimize our impact on the environ-
                                                                                       every one to five years. When auditors
DEVELOPING INNOVATIVE MEDICINES       Management System. Several Lilly facilities                                                                       ment and reduce employee and contractor
                                                                                       identify instances of nonconformance to
                                      have obtained certification to these and other                                                                    injuries. These goals follow from an earlier
                                                                                       Lilly’s Management System Standard or
CONDUCTING OUR BUSINESS ETHICALLY     external standards.                                                                                               set we achieved ahead of the target date,
AND TRANSPARENTLY                                                                      other requirements, the site in question is
                                                                                                                                                        demonstrating our drive for continuous
                                      Compliance with environmental regula-            required to develop corrective and preventa-
                                                                                                                                                        improvement. See page 49 for progress
SUPPORTING STRONG WORKPLACE           tions is central to our management of            tive actions and to demonstrate continuous
                                                                                                                                                        toward our health and safety goals.
PRACTICES                             environmental issues and sets a baseline         improvement.
                                      of performance. In addition to management
ENGAGING WITH PATIENTS AND            systems and auditing (see below), we use
COMMUNITIES                           environmental capability assessments to
                                      apply statistical process control techniques     2013 GOALS                                       PROGRESS29
FOSTERING ENVIRONMENTAL                                                                (WITH A 2007 BASELINE)
                                      to environmental processes to reduce the
                                      number of environmental events caused by
• Commitment and Approach
                                      permit-limit exceedances (see page 84                 15%      reduction in energy
                                                                                                     use and correspond-
                                                                                                                                        In progress.
                                      for detail). These environmental capability                                                       Through the end of 2010, we improved energy
                                                                                                     ing greenhouse gas
 Product Stewardship                  assessments allow us to identify opportuni-                                                       efficiency by more than 12 percent, and reduced
                                                                                                     emissions30 (both per
                                      ties to continuously improve our process                                                          corresponding greenhouse gas emissions by more
 Performance in Operations                                                                           square foot of facility
                                      controls, ensuring compliance and minimiz-                                                        than 9 percent (see page 73 for detail).
 Summary Data Table                   ing the chance of an environmental incident.

ABOUT THIS REPORT                     We manage employee health and safety                  25%      reduction in water
                                                                                                     intake (in absolute
                                                                                                                                        Achieved in 2009, four years early.
                                      issues using many of the same governance                                                          Through the end of 2010, we’ve reduced our water intake
GLOBAL REPORTING INITIATIVE INDEX     and management systems we use for the                          terms)
                                                                                                                                        by more than 30 percent (see page 76 for detail).
                                      environment. See the Employee Health,
UNITED NATIONS GLOBAL COMPACT INDEX   Safety, and Wellness section, beginning on                                                        Our new goal is to reduce water intake by 5 percent by
                                      page 48, for detail about our health and                                                          2013 (2010 baseline).
                                      safety programs and performance.
                                                                                            40%      reduction in waste
                                                                                                     to landfill31 (in
                                                                                                                                        Achieved in 2009, four years early.
                                        Audits                                                                                          Through the end of 2010, we’ve reduced our waste to
                                                                                                     absolute terms)
                                      Lilly’s Management System Standard                                                                landfill by 50 percent (see page 77 for detail).
                                      applies to all business areas globally. To                                                        Our new goal is to reduce waste to landfill by 20 percent
                                      ensure that our operations worldwide con-                                                         by 2013 toward the ultimate goal of “zero landfill”
                                      sistently meet these guidelines, we include                                                       (2010 baseline).
                                      external as well as internal auditors on
                                      each audit conducted to assess the per-           	Following	World	Resource	Institute	guidance,	progress	toward	environmental	goals	is	reported	on	an	adjusted	basis	

                                                                                         accounting	for	mergers,	acquisitions,	and	divestitures,	as	appropriate,	to	ensure	comparability,	unless	stated	otherwise.
                                      formance of individual sites, following the
                                                                                        	This	goal	covers	Lilly’s	Scope	1	and	Scope	2	emissions.
                                      protocols outlined in our Verification and
                                                                                        	Lilly’s	former	and	current	waste-to-landfill	goals	do	not	include	construction	and	demolition	debris,	biosolids	from	
                                      Corrective Action Standard. This standard          wastewater	treatment	plants,	incinerator	ash,	coal	ash	if	reused	for	mine	reclamation	or	road	base,	and	mycelia	and	urea	
                                      applies to all Lilly business areas, includ-       reused	for	fertilizer.
                                      ing manufacturing, affiliate, research and

    PAGE 66                                                                                                                                               LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                  Energy, Waste, and Natural                         ENERGY, WASTE, AND NATURAL RESOURCE
                                                                                         REDUCTION FUND EXPENDITURES32
                                                                                                                                                      EMPLOYEE VOICE

ABOUT LILLY                           Resource Reduction Fund                            ($ MILLIONS)

                                      Making capital investments in technology           2008                2009                2010
RESPONSIBILITY                        and physical plant operations can have                                                                              It’s a false dichotomy to think
                                      a substantial, positive impact on achiev-
                                      ing overall environmental goals. However,
                                                                                         $6.5                $5.7                $4.1                     that you have to choose
                                      these projects compete for funding with             	The	sum	of	the	data	in	the	table	differs	from	the	total	
                                                                                         32                                                               between what’s good for the
DEVELOPING INNOVATIVE MEDICINES       other essential projects at each facility—for        approved	noted	above	because	some	approved	funding	
                                                                                           has	not	yet	been	spent.
                                                                                                                                                          environment and what’s good
                                      example, those directly related to product

CONDUCTING OUR BUSINESS ETHICALLY     manufacturing. To address this challenge,                                                                           for the business.
AND TRANSPARENTLY                     we established an Energy, Waste, and
                                      Natural Resource Reduction Fund. The fund
                                      helps pay for capital projects at our facilities
                                                                                         Sustainable Culture at Lilly
                                      globally and promotes the development of           Supporting our employees’ commitment to                      Our employees also serve as a great source
ENGAGING WITH PATIENTS AND            environmentally superior, efficient tech-          sustainability is essential to our ongoing                   of ideas, and they often make suggestions
COMMUNITIES                           nologies and the sharing of best practices         success. Lilly has dozens of “green teams”                   directly to the management team of their
                                      across our facilities.                             globally, launched during the last decade                    local facilities, to their HSE team, or via
FOSTERING ENVIRONMENTAL                                                                  by our employees who are passionate
                                      A total of more than $29 million has been                                                                       online services such as our internal social-
SUSTAINABILITY                                                                           about the environment and reducing their
                                      approved for investment in nearly 100                                                                           networking platform. Management evaluates
                                                                                         impact on local communities. These teams                     all recommendations based on potential
• Commitment and Approach             projects since 2006. This is in addition
                                                                                         meet periodically to discuss environmental                   benefit to the environment and cost savings,
                                      to the amounts that are spent by those
 Product Stewardship                                                                     developments at their site and how they can                  and we implement several each year. Dur-
                                      facilities independent of the global fund.
                                                                                         make a difference, and HSE management                        ing the past year, for example, these teams
 Performance in Operations            These projects have collectively saved more
                                                                                         and employees actively support them in                       have initiated, sponsored, or volunteered to
                                      than 840 billion BTUs of energy, avoiding
 Summary Data Table                                                                      their efforts.                                               implement employee-run gardens, on-site
                                      approximately 100,000 metric tons of car-
                                      bon dioxide equivalent of greenhouse gas           Lilly’s green teams engage internal and                      farmers’ markets, bike-to-work initiatives,
ABOUT THIS REPORT                                                                                                                                     and river cleanup programs.
                                      emissions. Examples include transforming           external experts to provide insight on
                                      energy use at the Speke, United Kingdom,           environmental issues. The teams also take                    To extend the benefits of strong environ-
                                      manufacturing facility (see page 75)               educational field trips (for example, to a                   mental performance beyond our operations,
UNITED NATIONS GLOBAL COMPACT INDEX   and conserving water at our Fegersheim,            recycling facility or an organic-food market),               we also encourage and provide employees
                                      France, facility (see page 77).                    and implement projects such as employee                      the knowledge to act as better stewards of
                                                                                         carpooling programs, energy-efficiency                       the environment outside of work. Examples
                                      The actual amounts spent each year are
                                                                                         projects, beverage-container and cardboard                   include expanding composting and recy-
                                      included in the following table. In 2010, Lilly
                                                                                         recycling, and others. During 2010, several                  cling in their homes, upgrading to more
                                      realized a return of about $16 million for all
                                                                                         hundred Lilly employees participated in                      efficient lighting, and using public transport
                                      projects implemented so far.
                                                                                         green teams globally.                                        when feasible to decrease impacts from

    PAGE 67                                                                                                                                               LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                      PRODUCT STEWARDSHIP
                                      Lilly is committed to reducing environmental impacts across the                               LILLY’S PRODUCT
OUR APPROACH TO CORPORATE                                                                                                           STEWARDSHIP STANDARD
                                      product life cycle. This improves our own performance and dem-
                                      onstrates our values, while also meeting the expectations of                                  Reflecting the breadth of product-related
ENHANCING ACCESS TO MEDICINES                                                                                                       sustainability issues, our Product Stewardship
                                      customers and other stakeholders who are increasingly focused on
                                                                                                                                    Standard covers the following areas:
DEVELOPING INNOVATIVE MEDICINES       Lilly’s progress in this area. Product stewardship practices provide
                                                                                                                                    •	 EMERGING ISSUES: Identifying, analyzing,
                                      a systematic way to respond to these concerns by identifying, miti-                             and managing new and emerging issues
AND TRANSPARENTLY                     gating, and managing product and process risks. Integrating these                             •	PROCUREMENT: Considering environmen-
                                      practices into our business protects people and the environment                                 tal factors in purchasing decisions
PRACTICES                             and enhances compliance with regulatory requirements.                                         •	PRODUCT DISCOVERY: Reviewing internal
                                                                                                                                      and external research operations to foster
ENGAGING WITH PATIENTS AND            Lilly’s Product Stewardship Standard            • Using science-based environmental risk        high HSE standards
                                      defines our health, safety, and environ-          assessments to evaluate the potential       •	PRODUCT DEVELOPMENT: Using inher-
                                      ment requirements for assessing Lilly             impact of our products in the environment     ently safer design principles such as green
SUSTAINABILITY                        products across the value chain (see box to       (see page 71), and                            chemistry to identify and reduce HSE hazards
                                      the right). This standard covers the entire     • Disposing of products responsibly at end-     from new products or processes where
 Commitment and Approach              value chain—from product discovery and            of-life (see page 72).                        possible, and using appropriate safeguards
                                      development, through manufacturing, sales                                                       throughout these activities
• Product Stewardship                 and marketing, distribution and use, to final   In addition to this company-wide approach,
                                      disposal. The scope covers both internal        some business units now have their own        •	PRODUCT PACKAGING: Reducing the
 Performance in Operations
                                      and external value-chain elements globally      product stewardship teams as well.              amount of packaging and using environ-
 Summary Data Table                   and distributes accountability to numerous                                                      mentally preferable materials when possible,
                                      Lilly business and functional groups. This                                                      while satisfying regulatory and customer
                                      approach is intended to integrate product
                                                                                      Design for Environment                          requirements, meeting marketing objectives,
                                      stewardship deeply into Lilly’s business.                                                       and preserving product integrity
GLOBAL REPORTING INITIATIVE INDEX                                                     Across many industries, the majority
                                                                                      of product environmental impacts are          •	DISTRIBUTION: Ensuring safe product
                                      Our main areas of focus in product steward-
UNITED NATIONS GLOBAL COMPACT INDEX                                                   determined at the design stage. The phar-       transport and warehousing while reducing
                                      ship include the following:
                                                                                      maceutical industry is no exception. We         associated environmental impacts
                                      • Using green chemistry to reduce the           consider environmental factors from the       •	MARKETING AND SALES: Decreasing the
                                        use of hazardous materials in our devel-      earliest stages of design and development—      environmental impact of promotional materi-
                                        opment and manufacturing processes            taking into account the materials and           als, and communicating with customers about
                                        (see page 69),                                processes we will use to make products as       sustainability
                                      • Improving materials use in devices            well as how we will package those products
                                                                                      to distribute to customers. This integrated   •	 SUPPLIERS, CONTRACT OPERATIONS,
                                        (see page 70),                                                                                AND ALLIANCES: Evaluating and influ-
                                                                                      approach enables us to identify opportu-
                                      • Reducing the environmental impact of                                                          encing the HSE performance of suppliers,
                                                                                      nities to improve product environmental
                                        product manufacturing (see the Environ-                                                       contract operations, and alliances (see
                                        mental Development Review box on                                                              page 38 for more information about sup-
                                        page 70),                                                                                     plier management)
                                      • Decreasing the environmental impact                                                         •	 SUPPLY CHAIN MANAGEMENT: Establish-
                                        of packaging (see page 71),                                                                    ing plans to ensure business continuity and
                                                                                                                                      appropriate emergency response if needed

     PAGE 68                                                                                                                        LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                  Green Chemistry                                  substantially decrease resource use while       EMPLOYEE VOICE
                                                                                       also enhancing safety (see examples below).
ABOUT LILLY                           In the early 1990s, Lilly was one of the first
                                      pharmaceutical companies to recognize            Providing our scientists with useful

OUR APPROACH TO CORPORATE             the potential of green chemistry to trans-       information at key decision points helps
RESPONSIBILITY                        form our manufacturing processes to be           them make the best decisions when using              We have a broader set of
                                      inherently safer, more efficient, and more       chemistry to design processes. To accom-             obligations—to foster healthy
ENHANCING ACCESS TO MEDICINES                                                          plish this, we have developed electronic
                                      environmentally friendly. Traditionally,
                                                                                       lab notebooks, used by chemists within the
                                                                                                                                            communities, healthy families,
                                      pharmaceutical manufacturers viewed the

                                      use of hazardous materials as a necessary        company, which include information and               and a healthy environment.
                                      part of making medicine. Green chemistry,        tools regarding process efficiency, solvent
AND TRANSPARENTLY                     by contrast, works to reduce or eliminate        selection, and materials of concern. When
                                      the use of hazardous materials where             any researcher adds information to the
                                                                                       notebook, it is easily available to all Lilly   During 2010, our scientists produced
SUPPORTING STRONG WORKPLACE           possible so that protections, controls, and
PRACTICES                                                                              researchers worldwide.                          numerous innovations in green chemistry
                                      treatment are reduced or no longer needed.
                                                                                                                                       (see examples below).
ENGAGING WITH PATIENTS AND            Today, our approach to protecting the envi-      We have also established accountability for
                                                                                       the routine use of green chemistry prin-        We work with others in the industry to
COMMUNITIES                           ronment begins with using our knowledge
                                                                                       ciples in our business. Expectations to use     leverage our own efforts, share best
                                      of green chemistry to design more efficient
FOSTERING ENVIRONMENTAL                                                                green chemistry are built into our product-     practices, and advance the field of green
                                      manufacturing processes that avoid or
SUSTAINABILITY                                                                         development objectives along with other         chemistry. Lilly was a founding member in
                                      reduce the use of hazardous substances
                                                                                       important criteria, such as quality and cost.   2005 of the American Chemical Society’s
                                      in the manufacturing of our active phar-
 Commitment and Approach                                                               Development teams are accountable for           Green Chemistry Institute Pharmaceuti-
                                      maceutical ingredients. By building these
                                                                                       process efficiency and safety from the point    cal Roundtable, now 17 members strong.
• Product Stewardship                 considerations into the earliest stages of
                                                                                       when candidate molecules are selected           Through this group, from 2008 to 2010 we
                                      product and process development, we can
 Performance in Operations                                                             through the development of a manufactur-        helped develop the ACS GCI Pharmaceutical
                                      reduce both environmental impacts and
                                                                                       ing process, and we monitor progress at         Roundtable Solvent Selection Guide, which
 Summary Data Table                   safety concerns.
                                                                                       major development milestones.                   was publicly released in 2011. Our scientists
                                      Lilly’s approach to green chemistry is                                                           have published extensively in this area, and
ABOUT THIS REPORT                                                                      To measure progress in this area, we
                                      twofold. First, we seek improvements by                                                          Lilly supports academic grants focused on
                                      reducing the amount of hazardous mate-           have established material use efficiency        research related to green chemistry, such
                                      rial used to make a product, increasing          standards at critical steps in the product-     as through the Roundtable for work related
UNITED NATIONS GLOBAL COMPACT INDEX   overall materials efficiency, evaluating         development process, including the Process      to green oxidation processes (2010) and the
                                      chemical alternatives, and avoiding use of       Mass Intensity (PMI) factor, a ratio of the     Grignard reaction33 (2011).
                                      the riskiest substances. Second, we seek         total mass of raw materials (including
                                                                                       water) put into a process for every kilogram    While we have made significant progress
                                      more fundamental changes—ones that
                                                                                       of drug produced. Failure to meet these         in using green chemistry to drive HSE
                                      can result in order-of-magnitude improve-
                                                                                       standards triggers management review.           improvements, major improvements in
                                      ments—by advancing the state of the art in
                                                                                                                                       the future will require additional scien-
                                      chemistry and developing and implementing        We created a goal in 2004 to cut hazardous      tific advances. Carrying out the research
                                      new reactor technologies. One example of         material purchases normalized by sales by       needed to accomplish this is hard, time-
                                      the latter is continuous processing, which       one-third by 2010, compared with those in       intensive, and expensive. But, we believe it
                                      replaces chemical reactions performed            2003. By 2007, our hazardous material pur-      is worth pursuing.
                                      in larger batches with smaller-scale             chases were more than 50 percent below
                                      operations in series. Using this approach,       the 2003 baseline. We attained this goal
                                      commercial scale may be in the range of          due to efficiency gains, solvent recovery,       	The	Grignard	reaction	has	been	applied	to	the	synthesis	

                                      10–22 liters, replacing the 2,000–8,000 liter    changes in our product mix, and supply            of	numerous	intermediates	in	the	preparation	of	food	
                                      reactors used in batch processing. This can      chain decisions.
                                                                                                                                         additives,	industrial	chemicals,	and	pharmaceutical	
                                                                                                                                         products	since	the	beginning	of	the	20th	century.	

