(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
Title of Each Class | Trading Symbol | Name of Each Exchange On Which Registered |
☒ | Accelerated filer | ☐ | |||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||
Emerging growth company |
Class | Number of Shares Outstanding | ||
Common |
Page | ||||
• | uncertainties in the pharmaceutical research and development process, including with respect to the timing of anticipated regulatory approvals and launches of new products; |
• | market uptake of recently launched products; |
• | competitive developments affecting current products and our pipeline; |
• | the expiration of intellectual property protection for certain of our products; |
• | our ability to protect and enforce patents and other intellectual property; |
• | the impact of actions of governmental and private payers affecting pricing of, reimbursement for, and access to pharmaceuticals; |
• | regulatory compliance problems or government investigations; |
• | regulatory actions regarding currently marketed products; |
• | unexpected safety or efficacy concerns associated with our products; |
• | issues with product supply stemming from manufacturing difficulties or disruptions; |
• | regulatory changes or other developments; |
• | changes in patent law or regulations related to data-package exclusivity; |
• | litigation, investigations, or other similar proceedings involving past, current, or future products or commercial activities as we are largely self-insured; |
• | unauthorized disclosure, misappropriation, or compromise of trade secrets or other confidential data stored in our information systems, networks, and facilities, or those of third parties with whom we share our data; |
• | changes in tax law, including the impact of United States tax reform legislation enacted in December 2017 and related guidance, or events that differ from our assumptions related to tax positions; |
• | changes in foreign currency exchange rates, interest rates, and inflation; |
• | asset impairments and restructuring charges; |
• | changes in accounting and reporting standards promulgated by the Financial Accounting Standards Board and the Securities and Exchange Commission (SEC); |
• | acquisitions and business development transactions and related integration costs; |
• | information technology system inadequacies or operating failures; |
• | the impact of the evolving COVID-19 pandemic and the global response thereto; |
• | reliance on third-party relationships and outsourcing arrangements; and |
• | the impact of global macroeconomic conditions. |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Revenue (Note 2) | $ | $ | |||||
Costs, expenses, and other: | |||||||
Cost of sales | |||||||
Research and development | |||||||
Marketing, selling, and administrative | |||||||
Acquired in-process research and development (Note 3) | |||||||
Asset impairment, restructuring, and other special charges (Note 6) | |||||||
Other–net, (income) expense (Note 12) | ( | ) | ( | ) | |||
Income before income taxes | |||||||
Income taxes (Note 8) | |||||||
Net income from continuing operations | |||||||
Net income from discontinued operations (Note 5) | |||||||
Net income | $ | $ | |||||
Earnings per share: | |||||||
Earnings from continuing operations - basic | $ | $ | |||||
Earnings from discontinued operations - basic | |||||||
Earnings per share - basic | $ | $ | |||||
Earnings from continuing operations - diluted | $ | $ | |||||
Earnings from discontinued operations - diluted | |||||||
Earnings per share - diluted | $ | $ | |||||
Shares used in calculation of earnings per share: | |||||||
Basic | |||||||
Diluted |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Net income | $ | $ | |||||
Other comprehensive loss from continuing operations, net of tax (Note 11) | ( | ) | ( | ) | |||
Other comprehensive income from discontinued operations, net of tax (Note 11) | |||||||
Other comprehensive income (loss), net of tax (Note 11) | ( | ) | |||||
Comprehensive income | $ | $ |
March 31, 2020 | December 31, 2019 | ||||||
Assets | (Unaudited) | ||||||
Current Assets | |||||||
Cash and cash equivalents (Note 7) | $ | $ | |||||
Short-term investments (Note 7) | |||||||
Accounts receivable, net of allowances of $23.7 (2020) and $22.4 (2019) | |||||||
Other receivables | |||||||
Inventories | |||||||
Prepaid expenses and other | |||||||
Total current assets | |||||||
Investments (Note 7) | |||||||
Goodwill | |||||||
Other intangibles, net | |||||||
Deferred tax assets | |||||||
Property and equipment, net of accumulated depreciation of $9,141.5 (2020) and $9,161.6 (2019) | |||||||
Other noncurrent assets | |||||||
Total assets | $ | $ | |||||
Liabilities and Equity | |||||||
Current Liabilities | |||||||
Short-term borrowings and current maturities of long-term debt | $ | $ | |||||
Accounts payable | |||||||
Employee compensation | |||||||
Sales rebates and discounts | |||||||
Dividends payable | |||||||
Income taxes payable | |||||||
Other current liabilities | |||||||
Total current liabilities | |||||||
Other Liabilities | |||||||
Long-term debt | |||||||
Accrued retirement benefits (Note 9) | |||||||
Long-term income taxes payable | |||||||
Deferred tax liabilities | |||||||
Other noncurrent liabilities | |||||||
Total other liabilities | |||||||
Commitments and Contingencies (Note 10) | |||||||
Eli Lilly and Company Shareholders’ Equity | |||||||
Common stock | |||||||
Additional paid-in capital | |||||||
Retained earnings | |||||||
Employee benefit trust | ( | ) | ( | ) | |||
Accumulated other comprehensive loss (Note 11) | ( | ) | ( | ) | |||
Cost of common stock in treasury | ( | ) | ( | ) | |||
Total Eli Lilly and Company shareholders’ equity | |||||||
Noncontrolling interests | |||||||
Total equity | |||||||
Total liabilities and equity | $ | $ |
Equity of Eli Lilly and Company Shareholders | |||||||||||||||||||||||||||||||||
(Dollars in millions and shares in thousands) | Common Stock | Additional Paid-in Capital | Retained Earnings | Employee Benefit Trust | Accumulated Other Comprehensive Loss | Common Stock in Treasury | Noncontrolling Interests | ||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||
Balance at January 1, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax | |||||||||||||||||||||||||||||||||
Retirement of treasury shares | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
Purchase of treasury shares | ( | ) | ( | ) | |||||||||||||||||||||||||||||
Issuance of stock under employee stock plans, net | ( | ) | ( | ) | |||||||||||||||||||||||||||||
Stock-based compensation | |||||||||||||||||||||||||||||||||
Acquisition of common stock in exchange offer | ( | ) | |||||||||||||||||||||||||||||||
Deconsolidation of Elanco | ( | ) | |||||||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||||||
Balance at March 31, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||
Balance at January 1, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||||||
Other comprehensive loss, net of tax | ( | ) | |||||||||||||||||||||||||||||||
Retirement of treasury shares | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
Purchase of treasury shares (1) | ( | ) | |||||||||||||||||||||||||||||||
Issuance of stock under employee stock plans, net | ( | ) | ( | ) | |||||||||||||||||||||||||||||
Stock-based compensation | |||||||||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||||||
Balance at March 31, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Cash Flows from Operating Activities | |||||||
Net income | $ | $ | |||||
Adjustments to Reconcile Net Income to Cash Flows from Operating Activities: | |||||||
Gain related to disposition of Elanco (Note 5) | ( | ) | |||||
Depreciation and amortization | |||||||
Change in deferred income taxes | ( | ) | |||||
Stock-based compensation expense | |||||||
Acquired in-process research and development (Note 3) | |||||||
Other changes in operating assets and liabilities, net of acquisitions and divestitures | ( | ) | ( | ) | |||
Other non-cash operating activities, net | ( | ) | ( | ) | |||
Net Cash Provided by Operating Activities | |||||||
Cash Flows from Investing Activities | |||||||
Net purchases of property and equipment | ( | ) | ( | ) | |||
Proceeds from sales and maturities of short-term investments | |||||||
Purchases of short-term investments | ( | ) | |||||
Proceeds from sales of noncurrent investments | |||||||
Purchases of noncurrent investments | ( | ) | ( | ) | |||
Cash paid for acquisitions, net of cash acquired (Note 3) | ( | ) | ( | ) | |||
Purchases of in-process research and development | ( | ) | ( | ) | |||
Other investing activities, net | ( | ) | |||||
Net Cash Used for Investing Activities | ( | ) | ( | ) | |||
Cash Flows from Financing Activities | |||||||
Dividends paid | ( | ) | ( | ) | |||
Net change in short-term borrowings | |||||||
Proceeds from issuance of long-term debt | |||||||
Repayments of long-term debt | ( | ) | ( | ) | |||
Purchases of common stock | ( | ) | ( | ) | |||
Other financing activities, net | ( | ) | ( | ) | |||
Net Cash Provided by Financing Activities | |||||||
Effect of exchange rate changes on cash and cash equivalents | ( | ) | |||||
Net decrease in cash and cash equivalents | ( | ) | ( | ) | |||
Cash and cash equivalents at January 1 (2019 includes $677.5 of discontinued operations) | |||||||