     PAGE 69                                                                                                                                LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                    Continuous Processing Enables
                                      a Convergent Route to a New Drug
ABOUT LILLY                           Candidate34                                                   ENVIRONMENTAL DEVELOPMENT REVIEW
OUR APPROACH TO CORPORATE             The commercial production of an inves-
RESPONSIBILITY                        tigational new drug candidate, currently                      Lilly uses an Environmental Development Review (EDR) process to evaluate potential environmental
                                      in Phase II clinical trials, illustrates the                  issues and opportunities during the scale-up of medicine production to manufacturing levels. The EDR
ENHANCING ACCESS TO MEDICINES         importance and impact of designing green                      process helps us identify and address potential impacts of manufacturing and waste treatment, suggest
                                      processes. The original synthesis of this                     process improvements, and share learning as new medicines come through the pipeline and transition
DEVELOPING INNOVATIVE MEDICINES                                                                     into manufacturing.
                                      drug, which Lilly gained through an acquisi-
                                      tion, enabled early development. However,                    An EDR conducted in 2010 identified significant opportunities for the recovery and reuse of solvents
AND TRANSPARENTLY                     that approach was not amenable to large-                     for the manufacture of a product that could begin in 2019, depending on the approval of the product by
                                      scale manufacture.                                           regulatory authorities. Compared to disposing these solvents, this would decrease greenhouse gas emis-
SUPPORTING STRONG WORKPLACE                                                                        sions associated with waste incineration by more than 75 percent while saving tens of millions of dollars
                                      Lilly discovered an alternative and much
PRACTICES                                                                                          annually. See more information about our environmental performance in manufacturing on page 73.
                                      more efficient synthesis route. Continuous
ENGAGING WITH PATIENTS AND            processing proved critical to this option,
COMMUNITIES                           which represented a 94 percent improve-
                                      ment in PMI compared to the original
FOSTERING ENVIRONMENTAL               approach. Lilly implemented this new route                 at a small reaction volume, performing                  the most dangerous chemicals when safe
SUSTAINABILITY                        on a pilot-plant scale during 2009 and on a                metal activation only once during each                  alternatives are available. Lilly’s corporate
                                      commercial scale during 2010.                              campaign, and using a superior reagent and              and local REACH teams have assessed the
 Commitment and Approach                                                                         reaction solvent that may be derived from               impact of REACH on substances manufac-
                                        Grignard Reactions Decrease                              renewable resources. Relative to batch pro-             tured and imported by Lilly in the EU as well
• Product Stewardship
                                      Environmental Impact with                                  cesses, the continuous approach reduces                 as those of our EU and non-EU suppliers.
 Performance in Operations            Continuous Processing35                                    metal use by 43 percent and decreases                   Through this process, we have confirmed
                                                                                                 the PMI ratio by 30 percent overall. The                that we and our suppliers are in compliance
 Summary Data Table                   Since the start of the 20th century, the                   continuous approach also reduces reaction               with REACH. During 2011, we are working to
                                      Grignard reaction has been applied to the                  impurities substantially.                               ensure that our facilities remain in compli-
ABOUT THIS REPORT                     synthesis of numerous intermediates for                                                                            ance with and informed about the quickly
                                      food additives, industrial chemicals, and                  Lilly is using its CSTR Grignard approach to
GLOBAL REPORTING INITIATIVE INDEX                                                                                                                        evolving REACH landscape.
                                      pharmaceuticals. Despite these successes,                  produce two key materials. We anticipate
                                      the hazards of the Grignard reaction make                  commercial production of these materials on             As REACH further develops and new guid-
                                      it one of the more challenging reactions to                a 22-liter scale, which will replace the 2,000-         ance is released, we will continue to engage
                                      bring to commercial scale.                                 liter reactors used in batch processes.                 with the highest levels in the European
                                                                                                                                                         Commission and the European Chemicals
                                      Lilly developed inherently safer Grignard                                                                          Agency, through our national and EU phar-
                                      chemistry using a novel, continuous stirred                Chemicals Use                                           maceutical industry bodies and chemical
                                      tank reactor (CSTR) that allows continuous                                                                         associations, to further improve the effec-
                                      formation of Grignard reagents, as opposed                 Lilly, customers, and governments world-
                                                                                                 wide are increasingly focused on the                    tiveness of the regulation.
                                      to producing larger stand-alone batches.
                                      This strategy reduces hazards by operating                 materials and chemicals used in products.
                                                                                                 For example, the European Union (EU)
                                                                                                                                                         Materials Use
                                                                                                 Registration, Evaluation, Authorisation,
                                       	Based	on	information	published	in	Presidential Green
                                                                                                 and Restriction of Chemicals (REACH)                    Lilly produces medicines that may be
                                        Chemistry Challenge Awards Program: Summary of 2011
                                        Award Entries and Recipients,	page	41.                   Regulation, beginning in 2007, requires                 injected by patients using a syringe and
                                       	As	published	in	Presidential Green Chemistry Challenge
                                      35                                                         manufacturers and importers of chemicals                needle or a pen-type injection device,
                                        Awards Program: Summary of 2011 Award Entries and        to collect and register information about               and our environmental design and mate-
                                        Recipients,	page	42.                                     the chemicals they use and to replace                   rials selection efforts extend to this area.

     PAGE 70                                                                                                                                                LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                  EMPLOYEE VOICE                                    packaging and associated waste. Increas-           cardboard sleeve for blister packs) for
                                                                                        ing customer demand for information about          both products will save an estimated
ABOUT LILLY                                                                             packaging is another trend. For example,           $1.3 million yearly.

                                                                                        large outlet pharmacies have requested            Lilly also collaborates with other com-

RESPONSIBILITY                         By ‘going green,’ we save green.                 pharmaceutical companies to submit prod-          panies to advance sustainable packaging
                                                                                        uct packaging information. Some pharmacy          through our membership in the Sustainable
ENHANCING ACCESS TO MEDICINES                                                           customers intend to use this information to       Packaging Coalition (SPC). Involvement in
                                                                                        evaluate their pharmaceutical suppliers.          the SPC also provides Lilly the opportunity
DEVELOPING INNOVATIVE MEDICINES       At this time, Lilly does not use post-                                                              to engage with manufacturers of sustain-
                                                                                        To assist in meeting these objectives, Lilly
                                      consumer recycled materials in the                developed packaging guidelines to provide         able packaging materials and learn about
CONDUCTING OUR BUSINESS ETHICALLY                                                                                                         possible applications.
                                      manufacturing of these devices. Patient           a common basis for incorporating sus-
                                      safety is our first priority, and to ensure the   tainability considerations into packaging
                                      highest standards of quality and reliability,     decision-making. The guidelines cover
                                      we currently use only virgin raw materials.
                                                                                                                                          Pharmaceuticals in the
PRACTICES                                                                               areas such as reducing materials use,
                                      However, to enhance product environmental         using materials with reduced environ-             Environment
ENGAGING WITH PATIENTS AND            performance, we are evaluating the use of         mental impact, including recycled content,        Pharmaceutical products, like some foods
COMMUNITIES                           renewable-based plastics (produced using          and designing packaging to enhance                and nutritional supplements, may not be
                                      corn, soybeans, or sugar cane) that could         recyclability.
FOSTERING ENVIRONMENTAL                                                                                                                   completely absorbed or broken down by
                                      eventually replace the petroleum-based
SUSTAINABILITY                                                                          Our Product Stewardship Standard, which           the human body. Pharmaceutical residues
                                      plastics now in use. Lilly will only consider
                                                                                        is another consideration within our pro-          and their metabolites are eliminated by
                                      use of these materials in its devices when
 Commitment and Approach                                                                curement processes, also requires that we         patients and can make their way through
                                      suitable, after they are tested to have the
                                                                                        consider the use of post-consumer recycled        sewage-treatment facilities into surface
• Product Stewardship                 same performance, safety, and reliability
                                                                                        materials, products from certified sustainable    water and groundwater at extremely low
                                      of the plastics currently being used.
 Performance in Operations                                                              forests, and materials derived from renew-        levels. Modern advances in chemical
                                                                                        able resources. Our goal is to ultimately use     measurement techniques have allowed
 Summary Data Table
                                      Packaging                                         less material, as well as to use materials with   detections of pharmaceutical residues in
                                                                                        reduced environmental impact.                     water at concentrations usually in the range
                                      Pharmaceutical packaging is highly regu-                                                            of parts per trillion, or lower. The detection
                                      lated and must fulfill many functions,            Recent examples of packaging innovation in        of such pharmaceutical residues has raised
                                      including protecting product integrity            2010 include the following:                       concerns about their potential for adverse
UNITED NATIONS GLOBAL COMPACT INDEX   during transit and storage, providing                                                               impacts on human health and aquatic
                                                                                        • During 2011, we implemented several
                                      information, resisting counterfeiting, and                                                          organisms. Information published to date
                                                                                          packaging-process improvements at our
                                      protecting the contents from tampering                                                              shows that the extremely low concentra-
                                                                                          Giessen site in Germany for the launch of
                                      or access by children.                                                                              tions in surface waters are very unlikely to
                                                                                          one of our products. These improvements
                                      Packaging is also a source of cost and              reduced the reject rate, decreasing waste       be harmful to human health or have short-
                                      waste. To address this, Lilly operations            by nearly four metric tons per year and         term impacts on aquatic organisms. The
                                      around the world have developed innovative          saving an estimated $1.5 million annually.      potential for subtle and long-term effects
                                      packaging approaches that contribute to the                                                         on aquatic organisms is still being studied
                                                                                        • Our packaging engineers in Indianapolis,
                                      bottom line while improving our environ-                                                            by the scientific community.
                                                                                          Indiana, worked with brand teams to
                                      mental performance.                                 simplify the product sample packaging           Lilly is committed to understanding the
                                      Incorporating sustainability into packag-           for two products. Redesigning the blister       potential effects of pharmaceutical products
                                      ing decisions is motivated by several other         (the protective plastic sleeve that cov-        in the environment as well as in humans,
                                      factors as well. Legislation is a key driver,       ers each individual pill) for one product       and we support using science-based
                                      as almost 40 countries have implemented             sample, removing the external carton for        evaluations to assess and minimize the
                                      regulations requiring companies to reduce           the sample bottle for another product,          environmental risks of our pharmaceuti-
                                                                                          and eliminating the wallet (the protective      cal products. Through collaborations with

     PAGE 71                                                                                                                                LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                  industry partners, academic researchers,        Council, the World Health Organization,         sanctioned disposal guidelines for patients
                                      and regulatory agencies, we continually         the U.S. Environmental Protection Agency,       for unused medicines. In the United States,
ABOUT LILLY                           work to further understand and proactively      and European governmental sponsors.             we promote efforts to educate the public
                                      address any potential impacts from the          Summary results from environmental              about proper drug disposal methods for
                                      production, distribution, use, and disposal     fate and effect studies are available in our    unused medicines. For example, both Lilly
                                      of our products.                                material safety data sheets (http://ehs.        and the PhRMA trade association sponsor
ENHANCING ACCESS TO MEDICINES                                                and are         the SMARxT DISPOSAL™ program (www.
                                      As a precautionary measure, pharmaceuti-
                                                                                      routinely updated.                     Also, see Lilly’s Posi-
                                      cal products are subjected to environmental
DEVELOPING INNOVATIVE MEDICINES                                                                                                       tion Statement on the Disposal of Unused
                                      and other testing as part of registration       To see Lilly’s Position on Pharmaceuticals in
                                                                                                                                      Medicines in the United States:
                                      protocols before the product is marketed.       the Environment, visit
CONDUCTING OUR BUSINESS ETHICALLY                                                                                                     com/responsibility/es/Pages/wherewe.aspx.
AND TRANSPARENTLY                     We thus test and assess our medicines for       sibility/es/Pages/wherewe.aspx.
                                      potential effects on the environment to meet                                                    Lilly does produce some medications, such
SUPPORTING STRONG WORKPLACE           current regulatory requirements and internal                                                    as insulin, that patients inject using syringes
PRACTICES                             standards before launching new medicines.       Product End-of-Life                             with needles or pen-type injection devices. In
                                      We regularly update our testing protocols for   Medicines are intended to be used in their      those cases, we support the proper disposal
ENGAGING WITH PATIENTS AND            new and existing pharmaceuticals as knowl-                                                      of syringes, needles, and other “sharps”
                                                                                      entirety by patients. As a result, typical
COMMUNITIES                           edge and testing methods improve.                                                               to mitigate potential public-health risks.
                                                                                      models of take back, reuse, and recycling
                                                                                      in other sectors, designed to capture value     We are taking numerous steps to commu-
FOSTERING ENVIRONMENTAL               As part of our involvement in this area,
                                                                                      from products (such as paper, beverage          nicate proper sharps-disposal techniques
SUSTAINABILITY                        Lilly supports industry efforts to make
                                                                                      containers, or electronic equipment) after      to patients, including revising many of our
                                      information about pharmaceuticals in the
                                                                                      use, do not apply to our industry. We are       product user manuals as well as website
 Commitment and Approach              environment and the environmental char-
                                                                                      working with customers and partners to          content to provide more explicit instruc-
                                      acteristics of medicines readily available.
• Product Stewardship                                                                 better understand and ensure an effective       tions. We will also add content on sharps
                                      Our scientists have published articles
                                                                                      approach to product end-of-life issues.         collection and disposal to our diabetes
 Performance in Operations            and presented on these topics; they have
                                                                                                                                      patient-education programs and hospital
                                      also participated in discussions about the      In cases where patients do not finish
 Summary Data Table                                                                                                                   in-service activities and educate representa-
                                      safety of pharmaceutical residues in water      their medication, reuse or recycling is         tives in our retail and hospital sales forces
ABOUT THIS REPORT                     at scientific meetings held by the U.S.         not a safe option due to the nature of our      to better address sharps-related questions
                                      National Academies’ National Research           products. Therefore, we support nationally      from health care providers.


     PAGE 72                                                                                                                            LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                      PERFORMANCE IN OPERATIONS
                                      At Lilly, we are committed to measuring, reporting, and reducing                                     ENERGY PROGRAM
                                      our environmental impacts from operations. This section details                                      We are committed to using energy in the most
                                      our performance in the company’s most significant environmen-                                        efficient, cost-effective, and environmentally
ENHANCING ACCESS TO MEDICINES                                                                                                              responsible manner. To do so, we establish
                                      tal areas of impact—energy use and greenhouse gas emissions,                                         energy-efficiency goals and implement energy
DEVELOPING INNOVATIVE MEDICINES       water use, and waste. It also describes our progress in green                                        management practices globally. Our approach

                                      procurement, other air emissions, biodiversity, and compliance. In                                   includes the following elements:

AND TRANSPARENTLY                     addition to performance data in each area, we include numerous                                       •	Design for energy efficiency in new or
                                                                                                                                             updated processes and facilities,
                                      examples that illustrate strong practices across the company.
PRACTICES                                                                                                                                  •	Operate our facilities and equipment
ENGAGING WITH PATIENTS AND            Energy Use and Greenhouse                                                                            •	Monitor and report energy consumption and
                                      Gas Emissions                                                                                          resulting GHG emissions,
FOSTERING ENVIRONMENTAL                                                                                                                    •	Conduct energy assessments and implement
                                      Energy use and greenhouse gas emissions
SUSTAINABILITY                                                                                                                               initiatives to enhance energy efficiency,
                                      are a significant focus area for reducing
                                      our environmental impacts. Energy usage                                                              •	Utilize alternative energy sources, new tech-
 Commitment and Approach
                                      also represents a substantial operational                                                              nologies, and best practices, and
 Product Stewardship                  cost for Lilly, especially as it relates to our
                                      manufacturing and distribution activities.                                                           •	Participate in local, regional, and/or national
• Performance in Operations
                                                                                                                                             forums to influence responsible and cost-
                                      Energy assessments are central to our                                                                  effective decision-making and policy develop-
 Summary Data Table
                                      approach. Since 2006, we have conducted 27                                                             ment relative to energy.
ABOUT THIS REPORT                     such assessments, focusing on our energy-
                                      intensive sites. During these analyses,           Solar	panels	at	our	site	in	Sesto,	Italy.

GLOBAL REPORTING INITIATIVE INDEX     internal experts detail energy consumption
                                      to identify opportunities for improvement.        issues, including energy forecasting and         promote energy-efficient behaviors among
UNITED NATIONS GLOBAL COMPACT INDEX   As a result, we have uncovered an esti-           efficiency initiatives to manage projected       employees. Poster presentations, videos,
                                      mated $22.4 million in potential annual           demand. We also conduct a yearly internal        contests, guest speakers, and energy-
                                      savings, nearly $7 million of which we real-      awards presentation for HSE performance          focused informational booths make Energy
                                      ized by the end of 2010. These changes have       (which, similar to the initiatives described     Day fun and engaging.
                                      reduced energy use by 1,560,000 million           above, also address water savings and waste
                                                                                                                                         At several facilities, we use renewable
                                      BTUs, avoiding more than 200,000 metric           reduction). Other educational opportunities
                                                                                                                                         energy to diversify our energy sources and
                                      tons carbon dioxide equivalent (CO2e) of          include energy-focused webinars and col-
                                                                                                                                         decrease GHG emissions. For example:
                                      greenhouse gas emissions.                         laboration sites on the Lilly intranet; use of
                                                                                        our internal social networking site to share     • Solar panels on two of the largest build-
                                      To expand these benefits company wide, Lilly      best practices and make suggestions related        ings at our Sesto manufacturing site in
                                      employees share best practices in energy          to environmental activities; and widespread        Italy produce 160,000 kilowatt hours (kWh)
                                      efficiency through several channels, such         employee participation in Energy Day, a            per year of electricity. As a result, the
                                      as our annual health, safety, and environ-        yearly event to promote awareness of and           majority of the site’s energy demand is met
                                      ment workshop and our Engineering Tech            action toward Lilly’s company-wide energy          by a combination of renewable and low-
                                      Center. The latter is a group of engineers        goal. On Energy Day, Lilly sites around the        carbon energy generation technologies.
                                      who provide consultation on operational           globe conduct energy-awareness activities to

     PAGE 73                                                                                                                               LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                  • At our Giessen site in Germany, we              Progress Toward Goal —                                                                      Progress Toward Goal —
                                        installed a solar system that generates
ABOUT LILLY                                                                             Energy Use                                                                                  GHG Emissions
                                        25,000 kWh of electricity annually, saving
                                        about €12,500 ($16,500) each year.
                                      • At our facility in Fegersheim, France, we                      14,000,000                                700                                                  2,000,000                                  90
                                        installed a system of solar panels that                                                                                                                       1,800,000                                  80
                                                                                                       12,000,000                                600
ENHANCING ACCESS TO MEDICINES           produces about 50,000 kWh of electric-

                                                                                                                                                       THOUSAND BTUS/SQUARE FOOT
                                                                                                                                                                                                      1,600,000                                  70
                                        ity annually. A geothermal heat pump,
                                                                                                       10,000,000                                500                                                  1,400,000                           2013
DEVELOPING INNOVATIVE MEDICINES         installed in 2009, provides the facility with                                                                                                                                                     Goal   60

                                                                                                                                                                                                                                                        KG CO2E/SQUARE FOOT

                                                                                        MILLION BTUS

                                                                                                                                                                                   METRIC TONS CO2E
                                        heating and cooling and paid for itself in                      8,000,000
                                                                                                                                                 400                                                  1,200,000
CONDUCTING OUR BUSINESS ETHICALLY                                                                                                                                                                                                                50
                                        just one year.                                                                                                                                                1,000,000
AND TRANSPARENTLY                                                                                                                                                                                                                                40
                                                                                                        6,000,000                                300
                                      Cogeneration, which involves using an                                                                                                                            800,000
SUPPORTING STRONG WORKPLACE           on-site engine to generate electricity as                                                                                                                                                                  30
                                                                                                        4,000,000                                200                                                   600,000
PRACTICES                             well as recovering usable heat, is another
                                                                                                                                                                                                       400,000                                   20
                                      important part of our approach. By making                         2,000,000                                100
ENGAGING WITH PATIENTS AND                                                                                                                                                                             200,000                                   10
                                      productive use of heat that would otherwise
                                      be wasted, this technology can increase                                   0                                0                                                              0                                0
                                      the overall efficiency of the generation of                                   2007 2008 2009 2010                                                                             2007 2008 2009 2010
SUSTAINABILITY                        electric power and thermal energy from 49
                                                                                                       Indirect Energy            Energy Intensity                                                                               Greenhouse Gas
                                      percent by conventional means to 75 per-                                                                                                                        Scope 1
                                                                                                       Consumption                                                                                                             Emissions Intensity
 Commitment and Approach              cent.36 We use cogeneration or waste heat                        Direct Energy                                                                                  Scope 2
                                      recovery at several Lilly facilities worldwide,                  Consumption
 Product Stewardship                  including in Kinsale, Ireland; Sesto, Italy;
• Performance in Operations           and Speke, United Kingdom. We are evalu-
                                      ating possible use at other locations.
                                                                                                       Progress Toward Goal                                                        metric tons CO2e in 2009 (see graph above).
 Summary Data Table                                                                                                                                                                This change was due primarily to reduced
                                                                                        In 2010, Lilly’s energy use equaled
                                      Optimizing our IT environment also offers                                                                                                    energy usage. Lilly’s GHG emissions
                                                                                        11,200,000 million BTUs, compared with
ABOUT THIS REPORT                     opportunities to reduce energy use. Between                                                                                                  intensity improved by more than 9 percent
                                                                                        11,300,000 million BTUs in 2009 (see graph
                                      2006 and 2010, Lilly IT saved an average of                                                                                                  compared to that in 2007, keeping us on
GLOBAL REPORTING INITIATIVE INDEX                                                       above). Since 2007, our energy intensity has
                                      5,300 megawatt hours of electricity per year,                                                                                                track to meet the company’s goal of a 15
                                                                                        improved more than 12 percent, from 593
                                      equivalent to emissions of more than 3,700                                                                                                   percent improvement by 2013.38
UNITED NATIONS GLOBAL COMPACT INDEX                                                     kBTUs/square foot to 520 kBTUs/square
                                      metric tons CO2e.
                                                                                        foot in 2010, keeping us on track to meet                                                  Lilly also calculates Scope 3 GHG emis-
                                                                                        the company’s goal of a 15 percent improve-                                                sions, as summarized in the table on the
                                      EMPLOYEE VOICE                                    ment by 2013.37 These changes were due                                                     following page (and not included in the
                                                                                        primarily to increased awareness of our                                                    graph above). We are continuing to refine
                                                                                        energy goal and the implementation of                                                      our approach in this area.
                                                                                        energy conservation measures identified

                                                                                        through energy assessments, including
                                          Sustainability is about being a               improvements in boiler efficiency, chiller
                                          better company, about doing                   optimization, HVAC system enhancement,                                                     36
                                                                                                                                                                                           	According	to	the	U.S.	Environmental	Protection	Agency.	
                                          the right thing—not just now,                 the addition of laboratory fume hoods, and
                                                                                                                                                                                           	Following	World	Resource	Institute	guidance,	progress	
                                                                                        many others.

                                          but for the future.                                                                                                                               toward	environmental	goals	is	reported	on	an	adjusted	
                                                                                                                                                                                            basis	accounting	for	mergers,	acquisitions,	and	dives-
                                                                                        During 2010, the company’s Scope 1 and                                                              titures,	as	appropriate,	to	ensure	comparability,	unless	
                                                                                        Scope 2 GHG emissions equaled 1,620,000                                                             stated	otherwise.	
                                                                                        metric tons CO2e, compared with 1,670,000                                                  38
                                                                                                                                                                                           	This	goal	covers	Lilly’s	Scope	1	and	Scope	2	emissions.

     PAGE 74                                                                                                                                                                                          LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                  We do not believe that climate change poses       SCOPE 3 ESTIMATED EMISSIONS FROM OTHER LILLY ACTIVITIES39
                                      significant risks or opportunities for Lilly,     (METRIC TONS CO2e)
ABOUT LILLY                           given the nature of our operations and the
                                      locations of our facilities. See our submis-      ACTIVITY                                                           2007               2008               2009               2010
                                      sion to the Carbon Disclosure Project for
RESPONSIBILITY                                                                          Employee business travel (personal                              65,000             65,000             63,000              72,000
                                      more details as well as additional discus-
                                      sion about Lilly’s approach to managing           car, taxi, rental car, rail, and air travel)
                                      GHG emissions (see
                                                                                        Employee commuting                                              76,000             76,000             76,000              72,000
                                        Reducing Energy Use at Clinton                  Product transportation and                                      30,000             26,000             39,000              43,000
CONDUCTING OUR BUSINESS ETHICALLY     Labs in Indiana, United States                    distribution (contracted)
                                      Our Clinton Labs facility, in Clinton, Indiana,
                                      United States, focuses on animal health           Waste generated in operations40                                 18,000             14,000             11,000              17,000
PRACTICES                             product manufacturing that makes exten-           Non-Kyoto compound emissions                                    14,000             33,000             15,000              23,000
                                      sive use of a fermentation-based production       (refrigerants, VOCs, etc.)
ENGAGING WITH PATIENTS AND            process. This manufacturing is energy
COMMUNITIES                           intensive, and purchased utilities accounted       	These	data	do	not	include	sales	force	travel	using	company	vehicles,	use	of	Lilly	aircraft,	or	product	distribution	with	Lilly	

                                                                                          vehicles.	Those	items	are	Scope	1	and	are	included	with	Scope	1	and	Scope	2	emissions	in	the	GHG	Emissions	graph	above.
                                      for a significant amount of the site’s
FOSTERING ENVIRONMENTAL               expenses in 2010. The facility’s correspond-       	This	refers	to	GHG	emissions	related	to	wastewater	treatment	and	the	incineration	of	solid	and	liquid	wastes	by	third		

SUSTAINABILITY                                                                            parties.	It	does	not	include	GHG	emissions	associated	with	wastes	sent	to	landfill	or	applied	to	land.
                                      ing greenhouse gas emissions footprint is
                                      about 470,000 metric tons CO2e/year.
 Commitment and Approach
                                      After a comprehensive energy assessment
 Product Stewardship
                                      in 2006, the site’s energy team implemented         Optimizing Air Compressor Use in                                   Transforming Energy Use at
• Performance in Operations           a series of energy-reduction projects. To         Guayama, Puerto Rico                                               Our Speke, United Kingdom,
                                      help identify the most promising energy-                                                                             Manufacturing Facility
 Summary Data Table                   saving ideas, team members also asked             Following analysis of the air compressor
                                      frontline employees for recommendations.          systems at Lilly’s Guayama, Puerto Rico, site                      Lilly’s Speke facility in Liverpool, United
                                      The energy team also forged strong links          in 2010, employees determined that two air                         Kingdom, which uses fermentation-based
                                      with the site’s process optimization steering     compressors delivering air to the site’s facili-                   production processes extensively to manu-
                                      team. As a result, employees are able to          ties and equipment and two air compressors                         facture animal health products, is in the
UNITED NATIONS GLOBAL COMPACT INDEX   monitor the site’s electrical load in real-       dedicated to the site’s nitrogen generators                        middle of a multi-year energy transforma-
                                      time and take actions to reduce monthly           were operating well under capacity, at a cost                      tion. This broad effort focuses on numerous
                                      peaks in electrical usage.                        of $450,000 per year. Connecting the two                           aspects, including the following:
                                                                                        systems enabled the nitrogen generator air
                                      In 2010, Clinton Labs completed eight                                                                                • Improving management systems through
                                                                                        compressors to run at higher utilization and
                                      projects, including evaporator process                                                                                 quarterly updates to the senior leader-
                                                                                        meet all of the compressed air needs for
                                      changes, boiler efficiency enhancements,                                                                               ship team, use of leading and lagging
                                                                                        the site, which in turn allowed for the other
                                      agitation reduction, and others. These saved                                                                           indicators, and an enhanced energy
                                                                                        compressors to be turned off and kept in
                                      27 million kWh during the year, equivalent                                                                             purchasing strategy,
                                                                                        reserve as backups. This decreased overall
                                      to 27,000 metric tons of CO2e and nearly          energy consumption by nearly 150 kW per                            • Conducting energy assessments, using
                                      9 percent of the site’s total electricity use.    hour, saving $220,000 per year and reducing                          Six Sigma and other techniques,
                                      Several new projects are planned for 2011.        GHG emissions by about 900 metric tons of                          • Performing infrastructure upgrades,
                                                                                        CO2 annually.                                                      • Developing a site energy model,
                                                                                                                                                           • Implementing real-time energy
                                                                                                                                                             metering, and

     PAGE 75                                                                                                                                                  LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                  • Engaging employees through awareness          (equaling 4,210 tons of CO2e annually). These     implementing meters to measure and
                                        events, energy newsletters, “Energy Day”      enhancements have also decreased the              display electricity efficiency around the
ABOUT LILLY                             events, suggestion schemes, and other         facility’s NOx emissions by 85 percent, while     campus. Low-impact commuting initiatives
                                        means.                                        eliminating SOx emissions as well as the          include a bike-to-work program, carpool-
                                                                                      risks associated with transporting, storing,      ing, and shuttles from the office to the
RESPONSIBILITY                        In one example, the site’s chilled water
                                                                                      and handling heavy fuel oil.                      local train station. Employees can enter a
                                      compressors, which use roughly 20 million
ENHANCING ACCESS TO MEDICINES                                                                                                           monthly “Green Travel to Work” raffle and
                                      kWh of energy per year, were integrated           Decreasing Energy Use and Climate               win a prize for using these programs.
                                      into one system and replaced with more          Impact in Sales and Marketing
                                      efficient units. Lilly Speke received a grant
                                      of £700,000 ($1.1 million) in 2009 from the     Lilly’s global sales and marketing affiliates     Water Use
                                      Lilly Energy, Waste, and Natural Resource       are committed to helping us achieve our
                                      Reduction Fund, to cover nearly half the        environmental objectives. We’re continu-          Water is becoming more of an important
                                      total project cost. The initiative saves        ally looking for opportunities to improve the     issue for Lilly, due to trends in availability,
PRACTICES                             £300,000 ($460,000) and 6.8 million kWh         fuel efficiency of our sales-force vehicles,      quality, and cost. We consume water in our
                                      of energy yearly, while decreasing annual       to meet our goal to reduce overall fleet          manufacturing and production activities and
ENGAGING WITH PATIENTS AND            greenhouse gas emissions by 1,200 metric        fuel use 10 percent globally by 2013. For         also for domestic uses in our offices (such as
COMMUNITIES                           tons CO2e. (See page 67 to learn more           example:                                          cafeterias, bathrooms, and landscaping). We
                                      about the fund.)                                                                                  also require exceptionally high-quality water
FOSTERING ENVIRONMENTAL                                                               • In 2008, the Lilly U.S. fleet initiated a       to produce injectable products.
SUSTAINABILITY                                                                          process to replace existing vehicles with
                                        Switching to Natural Gas at Our                                                                 In 2011, we used the World Business Coun-
                                                                                        new midsize, four-cylinder sedans that will
                                      Kinsale, Ireland, Manufacturing                                                                   cil for Sustainable Development’s Water
 Commitment and Approach                                                                reduce our U.S. fleet fuel use by 11 percent.
                                      Facility                                                                                          Tool and the United Nations Environment
 Product Stewardship                                                                  • The vehicle selector used by Lilly’s U.K.
                                      Lilly’s site near Kinsale, County Cork,           affiliate includes only diesel-fuel vehicles    Programme’s Vital Water Tool to refine our
• Performance in Operations           manufactures active ingredients for human         and encourages employees to select mod-         evaluation of water-stressed areas where
                                      health medicines on a 140-acre campus.            els with carbon-emission ratings of less        we operate. Each of our facilities is required
 Summary Data Table                   In 2009, the site relied on heavy fuel oil to                                                     to have a local business-continuity plan that
                                                                                        than 130 grams/km.
                                      generate 60 million kWh of steam for HVAC                                                         addresses all sources of business inter-
ABOUT THIS REPORT                                                                     • Lilly’s Spain affiliate has established
                                      and process use. While the environmental                                                          ruption, including water availability. Water
                                                                                        a fleet carbon-emissions target of 130          availability and quality are of increasing
GLOBAL REPORTING INITIATIVE INDEX     impacts of this fuel use were recognized,
                                                                                        grams/km for sales vehicles, and all            concern particularly in emerging markets
                                      the economic case for switching to cleaner
                                                                                        affiliate drivers have completed an online      (such as China, India, and Russia), and we
UNITED NATIONS GLOBAL COMPACT INDEX   natural gas was weak, as the nearest supply
                                                                                        training course that promotes environ-          are continuing to assess how to address
                                      was about seven miles away.
                                                                                        mentally responsible driving practices.         these challenges.
                                      That year, a Lilly employee worked with the
                                                                                      At Lilly sales and marketing offices around       Our manufacturing and administration
                                      gas grid operator to facilitate approval of
                                                                                      the world, we’ve established projects such        groups as well as Lilly research laborato-
                                      a new gas pipeline for the town of Kinsale,
                                                                                      as LED lighting, heating and air condition-       ries have developed plans to reduce water
                                      with Lilly as the primary user. The pipeline
                                                                                      ing improvements, and energy awareness            consumption and measure progress against
                                      was completed in early 2011. In anticipation
                                                                                      days to reduce energy use while increasing        targets that contribute to our overall water-
                                      of natural gas becoming available early that
                                                                                      employee environmental awareness and              use reduction goal. Facilities collaborate
                                      year, Lilly installed gas distribution infra-
                                                                                      action.                                           with Lilly’s engineering technical center to
                                      structure and two high-efficiency boilers on
                                      the campus and converted other equipment        For example, our sales office in Surrey,          find technologies that reduce water intake
                                      as needed.                                      England, has reduced energy consump-              and with our global HSE environmental
                                                                                      tion by 25 percent since 2007 by using            affairs group to explore financing for water-
                                      This transition has produced several envi-                                                        reduction projects (see page 77).
                                                                                      more energy efficient data center cool-
                                      ronmental benefits, including an 18 percent
                                                                                      ing, installing timed lighting controls, and
                                      reduction in GHG emissions at the site