Cash and Cash Equivalents at March 31 | $ | $ |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Net product revenue | $ | $ | |||||
Collaboration and other revenue (1) | |||||||
Revenue | $ | $ |
March 31, 2020 | December 31, 2019 | ||||||
Contract liabilities | $ | $ |
Three Months Ended March 31, | |||||||||||||||||||
2020 | 2019 | ||||||||||||||||||
United States (U.S.) (1) | Outside U.S. | Total | U.S. (1) | Outside U.S. | Total | ||||||||||||||
Revenue—to unaffiliated customers: | |||||||||||||||||||
Diabetes: | |||||||||||||||||||
Trulicity® | $ | $ | $ | $ | $ | $ | |||||||||||||
Humalog® (2) | |||||||||||||||||||
Humulin® | |||||||||||||||||||
Basaglar® | |||||||||||||||||||
Jardiance (3) | |||||||||||||||||||
Trajenta (4) | |||||||||||||||||||
Other Diabetes | |||||||||||||||||||
Total Diabetes | |||||||||||||||||||
Oncology: | |||||||||||||||||||
Alimta® | |||||||||||||||||||
Cyramza® | |||||||||||||||||||
Verzenio® | |||||||||||||||||||
Erbitux® | |||||||||||||||||||
Other Oncology | ( | ) | |||||||||||||||||
Total Oncology | |||||||||||||||||||
Immunology: | |||||||||||||||||||
Taltz® | |||||||||||||||||||
Olumiant® | |||||||||||||||||||
Other Immunology | |||||||||||||||||||
Total Immunology | |||||||||||||||||||
Neuroscience: | |||||||||||||||||||
Cymbalta® | |||||||||||||||||||
Zyprexa® | |||||||||||||||||||
Emgality® | |||||||||||||||||||
Other Neuroscience | |||||||||||||||||||
Total Neuroscience | |||||||||||||||||||
Other: | |||||||||||||||||||
Forteo® | |||||||||||||||||||
Cialis® | |||||||||||||||||||
Other | |||||||||||||||||||
Total Other | |||||||||||||||||||
Revenue | $ | $ | $ | $ | $ | $ |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Revenue—to unaffiliated customers (1): | |||||||
U.S. (2) | $ | $ | |||||
Europe | |||||||
Japan | |||||||
China | |||||||
Other foreign countries | |||||||
Revenue | $ | $ |
Estimated Fair Value at February 15, 2019 | |||
Acquired IPR&D (1) | $ | ||
Finite-lived intangibles (2) | |||
Deferred income taxes | ( | ) | |
Other assets and liabilities - net | ( | ) | |
Total identifiable net assets | |||
Goodwill(3) | |||
Total consideration transferred - net of cash acquired | $ |
Counterparty | Compound(s) or Therapy | Acquisition Month | Phase of Development (1) | Acquired IPR&D Expense | ||||
Sitryx Therapeutics Limited | Preclinical targets that could lead to potential new medicines for autoimmune diseases | March 2020 | Pre-clinical | $ | ||||
AC Immune SA (2) | Tau aggregation inhibitor small molecules for the potential treatment of Alzheimer's disease and other neurodegenerative diseases | January 2019 | Pre-clinical | $ | ||||
ImmuNext, Inc. | Novel immunometabolism target | March 2019 | Pre-clinical |
Product Family | Milestones (Deferred) Capitalized (1) | |||
Trajenta (2) | $ | |||
Jardiance (3) | ||||
Basaglar | ( | ) |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Basaglar | $ | $ | |||||
Jardiance | |||||||
Trajenta |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Olumiant | $ | $ |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Severance | $ | $ | ( | ) | |||
Asset impairment and other special charges | |||||||
Total asset impairment, restructuring, and other special charges | $ | $ |
• | Investments in companies over which we have significant influence but not a controlling interest are accounted for using the equity method, with our share of earnings or losses reported in other-net, (income) expense. |
• | For equity investments that do not have readily determinable fair values, we measure these investments at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. Any change in recorded value is recorded in other-net, (income) expense. |
• | Our public equity investments are measured and carried at fair value. Any change in fair value is recognized in other-net, (income) expense. |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Fair value hedges: | |||||||
Effect from hedged fixed-rate debt | $ | $ | |||||
Effect from interest rate contracts | ( | ) | ( | ) | |||
Cash flow hedges: | |||||||
Effective portion of losses on interest rate contracts reclassified from accumulated other comprehensive loss | |||||||
Cross-currency interest rate swaps | ( | ) | ( | ) | |||
Net (gains) losses on foreign currency exchange contracts not designated as hedging instruments | ( | ) | |||||
Total | $ | ( | ) | $ |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Net investment hedges: | |||||||
Foreign currency-denominated notes | $ | $ | |||||
Cross-currency interest rate swaps | |||||||
Cash flow hedges: | |||||||
Forward-starting interest rate swaps | ( | ) | ( | ) | |||