     PAGE 76                                                                                                                              LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                                   Progress Toward Goal                                                                       Improving Reverse Osmosis to                                Waste
                                                                                                                                                Conserve Water in Fegersheim,
ABOUT LILLY                             In 2010, Lilly’s water intake was 13.3 billion
                                                                                                                                                                                                              To increase business value and reduce the
                                        liters, compared with 13.2 billion liters in                                                                                                                          impact of our operations on the environ-
OUR APPROACH TO CORPORATE               2009 (see graph below).                                                                                 At Lilly’s manufacturing site in Fegersheim,                  ment, Lilly uses the following hierarchy for
RESPONSIBILITY                                                                                                                                  France, employees formulate, fill, and finish                 waste treatment:
                                        Examples of how we have reduced our
                                                                                                                                                injectable products. Exceptionally clean
ENHANCING ACCESS TO MEDICINES           water intake since 2007 include identify-                                                                                                                             • Eliminate or reduce the amount of waste
                                                                                                                                                water is required for these processes, so
                                        ing and repairing leaks in water systems,                                                                                                                               produced,
                                                                                                                                                water purification is the leading driver of
DEVELOPING INNOVATIVE MEDICINES         improving purified water production effi-
                                                                                                                                                water use at the site.                                        • Reuse materials when possible (often
                                        ciency, and treating and reusing water in
CONDUCTING OUR BUSINESS ETHICALLY                                                                                                                                                                               multiple times),
                                        cooling tower systems.                                                                                  In 2008, the facility used 310 million liters
AND TRANSPARENTLY                                                                                                                               of city water to produce 155 million liters                   • Recycle used materials to make new
                                        After meeting our 2013 water-intake reduc-                                                                                                                              products,
                                                                                                                                                of purified water. Working toward a goal to
SUPPORTING STRONG WORKPLACE             tion goal four years early 42 (see page 66),
                                                                                                                                                decrease wastewater by 50 percent in the                      • Recover energy from waste,
PRACTICES                               we have established a new goal to reduce
                                                                                                                                                water purification process, the site installed                • Treat waste to reduce toxicity and volume,
                                        water intake by 5 percent in absolute terms
ENGAGING WITH PATIENTS AND                                                                                                                      a new reverse osmosis unit that recycles                        and
                                        by 2013, compared to 2010. Meeting the new
COMMUNITIES                                                                                                                                     about half of the water rejected by three
                                        goal will be challenging, as we are facing                                                                                                                            • Send waste to landfill only when the
                                                                                                                                                other existing units, with no impact on
                                        production increases that will elevate water                                                                                                                            options above are not feasible.
FOSTERING ENVIRONMENTAL                                                                                                                         purified water quality. In 2010, due to these
SUSTAINABILITY                          intake rates.
                                                                                                                                                enhancements, the site saved more than
                                                                                                                                                                                                                Progress Toward Goal
                                                                                                                                                93 million liters of city water, equivalent
 Commitment and Approach                Progress Toward Goal —                                                                                  to 16 percent of the facility’s total water                   In 2010, Lilly sent 15,900 metric tons of
 Product Stewardship
                                        Water Intake                                                                                            consumption and 63 percent of its purified                    waste to landfill, up from 14,800 metric
                                                                                                                                                water process rejects. Following an initial                   tons in 2009 and a decrease of 50 percent
• Performance in Operations                                                                                                                     investment of $228,000, yearly financial                      compared to 2007 (see graph below).
                                                       25                                         1.2
                                                                                                                                                benefits are estimated at $87,000.
 Summary Data Table
                                                                                                                                                                                                              Progress Toward Goal —

                                                                                                        MILLION LITERS/MILLION $ REVENUE
ABOUT THIS REPORT                                      20                                                                                                                                                     Waste to Landfill
GLOBAL REPORTING INITIATIVE INDEX                                                                 0.8                                       	“Water	intake”	as	used	in	evaluating	our	progress	toward	
                                                                                                                                           41                                                                 metric tons
                                      BILLION LITERS

                                                       15                                                                                    our	water-reduction	goal	is	the	total	amount	of	water	
                                                                                                                                             coming	into	a	facility,	including	water	pumped	from	bodies	
UNITED NATIONS GLOBAL COMPACT INDEX                                                               0.6                                                                                                         35,000
                                                                                                                                             of	surface	water	and	groundwater,	and	water	provided	
                                                       10                                                                                    by	a	utility.	It	includes	water	used	in	processes,	utilities,	
                                                                                                                                             and	other	ancillary	operations,	such	as	irrigation.	The	         30,000
                                                                                                                                             term	does	not	include	groundwater	pumped	solely	for	
                                                                                                                                             treatment	to	satisfy	regulatory	actions	or	requirements	         25,000
                                                        5                                                                                    (e.g.,	remediation	activities	where	the	water	is	not	used	
                                                                                                                                             for	another	purpose).	Values	do	not	include	the	water	
                                                                                                                                             extracted	from	wells	solely	for	the	purpose	of	lowering	         20,000
                                                        0                                        0.0                                         the	groundwater	table(s)	to	maintain	the	physical	and	
                                                                                                                                             structural	integrity	of	building	foundations.                    15,000
                                                            2007   2008   2009   2010      2013
                                                                                           Goal                                             	Following	World	Resource	Institute	guidance,	progress	

                                                                                         (updated)                                           toward	environmental	goals	is	reported	on	an	adjusted	           10,000
                                                                                                                                             basis	accounting	for	mergers,	acquisitions,	and	dives-
                                                       Water Intake                   Water Intensity                                        titures,	as	appropriate,	to	ensure	comparability,	unless	
                                                                                                                                             stated	otherwise.                                                 5,000

                                                                                                                                                                                                                       2007   2008   2009    2010     2013

     PAGE 77                                                                                                                                                                                                    LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                    Waste Generation                                                                         • RECYCLED (20 percent): This includes                 from 90 schools statewide “shop” from
                                                                                                                                   solvent recovery in development and                  approximately 100 pallets stocked with
ABOUT LILLY                                                                                                                        manufacturing processes, the recycling of            free lab equipment and office supplies. In
                                                    450,000                                 25                                     construction and demolition debris, and              2010, the donated goods were estimated
                                                                                                                                   “waste-to-energy,” in which steam and                to be worth more than $100,000, and the

                                                                                                 METRIC TONS/MILLION $ REVENUE
                                                                                                                                   electricity are produced from waste to               program diverted more than 10 metric
                                                    350,000                                 20                                     provide power to several of our facilities.          tons of waste from landfills.
                                                    300,000                                                                      • TREATED (5 percent): This includes incin-       • SALE: Equipment that is not redeployed or

                                      METRIC TONS
DEVELOPING INNOVATIVE MEDICINES                                                             15                                     eration and other waste treatment, but not        donated is sold through a network of non-
                                                                                                                                   wastewater treated on-site or at public           Lilly equipment brokers.
                                                    200,000                                                                        facilities.                                     • RECYCLING: ARD works with several recy-
AND TRANSPARENTLY                                                                           10
                                                    150,000                                                                      • LANDFILLED (10 percent): The proportion           cling vendors to handle metal, electronic
SUPPORTING STRONG WORKPLACE                                                                                                        of waste sent to landfill increased from          waste, cardboard, plastic, glass, wood
                                                    100,000                                 5
PRACTICES                                                                                                                          7 percent in 2009 to 10 percent in 2010.45        pallets, refrigerators, and freezers.
                                                     50,000                                                                        Six sites globally reported achieving
                                                         0                                  0                                      zero-landfill status, including Lilly’s U.S.      Applying Fermentation Waste to
COMMUNITIES                                                                                                                        distribution centers in Fresno, Califor-        Land in Indiana, United States
                                                              2007    2008   2009    2010
                                                                                                                                   nia; Enfield, Connecticut; and Plainfield,      Fermentation was first implemented at Lilly
SUSTAINABILITY                                      Hazardous Waste          Waste Generation                                      Indiana; our research and development           in the 1950s to produce the polio vaccine. It
                                                    Generation                       Intensity                                     center in Surrey, United Kingdom; and           continues to play a central role in manufac-
 Commitment and Approach                            Non-Hazardous Waste                                                            manufacturing sites in Suzhou, China, and       turing several Lilly animal health products.
                                                    Generation                                                                     Giessen, Germany.
 Product Stewardship                                                                                                                                                               Using large fermentation vats and inputs
                                                                                                                                 See page 86 for historical waste-disposi-         such as grain, sugar, and starches, the
• Performance in Operations                                                                                                      tion data.                                        process uses significant amounts of energy
                                       After meeting our 2013 waste-to-landfill
 Summary Data Table                                                                                                                                                                and water and also creates substantial
                                       reduction goal four years early (see page                                                   Promoting the Reuse of Surplus                  amounts of nontoxic, organic by-products.
ABOUT THIS REPORT                      66), we have established a new goal to                                                    Equipment and Supplies at Our Global
                                       reduce the amount of waste sent to landfills                                              Headquarters in Indiana, United States
GLOBAL REPORTING INITIATIVE INDEX      by 20 percent, with a baseline of 2010.43                                                                                                    	Our	former	and	current	waste-to-landfill	goals	do	not	
                                                                                                                                 In Indiana alone, Lilly operations produce an
                                       Our ultimate goal is to send zero waste                                                                                                       include	construction	and	demolition	debris,	biosolids	from	
                                                                                                                                 average of 12 to 14 pallets of surplus equip-       wastewater	treatment	plants,	incinerator	ash,	coal	ash	if	
UNITED NATIONS GLOBAL COMPACT INDEX    to landfill.44                                                                                                                                reused	for	mine	reclamation	or	road	base,	and	mycelia	
                                                                                                                                 ment and supplies every business day. Over
                                                                                                                                                                                     and	urea	reused	for	fertilizer.	Following	World	Resource	
                                       See a summary of total waste generation                                                   the past 10 years, Lilly’s Indianapolis facili-     Institute	guidance,	progress	toward	environmental	goals	
                                       and disposition on page 86.                                                               ties management asset recovery department           is	reported	on	an	adjusted	basis	accounting	for	mergers,	
                                                                                                                                                                                     acquisitions,	and	divestitures,	as	appropriate,	to	ensure	
                                                                                                                                 (ARD) has implemented a process to receive
                                       During 2010, total waste at Lilly was man-                                                                                                    comparability.	However,	unlike	our	energy,	GHG	emis-
                                                                                                                                 and evaluate these assets for reuse, dona-          sions,	and	water-intake	goals,	performance	data	used	to	
                                       aged in the following ways:
                                                                                                                                 tion, sale, or recycling, as follows:               calculate	progress	against	our	waste-to-landfill	goal	do	
                                                                                                                                                                                     not	exclude	data	from	our	Tippecanoe	Laboratories	facility	
                                       • REUSED (65 percent): For example,                                                                                                           in	Indiana,	United	States,	which	Lilly	divested	in	2009,	
                                                                                                                                 • REUSE: An internal website, launched in
                                         mycelia, a solid material left after a                                                                                                      because	the	data	at	that	site	did	not	have	a	significant	
                                                                                                                                   2010, enables Lilly employees and affili-         impact	on	our	worldwide	waste-to-landfill	total.	
                                         fermentation process, is being used as a
                                                                                                                                   ates to access information about surplus         	“Zero	landfill”	refers	to	eliminating,	reusing,	or	recycling	
                                         soil conditioner on farmland. Spent urea,
                                                                                                                                   equipment online, to easily identify mate-        waste	to	the	point	that	it	is	no	longer	sent	to	a	landfill.	
                                         a material used in insulin production, is                                                                                                   A	site	may	achieve	“zero	landfill”	status	if	less	than	0.5	
                                                                                                                                   rials needed for their department.
                                         used as an ingredient in fertilizer manu-                                                                                                   percent	of	the	waste	it	generates	is	sent	to	landfill.
                                         facturing. See Applying Fermentation                                                    • DONATION: Since 2000, ARD staff has              	This	change	was	due	largely	to	our	divestiture	of	

                                         Waste to Land in Indiana, United States,                                                  worked with Lilly volunteers to conduct           Tippecanoe	Laboratories	in	2009.	Because	that	site	sent	
                                                                                                                                                                                     almost	no	waste	to	landfill,	removing	it	from	our	data	set	
                                         at right for more detail.                                                                 a community outreach program called               increased	the	overall	proportion	of	waste	to	landfill	even	
                                                                                                                                   “Teacher’s Day,” at which teachers invited        though	it	didn’t	significantly	impact	the	absolute	amount.