Cross-currency interest rate swaps | ( | ) | ( | ) |
Fair Value Measurements Using | |||||||||||||||||||||||
Carrying Amount | Cost (1) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value | ||||||||||||||||||
March 31, 2020 | |||||||||||||||||||||||
Cash equivalents | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Short-term investments: | |||||||||||||||||||||||
U.S. government and agency securities | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Corporate debt securities | |||||||||||||||||||||||
Asset-backed securities | |||||||||||||||||||||||
Other securities | |||||||||||||||||||||||
Short-term investments | $ | ||||||||||||||||||||||
Noncurrent investments: | |||||||||||||||||||||||
U.S. government and agency securities | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Corporate debt securities | |||||||||||||||||||||||
Mortgage-backed securities | |||||||||||||||||||||||
Asset-backed securities | |||||||||||||||||||||||
Other securities | |||||||||||||||||||||||
Marketable equity securities | |||||||||||||||||||||||
Equity investments without readily determinable fair values (2) | |||||||||||||||||||||||
Equity method investments (2) | |||||||||||||||||||||||
Noncurrent investments | $ | ||||||||||||||||||||||
December 31, 2019 | |||||||||||||||||||||||
Cash equivalents | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Short-term investments: | |||||||||||||||||||||||
U.S. government and agency securities | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Corporate debt securities | |||||||||||||||||||||||
Asset-backed securities | |||||||||||||||||||||||
Other securities | |||||||||||||||||||||||
Short-term investments | $ | ||||||||||||||||||||||
Noncurrent investments: | |||||||||||||||||||||||
U.S. government and agency securities | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Corporate debt securities | |||||||||||||||||||||||
Mortgage-backed securities | |||||||||||||||||||||||
Asset-backed securities | |||||||||||||||||||||||
Other securities | |||||||||||||||||||||||
Marketable equity securities | |||||||||||||||||||||||
Equity investments without readily determinable fair values (2) | |||||||||||||||||||||||
Equity method investments (2) | |||||||||||||||||||||||
Noncurrent investments | $ |
Fair Value Measurements Using | |||||||||||||||||||
Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value | |||||||||||||||
Short-term commercial paper borrowings | |||||||||||||||||||
March 31, 2020 | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
December 31, 2019 | ( | ) | ( | ) | ( | ) | |||||||||||||
Long-term debt, including current portion | |||||||||||||||||||
March 31, 2020 | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
December 31, 2019 | ( | ) | ( | ) | ( | ) |
Fair Value Measurements Using | |||||||||||||||||||
Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value | |||||||||||||||
March 31, 2020 | |||||||||||||||||||
Risk-management instruments: | |||||||||||||||||||
Interest rate contracts designated as fair value hedges: | |||||||||||||||||||
Other noncurrent assets | $ | $ | $ | $ | $ | ||||||||||||||
Interest rate contracts designated as cash flow hedges: | |||||||||||||||||||
Other noncurrent assets | |||||||||||||||||||
Other noncurrent liabilities | ( | ) | ( | ) | ( | ) | |||||||||||||
Cross-currency interest rate contracts designated as net investment hedges: | |||||||||||||||||||
Other receivables | |||||||||||||||||||
Other noncurrent assets | |||||||||||||||||||
Other current liabilities | ( | ) | ( | ) | ( | ) | |||||||||||||
Cross-currency interest rate contracts designated as cash flow hedges: | |||||||||||||||||||
Other noncurrent liabilities | ( | ) | ( | ) | ( | ) | |||||||||||||
Foreign exchange contracts not designated as hedging instruments: | |||||||||||||||||||
Other receivables | |||||||||||||||||||
Other current liabilities | ( | ) | ( | ) | ( | ) | |||||||||||||
December 31, 2019 | |||||||||||||||||||
Risk-management instruments: | |||||||||||||||||||
Interest rate contracts designated as fair value hedges: | |||||||||||||||||||
Other noncurrent assets | |||||||||||||||||||
Interest rate contracts designated as cash flow hedges: | |||||||||||||||||||
Other noncurrent assets | |||||||||||||||||||
Cross-currency interest rate contracts designated as net investment hedges: | |||||||||||||||||||
Other noncurrent assets | |||||||||||||||||||
Other current liabilities | ( | ) | ( | ) | ( | ) | |||||||||||||
Other noncurrent liabilities | ( | ) | ( | ) | ( | ) | |||||||||||||
Cross-currency interest rate contracts designated as cash flow hedges: | |||||||||||||||||||
Other noncurrent assets | |||||||||||||||||||
Other noncurrent liabilities | ( | ) | ( | ) | ( | ) | |||||||||||||
Foreign exchange contracts not designated as hedging instruments: | |||||||||||||||||||
Other receivables | |||||||||||||||||||
Other current liabilities | ( | ) | ( | ) | ( | ) |
Maturities by Period | |||||||||||||||||||
Total | Less Than 1 Year | 1-5 Years | 6-10 Years | More Than 10 Years | |||||||||||||||
Fair value of debt securities | $ | $ | $ | $ | $ |
March 31, 2020 | December 31, 2019 | ||||||
Unrealized gross gains | $ | $ | |||||
Unrealized gross losses | |||||||
Fair value of securities in an unrealized gain position | |||||||
Fair value of securities in an unrealized loss position |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Proceeds from sales | $ | $ | |||||
Realized gross gains on sales | |||||||
Realized gross losses on sales |
Defined Benefit Pension Plans | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Components of net periodic benefit cost: | |||||||
Service cost | $ | $ | |||||
Interest cost | |||||||
Expected return on plan assets | ( | ) | ( | ) | |||
Amortization of prior service cost | |||||||
Recognized actuarial loss | |||||||
Net periodic benefit cost | $ | $ |
Retiree Health Benefit Plans | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Components of net periodic benefit income: | |||||||
Service cost | $ | $ | |||||
Interest cost | |||||||
Expected return on plan assets | ( | ) | ( | ) | |||
Amortization of prior service benefit | ( | ) | ( | ) | |||
Recognized actuarial loss | |||||||
Net periodic benefit income | $ | ( | ) | $ | ( | ) |
Continuing Operations | |||||||||||||||||||||||
(Amounts presented net of taxes) | Foreign Currency Translation Gains (Losses) | Unrealized Net Gains (Losses) on Securities | Defined Benefit Pension and Retiree Health Benefit Plans | Effective Portion of Cash Flow Hedges | Discontinued Operations | Accumulated Other Comprehensive Loss | |||||||||||||||||
Balance at January 1, 2020 | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||
Other comprehensive income (loss) before reclassifications | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Net amount reclassified from accumulated other comprehensive loss | ( | ) | |||||||||||||||||||||
Net other comprehensive income (loss) | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Balance at March 31, 2020 | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) |
Continuing Operations | |||||||||||||||||||||||
(Amounts presented net of taxes) | Foreign Currency Translation Gains (Losses) | Unrealized Net Gains (Losses) on Securities | Defined Benefit Pension and Retiree Health Benefit Plans | Effective Portion of Cash Flow Hedges | Discontinued Operations | Accumulated Other Comprehensive Loss | |||||||||||||||||
Balance at January 1, 2019 (1) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
Other comprehensive income (loss) before reclassifications | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||
Net amount reclassified from accumulated other comprehensive loss | |||||||||||||||||||||||
Net other comprehensive income (loss) | ( | ) | ( | ) | |||||||||||||||||||
Balance at March 31, 2019 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) |
Three Months Ended March 31, | |||||||
Tax benefit (expense) | 2020 | 2019 | |||||
Foreign currency translation gains/losses | $ | ( | ) | $ | ( | ) | |
Unrealized net gains/losses on securities | ( | ) | ( | ) | |||
Defined benefit pension and retiree health benefit plans | ( | ) | ( | ) | |||
Effective portion of cash flow hedges | |||||||
Benefit/(provision) for income taxes allocated to other comprehensive income (loss) items | $ | $ | ( | ) |
Details about Accumulated Other Comprehensive Loss Components | Three Months Ended March 31, | Affected Line Item in the Consolidated Condensed Statements of Operations | ||||||||
2020 | 2019 | |||||||||
Amortization of retirement benefit items: | ||||||||||
Prior service benefits, net | $ | ( | ) | $ | ( | ) | Other–net, (income) expense | |||
Actuarial losses, net | Other–net, (income) expense | |||||||||
Total before tax | ||||||||||
Tax benefit | ( | ) | ( | ) | Income taxes | |||||
Net of tax | ||||||||||
Other, net of tax | Other–net, (income) expense | |||||||||
Reclassifications from continuing operations (net of tax) | ||||||||||
Reclassifications from discontinued operations (net of tax) | Net income from discontinued operations | |||||||||
Total reclassifications for the period (net of tax) | $ | $ |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Interest expense | $ | $ | |||||
Interest income | ( | ) | ( | ) | |||
Retirement benefit plans | ( | ) | ( | ) | |||
Other income | ( | ) | ( | ) | |||