     PAGE 78                                                                                                                                                                            LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                  To enhance environmental performance,
                                      save money, and benefit local farmers,
ABOUT LILLY                           beginning in 1977 Lilly has applied fer-
                                      mentation by-products to local farmland
                                      in Indiana, and more recently at our site
                                      in Augusta, Georgia, both on property Lilly
ENHANCING ACCESS TO MEDICINES         owns and in cooperation with local farmers.
                                      This waste provides essential plant nutri-
                                      ents to the soil, and the amount that Lilly
                                      applies has a value of $70 to $90 per acre
AND TRANSPARENTLY                     per year. This approach also saves Lilly
                                      substantial amounts of money in avoided
SUPPORTING STRONG WORKPLACE           waste-disposal costs. In 2010, Lilly land-
PRACTICES                             applied about 68,000 cubic meters of this        Waste	urea	storage	and	evaporator	facility.
                                      material in Indiana.
COMMUNITIES                           Lilly is also working to improve energy and      The facility also realizes more than $1.3        HSE, and engineering identified more
                                      water use in fermentation processes through      million in annual savings due to these           than 69 ways to improve energy effi-
FOSTERING ENVIRONMENTAL               technological and process innovations such       initiatives, and has been recognized by the      ciency, including modifications to lighting,
SUSTAINABILITY                        as upgrading fermentation equipment and          Puerto Rico Manufacturing Association and        temperature control, optimization of lab
                                      recycling non-contact cooling water.             the local government for its waste-reduc-        equipment, and more. The team prioritized
 Commitment and Approach
                                                                                       tion efforts.                                    potential projects based on the estimated
                                        Increasing Recycling in Carolina,                                                               impact on safety, productivity, and energy
 Product Stewardship
                                      Puerto Rico                                        Demonstrating Strong                           use, as well as their cost, time to imple-
• Performance in Operations
                                      Lilly’s site in Carolina, Puerto Rico, has       Environmental Performance in                     ment, and the likelihood that employees
 Summary Data Table                   dramatically increased its recycling rate in     Surrey, United Kingdom                           would actually adopt the changes.
                                      recent years, from 11 percent in 2007 to 84      At our Erl Wood R&D site in Surrey, United       Enhancements implemented in 2010
ABOUT THIS REPORT                     percent in 2010. Initiatives have included the   Kingdom, employees have implemented              included replacing faulty variable air volume
                                      following:                                       innovative programs recently to dem-             controllers, allowing temperatures to rise
                                      • Constructing and operating a urea evapo-       onstrate strong environmental progress           or fall during off hours, optimizing light-
UNITED NATIONS GLOBAL COMPACT INDEX     rator, which concentrates the quantity of      toward our environmental goals related to        ing activation controls, and others. During
                                        spent urea (a material used in the manu-       energy and GHG emissions, water use, and         the year, the building used 4,930,000 kWh
                                        facture of insulin) to 50 percent and allows   waste generation.                                of energy, 24 percent less than during the
                                        it to be beneficially reused in the manufac-                                                    baseline year of 2007, saving $100,000. In
                                        ture of fertilizers,                           IMPROVING ENERGY EFFICIENCY                      February 2011, the building recorded its
                                                                                       At Erl Wood, employees conduct R&D for           lowest electricity consumption since Octo-
                                      • Installing recycling stations and contain-
                                                                                       our product pipeline. One research build-        ber 2005, when it opened.
                                        ers in office areas, parking lots, and
                                        cafeterias throughout the site,                ing was used only 12 hours a day, Monday
                                                                                       through Friday; historically it was heated,      SAVING WATER WITH AUTOMATED MONITOR-
                                      • Reusing materials, including fiber drums       cooled, lit, and ventilated all day and night,   ING AND TARGETING
                                        used to ship and store raw materials, and      seven days a week.                               To improve understanding and control of
                                      • Recycling nearly 100 percent of waste                                                           water use at the Erl Wood facility, in 2007
                                        acetonitrile (a solvent commonly used in       In 2008, employees set a target to decrease
                                                                                       energy consumption at the site by 15             facility managers installed a site-wide
                                        manufacturing at Lilly, especially in insu-                                                     automated water monitoring and target-
                                        lin production), instead of incinerating it.   percent. A cross-functional team with
                                                                                       representatives from chemistry users,            ing system. Each building now has a meter
                                                                                                                                        to record consumption of domestic water

     PAGE 79                                                                                                                              LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                  and process water. These meters— which        62 percent from 2003 to 2010. In 2009,          Green Procurement
                                      paid for themselves in a matter of a few      employees implemented a “wormery”
ABOUT LILLY                           months—provide valuable information           to compost food waste. They also created        Historically, decisions about purchasing
                                      regarding anomalies of usage that can         on-site composting bays to treat garden         to support Lilly’s operations did not
OUR APPROACH TO CORPORATE                                                                                                           consider the company’s sustainability
                                      indicate leaks or other system flaws, such    and grounds maintenance waste.
RESPONSIBILITY                                                                                                                      initiatives. For example, in 2009 only an
                                      as excessive night-time consumption and
                                                                                    In 2010, in an effort to reduce overall waste   estimated 13 percent of the office supplies
ENHANCING ACCESS TO MEDICINES         sudden changes in usage.
                                                                                    and increase recycling, the site rolled out     Lilly purchased by volume in the state of
                                      For example, after identifying an unex-       centralized recycling points to replace all     Indiana qualified as “green,”46 even though
                                      pected increase in water flow in one part     individual collection bins (the contents of     a substantially higher percentage of such
                                      of the building, employees located and        which had gone to incineration with heat        products were available.
AND TRANSPARENTLY                     repaired a broken pipe, saving 11 mil-        recovery), replaced paper and plastic cups
                                      lion liters of water that would have been     with glass and china, and diverted residual     During 2010, Lilly worked with our main
SUPPORTING STRONG WORKPLACE           wasted annually. By the end of 2010, the      landfill waste to a waste-to-energy facil-      office supply vendor to assess opportunities
PRACTICES                             site had reduced water intake by 50 percent   ity. Due to these efforts, since the fourth     to improve in this area. After challenging
                                      compared with 2006, saving more than 20       quarter of 2010 the site has sent zero waste    the vendor to provide more information
ENGAGING WITH PATIENTS AND            million liters of water annually.             to landfill, compared to more than 60 metric    about cost-competitive alternatives, we
COMMUNITIES                                                                         tons in 2009, while increasing the volume of    modified our selections in several categories,
                                      ACHIEVING ZERO WASTE TO LANDFILL              materials (such as cans, bottles, and paper)    including pens, binders, memo pads/
FOSTERING ENVIRONMENTAL                                                                                                             notebooks, envelopes, file folders, and
                                      Through numerous initiatives, the Erl Wood    that the site recycles.
SUSTAINABILITY                                                                                                                      laminate end tabs. This increased our
                                      site has reduced waste sent to landfill by
                                                                                                                                    green purchasing level to 33 percent
 Commitment and Approach
                                                                                                                                    across Indiana.
 Product Stewardship
                                                                                                                                    We are currently implementing several
• Performance in Operations                                                                                                         additional initiatives that will further elevate
                                                                                                                                    our green purchasing rate during 2011
 Summary Data Table                                                                                                                 throughout Indiana, including:
ABOUT THIS REPORT                                                                                                                   • Offering as an option a new brand of office
                                                                                                                                      copier paper that contains 30 percent
GLOBAL REPORTING INITIATIVE INDEX                                                                                                     post-consumer recycled content,
UNITED NATIONS GLOBAL COMPACT INDEX                                                                                                 • Substituting “green” alternatives for more
                                                                                                                                      items, and
                                                                                                                                    • Removing selected non-green alternatives
                                                                                                                                      from the e-catalog used by our clerical
                                                                                                                                    For information about Lilly’s standards in
                                                                                                                                    product packaging, see page 71.

                                                                                                                                      	According	to	the	definition	of	environmentally	preferable	

                                      The	“wormery”	at	our	Erl	Wood	site.

     PAGE 80                                                                                                                          LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                      Air Emissions                                   POLLUTANT                    2007      2008 2009 2010
ABOUT LILLY                           metric tons                                     Volatile Organic               526      560      549      626
OUR APPROACH TO CORPORATE                                                             Compounds
RESPONSIBILITY                                                                        (metric tons)
ENHANCING ACCESS TO MEDICINES                                                         Particulate Matter             311      293      384      200
                                      2,500                                           (metric tons)
                                                                                      SO2 (metric tons)            3,137    3,188 2,589 2,015
                                                                                      NOx (metric tons)            1,205    1,322 1,125         877
AND TRANSPARENTLY                     1,500
                                                                                      Ozone-Depleting                795    2,37647    749      790     View	of	Kinsale	Harbor.
SUPPORTING STRONG WORKPLACE           1,000                                           Substances (poten-
                                                                                      tial) (kg CFC-11                                                    Understanding Aquatic Life in
                                                                                      equivalent)                                                       Kinsale Harbor, Ireland
COMMUNITIES                               0                                                                                                             We have commissioned a long-term study
                                                                                           The	value	during	this	year	was	elevated	compared	to	other	
                                               2007      2008         2009   2010          years	due	to	a	high	amount	of	chiller	maintenance	at	two	    of Kinsale Harbor near our manufacturing
FOSTERING ENVIRONMENTAL                                                                    manufacturing	sites.                                         site in southern Ireland. This study, ongoing
SUSTAINABILITY                           SO2                                                                                                            since 1978 and conducted by researchers at
                                         NOx                                                                                                            National University of Ireland, Galway, has
 Commitment and Approach
                                         Volatile Organic Compounds                                                                                     suggested that the minor changes observed
 Product Stewardship                                                                                                                                    in the aquatic life of Kinsale Harbor are asso-
                                         Particulate Matter
                                                                                                                                                        ciated with natural stresses, such as storm
• Performance in Operations
                                                                                                                                                        events, rather than any discharge effects
 Summary Data Table                                                                                                                                     from our facility. Overall, the ecologic system
                                                                                      Biodiversity                                                      of the harbor has shown a high measure of
                                      Other Air Emissions
                                                                                                                                                        resilience and an ability to thoroughly handle
                                      During the last decade, Lilly has reduced       Lilly recognizes that biodiversity is an                          wastewater discharges.
GLOBAL REPORTING INITIATIVE INDEX     emissions of volatile organic compounds         increasingly important sustainability issue.
                                      (VOCs) by 53 percent, particulate matter by     Lilly has a long history of working collab-                         Preserving Ecological Habitat in
                                      67 percent, and ozone-depleting substances      oratively to protect habitat and minimize the                     Guayama, Puerto Rico
                                      by 54 percent. Today, the company’s other       impact of our operations on ecosystems. We
                                                                                                                                                        Our facility in Guayama, Puerto Rico,
                                      significant air emissions include nitrogen      pursue a decentralized approach, recogniz-
                                                                                                                                                        includes about 10 acres within its grounds
                                      oxides (NOx) and sulfur dioxide (SO2) result-   ing the variation in biodiversity challenges
                                                                                                                                                        as an ecological habitat conservation area, to
                                      ing from the combustion of natural gas, oil,    and opportunities based on location, and we
                                                                                                                                                        help preserve and restore the vibrant plant
                                      and coal. Lilly’s continued focus on improv-    engage in conservation projects and habitat
                                                                                                                                                        life in this country. The space is divided into
                                      ing energy efficiency and reducing GHG          enhancements at many sites worldwide. We
                                                                                                                                                        three areas:
                                      emissions is expected to further decrease       also support conservation efforts in the com-
                                      the levels of NOx and SO2 emissions during      munities where our facilities are located.                        • EDUCATION—This zone, about two acres,
                                      the coming years.                                                                                                   features a system of paths that students
                                                                                      Based on studies such as the one conducted
                                                                                                                                                          and others use to observe and learn about
                                      Emissions decreased from 2007 to 2010 in all    at Kinsale Harbor, discussed below, we
                                                                                                                                                          the ecological services provided by native
                                      categories reported except VOCs (see graph      believe that Lilly operations have limited
                                                                                                                                                          trees such as Ceiba, Dormilón, Guácima,
                                      above). That increase was due to increased      impact on biodiversity.
                                                                                                                                                          Mamey, and Ucar.
                                      production rates for selected products.

     PAGE 81                                                                                                                                              LILLY 2010 CORPORATE RESPONSIBILITY REPORT





                                      Walking	paths	in	the	education	area	at	our	site	in	Guayama,	   At	Lilly’s	site	in	Augusta,	Georgia,	several	ponds	provide	   At	the	Augusta	property,	sunflowers	provide	food,	pollina-
SUPPORTING STRONG WORKPLACE           Puerto	Rico.                                                   water	for	wildlife	species.                                   tion,	and	cover	for	many	different	species.

ENGAGING WITH PATIENTS AND            • REFORESTATION—In this four-acre sec-                         process that enables any organization that                      cover crops into existing areas so as not to
COMMUNITIES                             tion of the property, we are restoring                       owns or manages land to assess its impact                       disturb already established habitat. This
                                        vegetation that previously thrived locally                   on the natural world, improve its contribu-                     includes 28 different types of seeds—such
                                        before being cleared for farming. This                       tion to the environment, and demonstrate                        as wildflower mix, corn, sunflowers, Egyp-
                                        includes a mosaic of endemic and exotic                      its commitment to biodiversity. (See www.                       tian wheat, Japanese millet, switch grass,
 Commitment and Approach
                                        native trees such as Guayacán, Higüero,                                       and chicory—to provide food and cover all
                                        and Ortegón, as well as several species                      corporate:biodiversity:whatisit for more                        year long.
 Product Stewardship                    of cactus.                                                   on the Wildlife Trusts.)                                      • 40 acres are covered by reclaimed native
• Performance in Operations           • PRESERVATION—This area, also about                                                                                           grasses and open shrubs.
                                        four acres, has no paths or other infra-                       Enhancing Biodiversity in Georgia,
                                                                                                     United States                                                 • 35 acres are left fallow for future develop-
 Summary Data Table                     structure, and is only viewable from a                                                                                       ment, and are covered with several types
                                        distance. It is designed to be undisturbed                   Lilly’s manufacturing site in Augusta,                          of weeds and shrubs to provide bedding,
                                        and allow natural processes to take their                    Georgia, manages a 650-acre farm in Burke                       escape cover, nesting, and brood-rearing
GLOBAL REPORTING INITIATIVE INDEX       course.                                                      County. The facility’s wildlife habitat commit-                 areas for quail and other native species of
                                                                                                     tee focuses on enhancing biodiversity at the                    birds.
                                      Employees who have received training pro-
UNITED NATIONS GLOBAL COMPACT INDEX                                                                  site through the implementation of its wild-
                                      vide interpretive services at the site as a part                                                                             • 105 acres of open areas provide habitat
                                                                                                     life management plan. We recently exceeded
                                      of guided environmental tours.                                                                                                 development.
                                                                                                     our habitat challenge goal to enhance or
                                                                                                     restore at least 10 acres, by improving more                  • 110 acres are covered in large trees.
                                        Assessing Biodiversity in Surrey,
                                      United Kingdom                                                 than 25 acres through activities such as                      • 20 acres are covered in ponds.
                                                                                                     removing and replacing non-native plants
                                      Lilly’s research and development site in                                                                                     The property was certified to the Wildlife
                                                                                                     with native perennials and increasing water-
                                      Surrey, United Kingdom, is located in a rural                                                                                Habitat Council’s Wildlife at Work and Corpo-
                                                                                                     shed buffers.
                                      area that includes substantial numbers of                                                                                    rate Lands for Learning certifications in 2009
                                      trees and shrubs. Lilly has undertaken sev-                    Some of the land is farmed using conven-                      and recertified in 2010. Educational activi-
                                      eral biodiversity studies at the site over the                 tional planting methods. In addition:                         ties have included demonstrating habitat
                                      last 10 years, including audits of trees, bats,                                                                              enhancement techniques to local farmers,
                                                                                                     • 30 acres are cultivated using primarily
                                      small mammals, and badgers. The facility                                                                                     hosting events for youth and Lilly employees
                                                                                                       no-till methods to prevent erosion and
                                      gained certification to the Wildlife Trusts’                                                                                 at the site, and others.
                                                                                                       decrease soil disturbance. We also broad-
                                      Biodiversity Benchmark in March 2010. The                        cast (distribute seeds from a distance)
                                      Biodiversity Benchmark is a management

     PAGE 82                                                                                                                                                         LILLY 2010 CORPORATE RESPONSIBILITY REPORT

                                                                                                                                                                    THE INDIANAPOLIS PRIZE
                                                                                                                                                                    The Lilly Foundation has provided funding for
                                                                                                                                                                    the prestigious Indianapolis Prize, the world’s
ENHANCING ACCESS TO MEDICINES                                                                                                                                       leading award for animal conservation, since
                                                                                                                                                                    the award’s founding in 2006. The recogni-
DEVELOPING INNOVATIVE MEDICINES                                                                                                                                     tion is given every other year to an individual
                                                                                                                                                                    who has made extraordinary contributions to
CONDUCTING OUR BUSINESS ETHICALLY                                                                                                                                   conservation efforts involving a single animal
AND TRANSPARENTLY                                                                                                                                                   species or multiple species. In addition to the
                                      Great	blue	heron	and	egrets	flying	over	the	wetland	habitat	   An	8,700-square-foot	green	roof	at	Lilly’s	corporate	center	   $100,000 unrestricted cash prize, the winner
SUPPORTING STRONG WORKPLACE           at	Lilly’s	manufacturing	site	in	Clinton,	Indiana.             in	Indianapolis,	Indiana.                                      receives the prestigious Lilly Medal.
                                                                                                                                                                    In 2010, Save the Elephants founder Iain
ENGAGING WITH PATIENTS AND              Demonstrating the Affinity of                                other environmental partners will work with
                                                                                                                                                                    Douglas-Hamilton, Ph.D., received the award in
COMMUNITIES                           Conservation and Farming in Indiana,                           employee volunteers to plant at least 20,000
                                                                                                                                                                    recognition of his lifetime achievements. During
                                      United States                                                  flood-tolerant trees along the banks of the
                                                                                                                                                                    the last four decades, Dr. Douglas-Hamilton’s
FOSTERING ENVIRONMENTAL                                                                              river, flood and maintain the wetland areas,
                                      In early 2011, we introduced a project that                                                                                   efforts have included breakthrough scientific
SUSTAINABILITY                                                                                       and plant grasses among prairies. These
                                      will showcase the compatibility of conserva-                                                                                  studies in elephant social behavior, GPS-based
                                                                                                     areas are targeted to be accessible to the
                                      tion and farming, while protecting more than                                                                                  elephant tracking methods, leadership of
 Commitment and Approach                                                                             public via parking areas and hiking trails in
                                      300 acres at Lilly’s manufacturing facility in                                                                                emergency anti-poaching efforts in Uganda, tes-
                                                                                                     the fall of 2012.
 Product Stewardship                  Clinton, Indiana.                                                                                                             tifying before the U.S. Congress about elephant
                                                                                                                                                                    issues on numerous occasions, and extensive
• Performance in Operations           A conservation easement will forever protect                     Supporting Biodiversity at Global
                                                                                                                                                                    other activities benefitting the species.
                                      approximately 300 acres between Lilly’s                        Headquarters in Indiana, United States
 Summary Data Table                                                                                                                                                 Other finalists in 2010 included Gerardo
                                      Clinton Laboratories and the Wabash River.                     At our global headquarters in Indianapolis,
                                      The site will feature several wildlife habitat                                                                                Ceballos (National Autonomous University of
ABOUT THIS REPORT                                                                                    Indiana, Lilly’s Sustainability Garden occu-
                                      and buffer areas, including:                                                                                                  Mexico), Rodney Jackson (Snow Leopard Con-
                                                                                                     pies nearly four acres of land where alleys,
                                                                                                                                                                    servancy), Laurie Marker (Cheetah Conserva-
GLOBAL REPORTING INITIATIVE INDEX                                                                    roads, and buildings used to stand. In 2009,
                                      • 46 acres of native grass plantings,                                                                                         tion Fund), Carl Safina (Blue Ocean Institute),
                                                                                                     Lilly reclaimed and reused 10,000 bricks
UNITED NATIONS GLOBAL COMPACT INDEX   • 31 acres of restored wetlands,                                                                                              and Amanda Vincent (Project Seahorse).
                                                                                                     and recycled 327 metric tons of asphalt and
                                      • 28 acres of tree plantings,                                  163 metric tons of concrete to develop the
                                      • four acres of research area plantings,                       garden. The site contains more than 32,000
                                      • three miles of trails, and                                   native plants, trees, and shrubs, which
                                                                                                     require less water and chemical fertilizer to
                                      • 126 acres in the center of the restoration                   thrive. The walking path through the garden
                                        that will continue to be farmed.                             acts as a biofilter and channels storm water
                                      The demonstration project, which is part of                    into the subsoil. The garden reduces storm-
                                      the state of Indiana’s Healthy Rivers Initia-                  water runoff into city sewers by an estimated
                                      tive along the Wabash River, will show how                     13.2 million liters per year.
                                      wildlife habitat can be created to buffer the                  Also at the corporate headquarters, Lilly has
                                      river and allow farming to continue on land                    installed four green roofs on buildings since                  Iain	Douglas-Hamilton	(left)	taking	blood	and	hair	
                                      prone to flooding.                                             2009, representing a total of 21,000 square
                                                                                                                                                                    samples	from	an	anaesthetized	elephant,	in	prepara-
                                                                                                                                                                    tion	to	add	a	GPS	collar	as	part	of	a	project	to	track	
                                      During the next year, Lilly, the Indiana                       feet. These roofs lessen weather’s eroding                     elephants	and	protect	them	from	poachers	and	
                                                                                                     effects on buildings and reduce the urban                      land-use	conflicts	in	Africa.	Credits:	Photographer	
                                      Department of Natural Resources, and                                                                                          Matt	Mays	and	the	Indianapolis	Zoo.

     PAGE 83                                                                                                                                                        LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                                                                               ENVIRONMENTAL COMPLIANCE

ABOUT LILLY                                                                                                                                                                  2007            2008             2009             2010

OUR APPROACH TO CORPORATE                                                                          Reported Permit Limit Exceedances48                                          43              27               16               11
                                                                                                   Number of Significant Spills49                                                0                0                0                0
                                                                                                   Environmental Fines Paid ($)                                         $96,900                 $0        $12,000           $1,200
DEVELOPING INNOVATIVE MEDICINES                                                                    48	
                                                                                                         	 Reportable	permit-limit	exceedances”	are	environmental	releases	to	air,	water,	or	land	outside	of	regulatory	limits.	These	
                                                                                                         do	not	necessarily	result	in	harm	to	people	or	the	environment.
                                                                                                     	 Significant	spill”	in	this	report	refers	to	any	unexpected,	unintended,	abnormal,	or	unapproved	dumping,	leakage,	drainage,	
AND TRANSPARENTLY                                                                                    seepage,	discharge,	or	other	loss	of	a	substance	that	resulted	in	damage	to	the	environment	(i.e.,	human	health,	aquatic	
                                      A	walkway	provides	employee	and	visitor	access	to	explore	     life,	or	wildlife)	or	a	material	event	requiring	reporting	to	the	U.S.	Securities	and	Exchange	Commission.	Damage	means	
SUPPORTING STRONG WORKPLACE           one	of	the	green	roofs.	                                       the	actual	or	imminent	alteration	of	the	environment	so	as	to	render	the	environment	harmful,	detrimental,	or	injurious.

                                      heat island effect commonly seen in cities. A                caused by permit-limit exceedances. These                            Awards and Recognition
                                      green roof also improves air quality and pro-                processes include wastewater collection and
                                      motes biodiversity by providing another place                treatment, air pollution control, incineration,                      • Newsweek Green Rankings, listed as the
SUSTAINABILITY                        for plants to thrive. The plants on Lilly’s                  and steam generation at Lilly facilities.                              58th greenest U.S. company (2010)
                                      green roofs include 11 types of drought-                                                                                          • Keep Indianapolis Beautiful, Donor of the
                                                                                                   Reportable permit-limit exceedances
 Commitment and Approach              resistant sedum plants, specially selected                                                                                          Year (2010)
                                                                                                   decreased from 43 in 2007 to 11 in 2010, a 74
                                      for the Midwest climate. Not only do these                                                                                        • Indiana Governor’s Environmental Excel-
 Product Stewardship                                                                               percent reduction and the lowest level ever
                                      roofs prevent approximately 1.7 million liters                                                                                      lence Award, Land Use category winner
                                                                                                   reported by the company. Of the exceedances
• Performance in Operations           of stormwater from entering the city’s sewer                                                                                        (2010)
                                                                                                   in 2010, one related to air and 10 related to
                                      systems annually, they also extend the lives
 Summary Data Table                                                                                water. Four occurred in the United King-                             • Chemical Industry Awards, EDF Energy
                                      of the roofs’ infrastructure by up to 10 years.
                                                                                                   dom, three in Puerto Rico, two in the United                           Low Carbon Award, U.K., short-listed
ABOUT THIS REPORT                                                                                  States, and one each in France and Ireland.                            (2011)
                                      Environmental Compliance                                     During routine inspections in 2006 and 2007,                         • SustainIndy Finalist in two categories
                                      Lilly’s policy is to comply with all health,                 the U.S. Environmental Protection Agency                               (Land and Water) (2011)
UNITED NATIONS GLOBAL COMPACT INDEX   safety, and environment regulations wher-                    identified potential weaknesses in our leak                          • Puerto Rico Manufacturing Association,
                                      ever we do business. We believe compliance                   detection and repair program at our Lilly                              Gold and Silver Medal award winner for
                                      is foundational in maintaining our facilities’               technology center facility in Indianapolis,                            non-hazardous waste reduction and recy-
                                      “right-to-operate” in their local communi-                   Indiana. In addition, in 2006 we voluntarily                           cling (2011)
                                      ties. (See page 64 for more information                      reported to the state and city environmental
                                      about our HSE policies, standards, and                       agencies that we had exceeded an annual
                                      management systems.) If it is determined                     limit for air emissions. In response to these
                                      that we are out of compliance, we work to                    events, we have implemented numerous
                                      remedy the situation as quickly as possible.                 corrective actions and enhancements to our
                                                                                                   environmental programs. We paid a penalty
                                      We use environmental capability assess-                      of $337,500 in early 2011 to settle the case.
                                      ments to apply statistical process-control                   There was no harm done to employees,
                                      techniques to environmental processes to                     neighbors, or the environment as a result of
                                      reduce the number of environmental events                    these events.

     PAGE 84                                                                                                                                                               LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                                                                                                                                   2007        2008         2009         2010
RESPONSIBILITY                        ENERGY USE
                                      Energy Consumption (million BTUs)                                                                       12,900,000 11,900,000 11,300,000 11,200,000
                                      Energy Intensity (thousand BTUs/square foot)                                                                  593         562          543          520
                                      Energy Intensity (million BTUs/million $ revenue)                                                             692         584          517          485
CONDUCTING OUR BUSINESS ETHICALLY     Direct Energy Consumption (million BTUs)                                                                 4,670,000   4,510,000   4,230,000    4,190,000
                                         Coal (million BTUs)                                                                                   1,410,000   1,290,000   1,140,000    1,280,000
SUPPORTING STRONG WORKPLACE              Natural Gas (million BTUs)                                                                            2,480,000   2,400,000   2,400,000    2,200,000
                                         Fuel Oil (million BTUs)                                                                                768,000     801,000      661,000      687,000
ENGAGING WITH PATIENTS AND               Liquid Propane (million BTUs)                                                                           18,600      21,500       29,600       22,700
                                      Indirect Energy Consumption (million BTUs)                                                               8,240,000   7,360,000   7,120,000    7,000,000
FOSTERING ENVIRONMENTAL                  Purchased Electricity (million BTUs)                                                                  4,630,000   4,500,000   4,350,000    4,310,000
                                         Purchased Steam (million BTUs)                                                                        2,990,000   2,610,000   2,310,000    2,200,000
 Commitment and Approach                 Purchased Chilled Water (million BTUs)                                                                 619,000     254,000      449,000      491,000
 Product Stewardship                  GREENHOUSE GAS EMISSIONS

 Performance in Operations
                                      Greenhouse Gas Emissions (Scope 1 and Scope 2) (metric tons CO2e)                                        1,810,000   1,740,000   1,670,000    1,620,000
                                         Scope 1                                                                                                513,000     500,000      478,000      455,000
• Summary Data Table
                                         Scope 2                                                                                               1,300,000   1,240,000   1,190,000    1,170,000
                                      Greenhouse Gas Emissions Intensity (kg CO2e/square foot)                                                      83.1        82.6         79.8        75.3
GLOBAL REPORTING INITIATIVE INDEX     Greenhouse Gas Emissions Intensity (metric tons CO2e/million $ revenue)                                       97.1        85.4         76.5        70.2

                                      Scope 3 Emissions (not included in metrics above)        52

                                         Employee Business Travel (personal car, taxi, rental car, rail, and air travel) (metric tons CO2e)      65,000      65,000       63,000       72,000
                                         Employee Commuting (metric tons CO2e)                                                                   76,000      76,000       76,000       72,000
                                         Product Transportation and Distribution (contracted) (metric tons CO2e)                                 30,000      26,000       39,000       43,000
                                         Waste Generated in Operations (metric tons CO2e)                                                        18,000      14,000       11,000       17,000
                                         Non-Kyoto Compound Emissions (refrigerants, VOCs, etc.) (metric tons CO2e)                              14,000      33,000       15,000       23,000
                                      WATER USE
                                      Water Intake (billion liters)53                                                                               19.6        17.6         13.2        13.3
                                         Municipal (billion liters)                                                                                                                      10.4
                                         Surface (billion liters)                                                                                                                             0
                                         Groundwater (billion liters)                                                                                                                      2.9
                                      Water Intensity (million liters/million $ revenue)                                                            1.05       0.864       0.605        0.576
                                      See	footnotes	on	following	page.                                                                                                                  (cont’d)

     PAGE 85                                                                                                                                        LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                                                                                                                                                         2007              2008              2009              2010
ABOUT LILLY                           WASTE
                                      Waste Generation (metric tons)                                                                                                 379,000           387,000          287,000           228,000
RESPONSIBILITY                             Hazardous Waste Generation (metric tons)                                                                                   53,800            55,500            46,400            31,000
                                           Non-Hazardous Waste Generation (metric tons)                                                                              325,000           331,000          241,000           197,000
                                      Waste Generation Intensity (metric tons/million $ revenue)                                                                          20.3             19.0              13.1              9.88
                                      Waste Disposition
CONDUCTING OUR BUSINESS ETHICALLY          Beneficially Reused (metric tons)                                                                                         253,900           198,700          201,600           148,800
                                           Recycled (includes incineration with energy recovery) (metric tons)                                                        31,500           102,000            28,800            45,000
SUPPORTING STRONG WORKPLACE                Treated (includes incineration without energy recovery) (metric tons)                                                      49,100            49,700            35,600            12,300
                                           Landfilled (metric tons)                                                                                                   44,700            32,600            21,200            22,100
ENGAGING WITH PATIENTS AND                 Landfilled (related to goal) (metric tons)54                                                                               32,000            22,300            14,800            15,900
                                      OTHER AIR EMISSIONS
FOSTERING ENVIRONMENTAL               Volatile Organic Compound Emissions (metric tons)                                                                                   526               560               549               626
                                      Particulate Matter (metric tons)                                                                                                    311               293               384               200
 Commitment and Approach              SO2 Emissions (metric tons)                                                                                                       3,137             3,188             2,589             2,015

 Product Stewardship                  NOx Emissions (metric tons)                                                                                                       1,205             1,322             1,125               877

 Performance in Operations
                                      Ozone-Depleting Substances Potential (kg CFC-11 equivalent)                                                                         795             2,376               749               790
                                      ENVIRONMENTAL COMPLIANCE
• Summary Data Table
                                      Reportable Permit-Limit Exceedances55                                                                                                 43                27                16                11
                                      Number of Significant Spills           56
                                                                                                                                                                              0                 0                 0                 0
GLOBAL REPORTING INITIATIVE INDEX     Environmental Fines Paid ($)                                                                                                  $96,900                   $0        $12,000             $1,200
                                      ENERGY, WASTE, AND NATURAL RESOURCE REDUCTION FUND
                                      Expenditures ($ millions)                                                                                                             $0             $6.5              $5.7              $4.1

                                       	Some	segments	do	not	add	up	to	totals	due	to	rounding.
                                                                                                                                        	Our	former	and	current	waste-to-landfill	goals	do	not	include	construction	and	demolition	

                                       	Energy	use,	greenhouse	gas	emissions	(except	Scope	3),	and	water-use	data	are	reported	
                                      51                                                                                                 debris,	biosolids	from	wastewater	treatment	plants,	incinerator	ash,	coal	ash	if	reused	for	
                                        on	an	adjusted	basis	accounting	for	mergers,	acquisitions,	and	divestitures.	The	other	data	     mine	reclamation	or	road	base,	and	mycelia	and	urea	reused	for	fertilizer.
                                        in	this	table	are	nonadjusted.                                                                  	“Reportable	permit-limit	exceedances”	are	environmental	releases	to	air,	water,	or	land	

                                       	These	data	do	not	include	sales-force	travel	using	company	vehicles,	use	of	Lilly	aircraft,	
                                      52                                                                                                 outside	of	regulatory	limits.	These	do	not	necessarily	result	in	harm	to	people	or	the	
                                        or	product	distribution	with	Lilly	vehicles.	Those	items	are	Scope	1	and	included	in	the	        environment.
                                        data	above.                                                                                     	“Significant	spill”	in	this	report	refers	to	any	unexpected,	unintended,	abnormal,	or	unap-

                                       	“Water	intake”	as	used	in	evaluating	our	progress	toward	our	water-reduction	goal	is	
                                      53                                                                                                 proved	dumping,	leakage,	drainage,	seepage,	discharge,	or	other	loss	of	a	substance	
                                        the	total	amount	of	water	coming	into	a	facility,	including	water	pumped	from	bodies	of	         that	resulted	in	damage	to	the	environment	(i.e.,	human	health,	aquatic	life,	or	wildlife)	
                                        surface	water	and	groundwater,	and	water	provided	by	a	utility.	It	includes	water	used	in	       or	a	material	event	requiring	reporting	to	the	U.S.	Securities	and	Exchange	Commission.	
                                        processes,	utilities,	and	other	ancillary	operations,	such	as	irrigation.	The	term	does	not	     Damage	means	the	actual	or	imminent	alteration	of	the	environment	so	as	to	render	the	
                                        include	groundwater	pumped	solely	for	treatment	to	satisfy	regulatory	actions	or	require-        environment	harmful,	detrimental,	or	injurious.
                                        ments	(e.g.,	remediation	activities	where	the	water	is	not	used	for	another	purpose).	
                                        Values	do	not	include	the	water	extracted	from	wells	solely	for	the	purpose	of	lowering	the	
                                        groundwater	table(s)	to	maintain	the	physical	and	structural	integrity	of	building	founda-
                                        tions.	Data	for	breakdown	of	water	intake	by	source	are	not	available	prior	to	2010.