Other–net, (income) expense | $ | ( | ) | $ | ( | ) |
Three Months Ended March 31, | |||||||||
2020 | 2019 | Percent Change | |||||||
Revenue | $ | 5,859.8 | $ | 5,092.2 | 15 | ||||
Gross margin | 4,644.7 | 3,953.5 | 17 | ||||||
Gross margin as a percent of revenue | 79.3 | % | 77.6 | % | |||||
Operating expenses | $ | 2,941.7 | $ | 2,747.6 | 7 | ||||
Acquired in-process research and development (IPR&D) | 52.3 | 136.9 | (62) | ||||||
Asset impairment, restructuring, and other special charges | 59.9 | 423.9 | (86) | ||||||
Net income from continuing operations | 1,456.5 | 561.1 | NM | ||||||
Net income | 1,456.5 | 4,241.6 | (66) | ||||||
EPS from continuing operations | 1.60 | 0.57 | NM | ||||||
EPS | 1.60 | 4.31 | (63) |
• | We recognized acquired IPR&D charges of $52.3 million related to the collaboration with Sitryx Therapeutics Limited (Sitryx). |
• | We recognized charges of $59.9 million primarily related to acquisition and integration costs as part of the closing of the acquisition of Dermira, Inc. (Dermira). |
• | We recognized acquired IPR&D charges of $136.9 million related to collaborations with AC Immune SA (AC Immune) and ImmuNext, Inc. (ImmuNext). |
• | We recognized charges of $423.9 million primarily associated with the accelerated vesting of Loxo Oncology, Inc. (Loxo) employee equity awards as a result of the closing of the acquisition of Loxo. |
• | We recognized a gain related to the disposition of Elanco of approximately $3.7 billion. |
* | Biologic molecule subject to the U.S. Biologics Price Competition and Innovation Act |
** | Diagnostic agent |
Compound | Indication | U.S. | Europe | Japan | Developments |
Endocrinology | |||||
Baqsimi | Severe hypoglycemia | Launched | Approved | Approved in Japan in the first quarter of 2020. | |
Tirzepatide | Type 2 diabetes | Phase III | Phase III trials are ongoing. | ||
Obesity | Phase III | Phase III trials are ongoing. | |||
Lyumjev | Type 1 and 2 diabetes | Submitted | Approved | Approved in Europe and Japan in the first quarter of 2020. | |
Immunology | |||||
Lebrikizumab | Atopic dermatitis | Phase III | Acquired in the Dermira acquisition in February 2020. Granted Fast Track Designation(1) by the U.S. Food and Drug Administration (FDA). Phase III trials are ongoing. | ||
Mirikizumab | Crohn's Disease | Phase III | Phase III trials are ongoing. | ||
Psoriasis | Phase III | In April 2020, announced a Phase III trial met the co-primary and key secondary endpoints. Another Phase III trial is ongoing. | |||
Ulcerative colitis | Phase III | Phase III trials are ongoing. |
Compound | Indication | U.S. | Europe | Japan | Developments |
Neuroscience | |||||
Emgality | Cluster headache | Launched | Submitted | Not pursuing Phase III trial | Received negative opinion from the Committee for Medicinal Products for Human Use in Europe during the first quarter of 2020. |
Migraine prevention | Launched | Submitted | Submitted to Japanese regulatory authorities in the first quarter of 2020. | ||
Flortaucipir | Alzheimer's disease diagnostic | Submitted | Not pursuing Phase III trials | Currently under regulatory review in the U.S. | |
Reyvow | Acute treatment of migraine | Launched | Phase III | Received Schedule V classification from the Drug Enforcement Agency and launched in the U.S. in January 2020. | |
Solanezumab | Preclinical Alzheimer's disease | Phase III | Announced in February 2020 that a Phase III trial for people with dominantly inherited Alzheimer's disease (DIAD) did not meet the primary endpoint. We do not plan to pursue submission for DIAD. Phase III trial is ongoing for Anti-Amyloid Treatment in Asymptomatic Alzheimer's. | ||
Tanezumab | Osteoarthritis pain | Submitted | Phase III | In partnership with Pfizer, we submitted to the FDA in the fourth quarter of 2019 and submitted in Europe in March 2020. We intend to pursue submission in Japan in 2020. | |
Cancer pain | Phase III | Phase III trial is ongoing. | |||
Oncology | |||||
Selpercatinib (LOXO-292) | Thyroid Cancer | Submitted | Phase III | Granted Breakthrough Therapy Designation(2). Granted Priority Review(3) from the FDA in the first quarter of 2020. Phase III trials are ongoing. | |
Lung Cancer | Submitted | Phase III |
• | the Coronavirus Aid, Relief and Economic Security (CARES) Act and potential subsequent stimulus bills that focus on ensuring availability and access to lifesaving drugs during a public health crisis, |
• | foreign reference pricing in Medicare and private insurance, |
• | modifications to Medicare Parts B and D, |
• | provisions that would allow the Department of Health and Human Services to negotiate prices for biologics and drugs in Medicare, |