     PAGE 86                                                                                                                                                              LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                      ABOUT THIS REPORT



                                      This is Eli Lilly and Company’s 2010 Corporate Responsibility                                framework widely used around the world.
DEVELOPING INNOVATIVE MEDICINES                                                                                                    The GRI’s core goals include the main-
                                      Report. It is an important expression of our commitment to                                   streaming of disclosure on environmental,
CONDUCTING OUR BUSINESS ETHICALLY     transparency and accountability and a tool for dialogue with our                             social, and governance performance. An
AND TRANSPARENTLY                                                                                                                  index to GRI indicators in this report is
                                      stakeholders. The report builds on Lilly’s recent Communication
                                                                                                                                   included on page 88. More information
SUPPORTING STRONG WORKPLACE           on Progress to the United Nations Global Compact (UNGC),                                     about the GRI and the application levels can
                                      issued in December 2010. Lilly will continue to report annually                              be found at
ENGAGING WITH PATIENTS AND            its Communication on Progress and will update its Corporate                                  This report also serves as Lilly’s annual
                                      Responsibility Report on a regular basis.                                                    Communication on Progress for the United
                                                                                                                                   Nations Global Compact, of which Lilly is
                                      Data contained in this report are for the     collect and report. For example, following     a signatory. The UNGC is a strategic policy
                                      2010 calendar year and include global         guidance from the World Resources Institute,   initiative for businesses that are committed
ABOUT THIS REPORT                     operations, unless otherwise noted. We also   we report progress toward environmental        to aligning their operations and strategies
                                      discuss significant events that occurred      goals on an adjusted basis accounting for      with 10 universally accepted principles
GLOBAL REPORTING INITIATIVE INDEX     in the first half of 2011. This report does   mergers, acquisitions, and divestitures as     in the areas of human rights, labor, the
                                      not include joint ventures, partially owned   appropriate, to ensure comparability, unless   environment, and anti-corruption. An index
                                      subsidiaries, leased facilities, outsourced   stated otherwise. Our global health, safety,   to the UNGC indicators in this report can be
                                      operations, or other items, unless such       and environment management system is           found on page 103. More information about
                                      business arrangements would affect the        certified by an independent, accredited        the UNGC can be found at www.unglobal
                                      intent of this report.                        auditor in accordance with the American
                                                                                    Chemistry Council’s Responsible Care Man-      We welcome feedback on this report, as it
                                      Our financial information is prepared
                                                                                    agement System requirements.                   helps us to improve future reports. Please
                                      according to the Generally Accepted
                                      Accounting Principles (GAAP) in the United    In some parts of the report, such as the       contact:
                                      States and is subject to our own internal     Fostering Environmental Sustainability
                                      accounting control systems as well as         section, we have significantly expanded the    ROBERT SMITH
                                      external third-party audits. Unless other-    metrics we include. This provides a more       SENIOR DIRECTOR, CORPORATE RESPONSIBILITY,
                                      wise noted, all dollar amounts given are in   complete description of the company’s per-     AND PRESIDENT OF THE LILLY FOUNDATION
                                      U.S. dollars.                                 formance and addresses our stakeholders’       EMAIL:
                                                                                    increasing interest in this information.       PHONE:   317-276-2000
                                      The content and data in this report have
                                      not been externally verified. Lilly follows   This report is aligned with the Global
                                      structured processes to collect, evaluate,    Reporting Initiative (GRI) G3 Guidelines,
                                      and calculate the data we report, to ensure   at the B application level. The GRI is a
                                      appropriateness and accuracy. We consider     network-based organization that produces
                                      external standards in deciding what data to   a comprehensive sustainability reporting

    PAGE 87                                                                                                                          LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                      GLOBAL REPORTING


                                      INITIATIVE INDEX



                                      Standard Disclosures Part I: Profile Disclosures
PRACTICES                             Reporting Key:     Fully       Partially      Not

COMMUNITIES                           PROFILE
                                      DISCLOSURE DESCRIPTION                                                            REPORTED CROSS-REFERENCE/DIRECT ANSWER

ABOUT THIS REPORT                     1.1          Statement from the most senior decision-maker of the organization.             page 2

GLOBAL REPORTING INITIATIVE INDEX     1.2          Description of key impacts, risks, and opportunities.                          page 2
                                                                                                                                  2010 10-K, pages 11-13
                                      2. ORGANIZATIONAL PROFILE

                                      2.1          Name of the organization.                                                      page 4

                                      2.2          Primary brands, products, and/or services.                                     page 4

    PAGE 88                                                                                                                   LILLY 2010 CORPORATE RESPONSIBILITY REPORT
ABOUT LILLY                           DISCLOSURE DESCRIPTION                                                                  REPORTED CROSS-REFERENCE/DIRECT ANSWER

                                      2.3        Operational structure of the organization, including main divisions,                   The Board of Directors of Eli Lilly and
RESPONSIBILITY                                   operating companies, subsidiaries, and joint ventures.                                 Company are elected by the com-
                                                                                                                                        pany’s shareholders to oversee the
ENHANCING ACCESS TO MEDICINES                                                                                                           actions and results of the company’s
                                                                                                                                        management. Lilly’s operational
DEVELOPING INNOVATIVE MEDICINES                                                                                                         structure includes five main business
                                                                                                                                        units: Lilly Bio-medicines, Lilly Dia-
CONDUCTING OUR BUSINESS ETHICALLY                                                                                                       betes, Lilly Emerging Markets, Lilly
AND TRANSPARENTLY                                                                                                                       Oncology, and Elanco Animal Health.
                                                                                                                                        Lilly Research Labs and the Develop-
                                                                                                                                        ment Center of Excellence compose
                                                                                                                                        the research and development areas
ENGAGING WITH PATIENTS AND                                                                                                              of the organization. Manufacturing
COMMUNITIES                                                                                                                             and Quality have responsibility for
                                                                                                                                        producing medicines and monitor-
FOSTERING ENVIRONMENTAL                                                                                                                 ing safety throughout our products
SUSTAINABILITY                                                                                                                          lifecycle. Additionally, the company
                                                                                                                                        is supported by general and admin-
ABOUT THIS REPORT                                                                                                                       istrative capabilities including key
                                                                                                                                        organizations such as finance, infor-
                                                                                                                                        mation technology, corporate affairs,
UNITED NATIONS GLOBAL COMPACT INDEX                                                                                                     and legal.
                                                                                                                                        For more information about our prod-
                                                                                                                                        ucts and partners, consult the 2010
                                                                                                                                        Annual Report on

                                      2.4        Location of organization's headquarters.                                               page 4

                                      2.5        Number of countries where the organization operates, and names of                      page 4
                                                 countries with either major operations or that are specifically relevant
                                                 to the sustainability issues covered in the report.

                                      2.6        Nature of ownership and legal form.                                                    page 4

                                      2.7        Markets served (including geographic breakdown, sectors served,                        pages 4, 32
                                                 and types of customers/beneficiaries).

                                      2.8        Scale of the reporting organization.                                                   page 4

                                      2.9        Significant changes during the reporting period regarding size, structure,             N/A
                                                 or ownership.

                                      2.10       Awards received in the reporting period.                                               pages 47, 51, 52, 55, 62, 84

                                      3.1        Reporting period (e.g., fiscal/calendar year) for information provided.                page 87

    PAGE 89                                                                                                                         LILLY 2010 CORPORATE RESPONSIBILITY REPORT
ABOUT LILLY                           DISCLOSURE DESCRIPTION                                                                     REPORTED CROSS-REFERENCE/DIRECT ANSWER

                                      3.2        Date of most recent previous report (if any).                                             page 87
                                      3.3        Reporting cycle (annual, biennial, etc.).                                                 page 87
                                      3.4        Contact point for questions regarding the report or its contents.                         page 87
DEVELOPING INNOVATIVE MEDICINES       3.5        Process for defining report content.                                                      page 5
CONDUCTING OUR BUSINESS ETHICALLY     3.6        Boundary of the report (e.g., countries, divisions, subsidiaries, leased                  page 87
AND TRANSPARENTLY                                facilities, joint ventures, suppliers). See GRI Boundary Protocol for further
PRACTICES                             3.7        State any specific limitations on the scope or boundary of the report                     page 87
                                                 (see completeness principle for explanation of scope).
COMMUNITIES                           3.8        Basis for reporting on joint ventures, subsidiaries, leased facilities,                   page 87
                                                 outsourced operations, and other entities that can significantly affect
                                                 comparability from period to period and/or between organizations.

                                      3.9        Data measurement techniques and the bases of calculations, including                      pages 64, 66, 86
                                                 assumptions and techniques underlying estimations applied to the com-
GLOBAL REPORTING INITIATIVE INDEX                pilation of the Indicators and other information in the report. Explain any
                                                 decisions not to apply, or to substantially diverge from, the GRI Indicator

                                      3.10       Explanation of the effect of any re-statements of information provided                    pages 66, 86
                                                 in earlier reports, and the reasons for such re-statement (e.g.,mergers/
                                                 acquisitions, change of base years/periods, nature of business, measure-
                                                 ment methods).

                                      3.11       Significant changes from previous reporting periods in the scope,                         Expanded data reported in Fostering
                                                 boundary, or measurement methods applied in the report.                                   Environmental Sustainability section

                                      3.12       Table identifying the location of the Standard Disclosures in the report.                 pages 88-102

                                      3.13       Policy and current practice with regard to seeking external assurance                     page 87
                                                 for the report.

                                      4. GOVERNANCE, COMMITMENTS, AND ENGAGEMENT

                                      4.1        Governance structure of the organization, including committees under the                  Proxy Statement, page 10
                                                 highest governance body responsible for specific tasks, such as setting
                                                 strategy or organizational oversight.

                                      4.2        Indicate whether the Chair of the highest governance body is also an                      Proxy Statement, page 7
                                                 executive officer.

    PAGE 90                                                                                                                            LILLY 2010 CORPORATE RESPONSIBILITY REPORT
ABOUT LILLY                           DISCLOSURE DESCRIPTION                                                                 REPORTED CROSS-REFERENCE/DIRECT ANSWER

                                      4.3        For organizations that have a unitary board structure, state the number               Proxy Statement, page 11
RESPONSIBILITY                                   of members of the highest governance body that are independent and/or
                                                 non-executive members.
                                      4.4        Mechanisms for shareholders and employees to provide recommendations                  Shareholders can communicate with
DEVELOPING INNOVATIVE MEDICINES                  or direction to the highest governance body.                                          the board of directors in writing via
                                                                                                                                       the corporate secretary’s office. In
CONDUCTING OUR BUSINESS ETHICALLY                                                                                                      general, formal mechanisms are not
AND TRANSPARENTLY                                                                                                                      in place for employees to make rec-
                                                                                                                                       ommendations directly to the board;
SUPPORTING STRONG WORKPLACE                                                                                                            however, the leadership team encour-
PRACTICES                                                                                                                              ages employees to provide feedback
                                                                                                                                       to management through a variety of
                                                                                                                                       communication channels, including
                                                                                                                                       a compliance hotline, internal town
FOSTERING ENVIRONMENTAL                                                                                                                hall style meetings, and on the CEO’s
SUSTAINABILITY                                                                                                                         blog. In addition, under the company’s
                                                                                                                                       processes for reporting suspected
ABOUT THIS REPORT                                                                                                                      ethics or compliance breaches, under
                                                                                                                                       certain circumstances designated
GLOBAL REPORTING INITIATIVE INDEX                                                                                                      employees are allowed or required to
                                                                                                                                       report the suspected breach directly
                                                                                                                                       to the relevant committee of the
                                                                                                                                       board of directors.

                                      4.5        Linkage between compensation for members of the highest governance                    Proxy Statement, page 17; There is
                                                 body, senior managers, and executives (including departure arrange-                   no explicit linkage between compen-
                                                 ments), and the organization's performance (including social and                      sation and social and environmental
                                                 environmental performance).                                                           performance

                                      4.6        Processes in place for the highest governance body to ensure conflicts of             page 26
                                                 interest are avoided.
                                                                                                                                       2010 10-K, page 73

                                      4.7        Process for determining the qualifications and expertise of the members               Proxy Statement, page 19
                                                 of the highest governance body for guiding the organization's strategy on
                                                 economic, environmental, and social topics.

                                      4.8        Internally developed statements of mission or values, codes of conduct,               pages 27, 64-65
                                                 and principles relevant to economic, environmental, and social perfor-
                                                                                                                                       Proxy Statement, page 13
                                                 mance and the status of their implementation.

    PAGE 91                                                                                                                        LILLY 2010 CORPORATE RESPONSIBILITY REPORT
ABOUT LILLY                           DISCLOSURE DESCRIPTION                                                                    REPORTED CROSS-REFERENCE/DIRECT ANSWER

                                      4.9        Procedures of the highest governance body for overseeing the organi-                     page 5
RESPONSIBILITY                                   zation's identification and management of economic, environmental,
                                                 and social performance, including relevant risks and opportunities, and
ENHANCING ACCESS TO MEDICINES                    adherence or compliance with internationally agreed standards, codes of
                                                 conduct, and principles.
                                      4.10       Processes for evaluating the highest governance body's own perfor-                       Proxy Statement, page 15
CONDUCTING OUR BUSINESS ETHICALLY                mance, particularly with respect to economic, environmental, and social
AND TRANSPARENTLY                                performance.

SUPPORTING STRONG WORKPLACE           4.11       Explanation of whether and how the precautionary approach or principle is                pages 71-72
PRACTICES                                        addressed by the organization.

ENGAGING WITH PATIENTS AND            4.12       Externally developed economic, environmental, and social charters, princi-               pages 2,17
COMMUNITIES                                      ples, or other initiatives to which the organization subscribes or endorses.

FOSTERING ENVIRONMENTAL               4.13       Memberships in associations (such as industry associations) and/or                       page 37
SUSTAINABILITY                                   national/international advocacy organizations in which the organization:
                                                 * Has positions in governance bodies; * Participates in projects or commit-
ABOUT THIS REPORT                                tees; * Provides substantive funding beyond routine membership dues; or
                                                 * Views membership as strategic.
                                      4.14       List of stakeholder groups engaged by the organization.                                  page 32
                                      4.15       Basis for identification and selection of stakeholders with whom to engage.              page 31

                                      4.16       Approaches to stakeholder engagement, including frequency of engage-                     pages 31-32
                                                 ment by type and by stakeholder group.

                                      4.17       Key topics and concerns that have been raised through stakeholder                        pages 31-32
                                                 engagement, and how the organization has responded to those key topics
                                                 and concerns, including through its reporting.

    PAGE 92                                                                                                                           LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                  Standard Disclosures Part II: Disclosures on Management Approach (DMAs)
ABOUT LILLY                           Reporting Key:       Fully     Partially      Not

                                      DMA EC       DISCLOSURE ON MANAGEMENT APPROACH EC
                                                   Economic performance                                     pages 2, 8
                                                                                                            2010 10-K, page 17
                                                                                                            2010 Annual Report, Executive Letter
                                                   Market presence                                          pages 8-9
PRACTICES                                          Indirect economic impacts                                pages 53-54
                                                   Materials                                                pages 69-71
SUSTAINABILITY                                     Energy                                                   pages 67, 73

ABOUT THIS REPORT                                  Water                                                    pages 67, 76

GLOBAL REPORTING INITIATIVE INDEX                  Biodiversity                                             page 81

UNITED NATIONS GLOBAL COMPACT INDEX                Emissions, effluents and waste                           pages 67, 73, 77, 81

                                                   Products and services                                    pages 68-72

                                                   Compliance                                               page 84

                                                   Transport                                                page 76

                                                   Overall                                                  pages 64-67

                                      DMA LA       DISCLOSURE ON MANAGEMENT APPROACH LA

                                                   Employment                                               pages 41-42

                                                   Labor/management relations                               pages 42, 48

                                                   Occupational health and safety                           pages 48-49

                                                   Training and education                                   pages 42-43

    PAGE 93                                                                                             LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                      G3 DMA   DESCRIPTION                                        REPORTED CROSS-REFERENCE/DIRECT ANSWER
                                               Diversity and equal opportunity                              pages 45-46
                                      DMA HR   DISCLOSURE ON MANAGEMENT APPROACH HR
                                               Investment and procurement practices                         pages 38-40
                                               Non-discrimination                                           pages 45, 47
                                               Freedom of association and collective bargaining             page 42
AND TRANSPARENTLY                              Child labor                                                  page 39

SUPPORTING STRONG WORKPLACE                    Forced and compulsory labor                                  page 39
                                               Security practices
COMMUNITIES                                    Indigenous rights

                                               Community                                                    pages 53-54
                                               Corruption                                                   pages 26-28
                                               Public policy                                                page 33
                                               Anti-competitive behavior

                                               Compliance                                                   pages 26-27

                                      DMA PR   DISCLOSURE ON MANAGEMENT APPROACH PR

                                               Customer health and safety                                   pages 16, 24-25

                                               Product and service labelling                                page 25

                                               Marketing communications                                     page 30

                                               Customer privacy                                             page 29

                                               Compliance                                                   pages 19, 28-29

    PAGE 94                                                                                             LILLY 2010 CORPORATE RESPONSIBILITY REPORT
MESSAGE FROM THE CEO                  Standard Disclosures Part III: Performance Indicators
ABOUT LILLY                           Reporting Key:       Fully      Partially      Not

RESPONSIBILITY                        DISCLOSURE DESCRIPTION                                                                      REPORTED CROSS-REFERENCE/DIRECT ANSWER



CONDUCTING OUR BUSINESS ETHICALLY     EC1           Direct economic value generated and distributed, including revenues,                    page 54
AND TRANSPARENTLY                                   operating costs, employee compensation, donations and other community
                                                                                                                                            2010 10-K, pages 12, 35
                                                    investments, retained earnings, and payments to capital providers
SUPPORTING STRONG WORKPLACE                         and governments.
                                      EC2           Financial implications and other risks and opportunities for the                        page 63
ENGAGING WITH PATIENTS AND                          organization’s activities due to climate change.
                                      EC3           Coverage of the organization’s defined benefit plan obligations.                        2010 10-K, pages 67-68
SUSTAINABILITY                        EC4           Significant financial assistance received from government.