• | a reduction in biologic data exclusivity, |
• | proposals related to Medicaid prescription drug coverage and manufacturer drug rebates, |
• | proposals that would require biopharmaceutical manufacturers to disclose proprietary drug pricing information; and |
• | state-level proposals related to prescription drug prices and reducing the cost of pharmaceuticals purchased by government health care programs. |
Three Months Ended March 31, | |||||||||
2020 | 2019 | Percent Change | |||||||
U.S. (1) | $ | 3,328.8 | $ | 2,890.8 | 15 | ||||
Outside U.S. | 2,531.0 | 2,201.4 | 15 | ||||||
Revenue | $ | 5,859.8 | $ | 5,092.2 | 15 |
Three Months Ended March 31, | ||||||
2020 vs. 2019 | ||||||
U.S. | Outside U.S. | Consolidated | ||||
Volume | 19 | % | 25 | % | 22 | % |
Price | (4 | ) | (8 | ) | (6 | ) |
Foreign exchange rates | — | (2 | ) | (1 | ) | |
Percent change | 15 | % | 15 | % | 15 | % |
Three Months Ended March 31, | |||||||||||||||||
2020 | 2019 | ||||||||||||||||
Product | U.S. (1) | Outside U.S. | Total | Total | Percent Change | ||||||||||||
Trulicity | $ | 929.5 | $ | 299.9 | $ | 1,229.4 | $ | 879.7 | 40 | ||||||||
Humalog (2) | 398.6 | 297.2 | 695.8 | 730.8 | (5) | ||||||||||||
Alimta | 324.2 | 235.8 | 560.1 | 499.2 | 12 | ||||||||||||
Taltz | 327.5 | 116.0 | 443.5 | 252.5 | 76 | ||||||||||||
Humulin | 214.1 | 101.5 | 315.7 | 297.7 | 6 | ||||||||||||
Basaglar | 230.4 | 73.3 | 303.7 | 251.4 | 21 | ||||||||||||
Forteo | 122.5 | 149.8 | 272.4 | 312.9 | (13) | ||||||||||||
Jardiance (3) | 144.6 | 122.9 | 267.5 | 203.6 | 31 | ||||||||||||
Cyramza | 89.1 | 149.9 | 239.0 | 198.3 | 21 | ||||||||||||
Cymbalta | 11.6 | 198.8 | 210.4 | 164.1 | 28 | ||||||||||||
Cialis | 26.1 | 167.0 | 193.0 | 308.2 | (37) | ||||||||||||
Verzenio | 129.4 | 58.6 | 188.0 | 109.4 | 72 | ||||||||||||
Olumiant | 11.3 | 128.4 | 139.7 | 82.1 | 70 | ||||||||||||
Erbitux® | 117.8 | 13.0 | 130.8 | 118.4 | 10 | ||||||||||||
Zyprexa® | 11.2 | 87.2 | 98.4 | 107.2 | (8) | ||||||||||||
Trajenta® (4) | 28.7 | 64.5 | 93.2 | 131.9 | (29) | ||||||||||||
Emgality | 67.3 | 6.7 | 74.0 | 14.2 | NM | ||||||||||||
Other products | 144.9 | 260.5 | 405.3 | 430.5 | (6) | ||||||||||||
Revenue | $ | 3,328.8 | $ | 2,531.0 | $ | 5,859.8 | $ | 5,092.2 | 15 |
• | The increased customer buying patterns and patient prescription trends associated with COVID-19 that were experienced in the first quarter of 2020 will be largely reversed over the course of 2020; |
• | The reduction in new-to-brand prescription trends will peak in the second quarter of 2020 in the U.S. and much of Europe; |
• | Healthcare activity, including non-COVID-19 related patient visits with their physicians, will align more closely with historical levels in the second half of 2020; |
• | Increased utilization of patient affordability programs and changes in segment mix due to increased U.S. unemployment will negatively impact U.S. pricing; |
• | Clinical trial enrollment in existing studies, as well as initiation of new clinical trials, will resume in the second half of 2020; and |
• | Investment in COVID-19 related research, testing and support will continue throughout 2020. |
(a) | Evaluation of Disclosure Controls and Procedures. Under applicable SEC regulations, management of a reporting company, with the participation of the principal executive officer and principal financial officer, must periodically evaluate the company’s “disclosure controls and procedures,” which are defined generally as controls and other procedures of a reporting company designed to ensure that information required to be disclosed by the reporting company in its periodic reports filed with the SEC (such as this Form 10-Q) is recorded, processed, summarized, and reported on a timely basis. |
(b) | Changes in Internal Controls. During the first quarter of 2020, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. |
Period | Total Number of Shares Purchased (in thousands) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (in thousands) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) | |||||||||
January 2020 | 3,026 | $ | 137.87 | 3,026 | $ | 1,082.9 | |||||||
February 2020 | — | — | — | 1,082.9 | |||||||||
March 2020 | 601 | 137.87 | 601 | 1,000.0 | |||||||||
Total | 3,627 | 137.87 | 3,627 |
EXHIBIT 3.1 | Amended Articles of Incorporation | |
EXHIBIT 3.2 | Bylaws, as amended | |
EXHIBIT 31.1 | Rule 13a-14(a) Certification of David A. Ricks, Chairman, President, and Chief Executive Officer | |
EXHIBIT 31.2 | Rule 13a-14(a) Certification of Joshua L. Smiley, Senior Vice President and Chief Financial Officer | |
EXHIBIT 32. | Section 1350 Certification | |
EXHIBIT 101. | Interactive Data Files | |