ABOUT THIS REPORT                     Market presence

GLOBAL REPORTING INITIATIVE INDEX     EC5           Range of ratios of standard entry level wage compared to local minimum
                                                    wage at significant locations of operation.
                                      EC6           Policy, practices, and proportion of spending on locally-based suppliers at
                                                    significant locations of operation.

                                      EC7           Procedures for local hiring and proportion of senior management hired
                                                    from the local community at significant locations of operation.

                                      Indirect economic impacts

                                      EC8           Development and impact of infrastructure investments and services                       pages 8, 11, 14
                                                    provided primarily for public benefit through commercial, in-kind, or
                                                    pro bono engagement.

                                      EC9           Understanding and describing significant indirect economic impacts,                     page 54
                                                    including the extent of impacts.



                                      EN1           Materials used by weight or volume.

                                      EN2           Percentage of materials used that are recycled input materials.                         pages 70-71

    PAGE 95                                                                                                                             LILLY 2010 CORPORATE RESPONSIBILITY REPORT
ABOUT LILLY                           DISCLOSURE DESCRIPTION                                                                        REPORTED CROSS-REFERENCE/DIRECT ANSWER

                                      EN3            Direct energy consumption by primary energy source.                                      pages 73-76, 85
ENHANCING ACCESS TO MEDICINES         EN4            Indirect energy consumption by primary source.                                           pages 73-76, 85
DEVELOPING INNOVATIVE MEDICINES       EN5            Energy saved due to conservation and efficiency improvements.                            pages 73-76
CONDUCTING OUR BUSINESS ETHICALLY     EN6            Initiatives to provide energy-efficient or renewable energy based
AND TRANSPARENTLY                                    products and services, and reductions in energy requirements as a
                                                     result of these initiatives.
PRACTICES                             EN7            Initiatives to reduce indirect energy consumption and reductions achieved.               pages 73-76
                                      EN8            Total water withdrawal by source.                                                        pages 76-77, 85
SUSTAINABILITY                        EN9            Water sources significantly affected by withdrawal of water.                             page 76

ABOUT THIS REPORT                     EN10           Percentage and total volume of water recycled and reused.


UNITED NATIONS GLOBAL COMPACT INDEX   EN11           Location and size of land owned, leased, managed in, or adjacent to, pro-
                                                     tected areas and areas of high biodiversity value outside protected areas.

                                      EN12           Description of significant impacts of activities, products, and services on              pages 71-72, 81
                                                     biodiversity in protected areas and areas of high biodiversity value outside
                                                     protected areas.

                                      EN13           Habitats protected or restored.                                                          pages 81-84

                                      EN14           Strategies, current actions, and future plans for managing impacts                       pages 81-84
                                                     on biodiversity.

                                      EN15           Number of IUCN Red List species and national conservation list species
                                                     with habitats in areas affected by operations, by level of extinction risk.

                                      Emissions, effluents and waste

                                      EN16           Total direct and indirect greenhouse gas emissions by weight.                            pages 73-76, 85

                                      EN17           Other relevant indirect greenhouse gas emissions by weight.                              pages 73-76, 85

                                      EN18           Initiatives to reduce greenhouse gas emissions and reductions achieved.                  pages 73-76

    PAGE 96                                                                                                                               LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                      DISCLOSURE DESCRIPTION                                                                         REPORTED CROSS-REFERENCE/DIRECT ANSWER
                                      EN19          Emissions of ozone-depleting substances by weight.                                         pages 81, 86
RESPONSIBILITY                        EN20          NOx, SOx, and other significant air emissions by type and weight.                          pages 81, 86
ENHANCING ACCESS TO MEDICINES         EN21          Total water discharge by quality and destination.

DEVELOPING INNOVATIVE MEDICINES       EN22          Total weight of waste by type and disposal method.                                         pages 77-80, 86

CONDUCTING OUR BUSINESS ETHICALLY     EN23          Total number and volume of significant spills.                                             pages 84, 86
                                      EN24          Weight of transported, imported, exported, or treated waste deemed haz-
SUPPORTING STRONG WORKPLACE                         ardous under the terms of the Basel Convention Annex I, II, III, and VIII, and
PRACTICES                                           percentage of transported waste shipped internationally.

ENGAGING WITH PATIENTS AND            EN25          Identity, size, protected status, and biodiversity value of water bodies and
COMMUNITIES                                         related habitats significantly affected by the reporting organization’s dis-
                                                    charges of water and runoff.
SUSTAINABILITY                        Products and services

ABOUT THIS REPORT                     EN26          Initiatives to mitigate environmental impacts of products and services, and                pages 68-72
                                                    extent of impact mitigation.
                                      EN27          Percentage of products sold and their packaging materials that are
UNITED NATIONS GLOBAL COMPACT INDEX                 reclaimed by category.


                                      EN28          Monetary value of significant fines and total number of non-monetary                       pages 84, 86
                                                    sanctions for non-compliance with environmental laws and regulations.


                                      EN29          Significant environmental impacts of transporting products and other                       pages 73-76, 85
                                                    goods and materials used for the organization’s operations, and transport-
                                                    ing members of the workforce.


                                      EN30          Total environmental protection expenditures and investments by type.                       page 67

                                      SOCIAL: LABOR PRACTICES AND DECENT WORK


                                      LA1           Total workforce by employment type, employment contract, and region.                       page 41

    PAGE 97                                                                                                                                LILLY 2010 CORPORATE RESPONSIBILITY REPORT
ABOUT LILLY                           DISCLOSURE DESCRIPTION                                                                    REPORTED CROSS-REFERENCE/DIRECT ANSWER

                                      LA2           Total number and rate of employee turnover by age group, gender, and
RESPONSIBILITY                                      region.

                                      LA3           Benefits provided to full-time employees that are not provided to tempo-              page 42
                                                    rary or part-time employees, by major operations.
                                      Labor/management relations
                                      LA4           Percentage of employees covered by collective bargaining agreements.                  page 42
                                      LA5           Minimum notice period(s) regarding significant operational changes,                   page 44
                                                    including whether it is specified in collective agreements.
                                      Occupational health and safety
COMMUNITIES                           LA6           Percentage of total workforce represented in formal joint management-                 page 48
                                                    worker health and safety committees that help monitor and advise on
                                                    occupational health and safety programs.
                                      LA7           Rates of injury, occupational diseases, lost days, and absenteeism, and               pages 49-51
                                                    number of work-related fatalities by region.
GLOBAL REPORTING INITIATIVE INDEX     LA8           Education, training, counseling, prevention, and risk-control programs in             pages 49, 51
                                                    place to assist workforce members, their families, or community members
                                                    regarding serious diseases.

                                      LA9           Health and safety topics covered in formal agreements with trade unions.              pages 42, 48

                                      Training and education

                                      LA10          Average hours of training per year per employee by employee category.                 page 42

                                      LA11          Programs for skills management and lifelong learning that support the                 pages 42-43
                                                    continued employability of employees and assist them in managing career

                                      LA12          Percentage of employees receiving regular performance and career devel-               page 42
                                                    opment reviews.

                                      Diversity and equal opportunity

                                      LA13          Composition of governance bodies and breakdown of employees per                       pages 47-48
                                                    category according to gender, age group, minority group membership, and
                                                    other indicators of diversity.

                                      LA14          Ratio of basic salary of men to women by employee category.

                                      SOCIAL: HUMAN RIGHTS

    PAGE 98                                                                                                                           LILLY 2010 CORPORATE RESPONSIBILITY REPORT
ABOUT LILLY                           DISCLOSURE DESCRIPTION                                                                         REPORTED CROSS-REFERENCE/DIRECT ANSWER

                                      Diversity and equal opportunity
                                      HR1           Percentage and total number of significant investment agreements that
                                                    include human rights clauses or that have undergone human rights
                                      HR2           Percentage of significant suppliers and contractors that have undergone                    None of Lilly’s suppliers and con-
CONDUCTING OUR BUSINESS ETHICALLY                   screening on human rights and actions taken.                                               tractors have undergone a formal
AND TRANSPARENTLY                                                                                                                              screening on human rights, pages
                                                                                                                                               38-39 contain a discussion on human
SUPPORTING STRONG WORKPLACE                                                                                                                    rights in the supply chain.
                                      HR3           Total hours of employee training on policies and procedures concern-                       Every year, Lilly employees spend
ENGAGING WITH PATIENTS AND                          ing aspects of human rights that are relevant to operations, including the                 approximately 40,000 hours—a
COMMUNITIES                                         percentage of employees trained.                                                           minimum of one hour per person—
                                                                                                                                               undergoing mandatory training on
FOSTERING ENVIRONMENTAL                                                                                                                        our code of conduct. The Red Book
SUSTAINABILITY                                                                                                                                 covers a broad spectrum of basic
                                                                                                                                               human-rights issues.
                                      HR4           Total number of incidents of discrimination and actions taken.
                                      Freedom of association and collective bargaining

                                      HR5           Operations identified in which the right to exercise freedom of association
                                                    and collective bargaining may be at significant risk, and actions taken to
                                                    support these rights.

                                      Child labor

                                      HR6           Operations identified as having significant risk for incidents of child labor,             pages 38-39
                                                    and measures taken to contribute to the elimination of child labor.

                                      Forced and compulsory labor

                                      HR7           Operations identified as having significant risk for incidents of forced or                pages 38-39
                                                    compulsory labor, and measures to contribute to the elimination of forced
                                                    or compulsory labor.

    PAGE 99                                                                                                                                LILLY 2010 CORPORATE RESPONSIBILITY REPORT
ABOUT LILLY                           DISCLOSURE DESCRIPTION                                                                      REPORTED CROSS-REFERENCE/DIRECT ANSWER

                                      Security practices
                                      HR8            Percentage of security personnel trained in the organization’s policies                All security personnel worldwide,
                                                     or procedures concerning aspects of human rights that are relevant                     including contractors in the United
                                                     to operations.                                                                         States, are required to undergo our
DEVELOPING INNOVATIVE MEDICINES                                                                                                             code of conduct training, which cov-
                                                                                                                                            ers topics directly related to Lilly’s
CONDUCTING OUR BUSINESS ETHICALLY                                                                                                           core values of integrity, excellence,
AND TRANSPARENTLY                                                                                                                           and respect for people. The train-
                                                                                                                                            ing is not specifically directed at the
SUPPORTING STRONG WORKPLACE                                                                                                                 topic of human rights but is closely
PRACTICES                                                                                                                                   associated. Security personnel
                                                                                                                                            participate in diversity training to
                                                                                                                                            sensitize them to the uniqueness of
                                                                                                                                            each individual worker and the value
FOSTERING ENVIRONMENTAL                                                                                                                     they bring to our workforce. Security
SUSTAINABILITY                                                                                                                              personnel are also expected to act in
                                                                                                                                            a professional and unbiased manner.
ABOUT THIS REPORT                                                                                                                           Corresponding positive perfor-
                                                                                                                                            mance is valued and appropriately
GLOBAL REPORTING INITIATIVE INDEX                                                                                                           recognized.

                                      HR9            Total number of incidents of violations involving rights of indigenous
                                                     people and actions taken.

                                      SOCIAL: SOCIETY


                                      SO1            Nature, scope, and effectiveness of any programs and practices that                    page 44
                                                     assess and manage the impacts of operations on communities, including
                                                     entering, operating, and exiting.


                                      SO2            Percentage and total number of business units analyzed for risks related               pages 26-28
                                                     to corruption.

                                      SO3            Percentage of employees trained in organization’s anti-corruption policies             pages 26-28
                                                     and procedures.

                                      SO4            Actions taken in response to incidents of corruption.

    PAGE 100                                                                                                                            LILLY 2010 CORPORATE RESPONSIBILITY REPORT
ABOUT LILLY                           DISCLOSURE DESCRIPTION                                                                             REPORTED CROSS-REFERENCE/DIRECT ANSWER

                                      Public policy
                                      SO5             Public policy positions and participation in public policy development and                   pages 33-37

                                      SO6             Total value of financial and in-kind contributions to political parties, politi-             page 37
                                                      cians, and related institutions by country.
                                      Anti-competitive behavior
                                      SO7             Total number of legal actions for anti-competitive behavior, anti-trust, and
                                                      monopoly practices and their outcomes.
COMMUNITIES                           SO8             Monetary value of significant fines and total number of non-monetary                         pages 84, 86
                                                      sanctions for non-compliance with laws and regulations.

ABOUT THIS REPORT                     Customer health and safety

GLOBAL REPORTING INITIATIVE INDEX     PR1             Life cycle stages in which health and safety impacts of products and                         page 25
                                                      services are assessed for improvement, and percentage of significant
UNITED NATIONS GLOBAL COMPACT INDEX                   products and services categories subject to such procedures.

                                      PR2             Total number of incidents of non-compliance with regulations and volun-
                                                      tary codes concerning health and safety impacts of products and services
                                                      during their life cycle, by type of outcomes.

                                      Product and service labelling

                                      PR3             Type of product and service information required by procedures, and                          page 25
                                                      percentage of significant products and services subject to such information

                                      PR4             Total number of incidents of non-compliance with regulations and volun-
                                                      tary codes concerning product and service information and labeling, by
                                                      type of outcomes.

                                      PR5             Practices related to customer satisfaction, including results of surveys
                                                      measuring customer satisfaction.

    PAGE 101                                                                                                                                   LILLY 2010 CORPORATE RESPONSIBILITY REPORT
ABOUT LILLY                           DISCLOSURE DESCRIPTION                                                                 REPORTED CROSS-REFERENCE/DIRECT ANSWER

                                      Marketing communications
                                      PR6          Programs for adherence to laws, standards, and voluntary codes related              pages 18, 24-25, 30
                                                   to marketing communications, including advertising, promotion, and
                                      PR7          Total number of incidents of non-compliance with regulations and volun-
CONDUCTING OUR BUSINESS ETHICALLY                  tary codes concerning marketing communications, including advertising,
AND TRANSPARENTLY                                  promotion, and sponsorship by type of outcomes.

SUPPORTING STRONG WORKPLACE           Customer privacy
                                      PR8          Total number of substantiated complaints regarding breaches of customer
ENGAGING WITH PATIENTS AND                         privacy and losses of customer data.
                                      PR9          Monetary value of significant fines for non-compliance with laws and
                                                   regulations concerning the provision and use of products and services.



    PAGE 102                                                                                                                       LILLY 2010 CORPORATE RESPONSIBILITY REPORT
                                      UNITED NATIONS GLOBAL


                                      COMPACT INDEX



                                      UNGC PRINCIPLE                                                                                          INFORMATION IN REPORT
PRACTICES                             Principle 1: Businesses should support and respect the protection of internationally proclaimed         Upholding Human Rights through-
                                                   human rights.                                                                              out the Supply Chain, page 39
COMMUNITIES                           Principle 2: Businesses should make sure they are not complicit in human rights abuses.                 Upholding Human Rights through-
                                                                                                                                              out the Supply Chain, page 39
SUSTAINABILITY                        Principle 3: Businesses should uphold the freedom of association and the effective recognition          Compensation and Benefits,
                                                   of the right to collective bargaining.                                                     page 42
                                      Principle 4: Businesses should uphold the elimination of all forms of forced and compulsory labour.     Upholding Human Rights through-
GLOBAL REPORTING INITIATIVE INDEX                                                                                                             out the Supply Chain, page 39
UNITED NATIONS GLOBAL COMPACT INDEX   Principle 5: Businesses should uphold the effective abolition of child labour.                          Upholding Human Rights through-
                                                                                                                                              out the Supply Chain, page 39

                                      Principle 6: Businesses should uphold the elimination of discrimination in respect of                   Diversity and Inclusion, page 45
                                                   employment and occupation.

                                      Principle 7: Businesses should support a precautionary approach to environmental challenges.            Fostering Environmental
                                                                                                                                              Sustainability, pages 71-72

                                      Principle 8: Businesses should undertake initiatives to promote greater environmental responsibility.   Fostering Environmental
                                                                                                                                              Sustainability, pages 63-86

                                      Principle 9: Businesses should encourage the development and diffusion of environmentally               Fostering Environmental
                                                   friendly technologies.                                                                     Sustainability, pages 67, 69-70,

                                      Principle 10: Businesses should work against corruption in all its forms, including extortion           Conducting Our Business Ethically
                                                    and bribery.                                                                              and Transparently, pages 27-28

    PAGE 103                                                                                                                            LILLY 2010 CORPORATE RESPONSIBILITY REPORT

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