EXHIBIT 104. | Cover Page Interactive Data File |
Exhibit | ||
EXHIBIT 3.1 | ||
EXHIBIT 3.2 | ||
EXHIBIT 31.1 | ||
EXHIBIT 31.2 | ||
EXHIBIT 32. | ||
EXHIBIT 101. | Interactive Data Files (embedded within the Inline XBRL document) | |
EXHIBIT 104. | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
ELI LILLY AND COMPANY | ||
(Registrant) | ||
Date: | May 1, 2020 | /s/Bronwen L. Mantlo |
Bronwen L. Mantlo | ||
Corporate Secretary | ||
Date: | May 1, 2020 | /s/Donald A. Zakrowski |
Donald A. Zakrowski | ||
Vice President, Finance and Chief Accounting Officer |
1. | I have reviewed this report on Form 10-Q of Eli Lilly and Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 1, 2020 | |
By: | /s/David A. Ricks | |
David A. Ricks | ||
Chairman, President, and Chief Executive Officer |
1. | I have reviewed this report on Form 10-Q of Eli Lilly and Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 1, 2020 | |
By: | /s/Joshua L. Smiley | |
Joshua L. Smiley | ||
Senior Vice President and Chief Financial Officer |
Date: | May 1, 2020 | /s/David A. Ricks | |
David A. Ricks | |||
Chairman, President, and Chief Executive Officer | |||
Date: | May 1, 2020 | /s/Joshua L. Smiley | |
Joshua L. Smiley | |||
Senior Vice President and Chief Financial Officer |
Acquisitions |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Acquisitions During the three months ended March 31, 2020 we completed the acquisition of Dermira, Inc. (Dermira) and during the three months ended March 31, 2019, we completed the acquisition of Loxo Oncology, Inc. (Loxo). These transactions, as further discussed in this note below in Acquisitions of Businesses, were accounted for as business combinations under the acquisition method of accounting. Under this method, the assets acquired and liabilities assumed were recorded at their respective fair values as of the acquisition date in our consolidated condensed financial statements. The determination of estimated fair value required management to make significant estimates and assumptions. The excess of the purchase price over the fair value of the acquired net assets, where applicable, has been recorded as goodwill. The results of operations of these acquisitions are included in our consolidated condensed financial statements from the date of acquisition. We also acquired assets in development in the three months ended March 31, 2020 and 2019, which are further discussed in this note below in Asset Acquisitions. Upon acquisition, the acquired in-process research and development (IPR&D) charges related to these compounds were immediately expensed because the compounds had no alternative future use. We incurred acquired IPR&D charges of $52.3 million and $136.9 million for the three months ended March 31, 2020 and 2019, respectively. Acquisitions of Businesses Dermira Acquisition Overview of Transaction In February 2020, we acquired all shares of Dermira for a purchase price of approximately $849.3 million, net of cash acquired. Under terms of the agreement, we acquired lebrikizumab, a novel, investigational, monoclonal antibody being evaluated for the treatment of moderate-to-severe atopic dermatitis. Lebrikizumab was granted Fast Track designation from the U.S. Food and Drug Administration (FDA). We also acquired Qbrexza® (glycopyrronium) cloth, a medicated cloth approved by the FDA for the topical treatment of primary axillary hyperhidrosis (uncontrolled excessive underarm sweating). Assets Acquired and Liabilities Assumed Our access to Dermira information was limited prior to the acquisition. As a consequence, we are in the process of determining fair values and tax bases of a significant portion of the assets acquired and liabilities assumed, including the identification and valuation of intangible assets, long-term debt, and tax exposures. The final determination of these amounts will be completed as soon as possible but no later than one year from the acquisition date. The final determination may result in asset and liability fair values and tax bases that differ from the preliminary estimates and require changes to the preliminary amounts recognized. Preliminary fair values related to this acquisition included goodwill of $99.7 million, other intangibles of $1.21 billion, and long-term debt of $375.5 million. After the acquisition, we repaid $276.2 million of long-term debt assumed as part of our acquisition of Dermira. Loxo Acquisition Overview of Transaction In February 2019, we acquired all shares of Loxo for a purchase price of $6.92 billion, net of cash acquired. The accelerated vesting of Loxo employee equity awards was recognized as transaction expense included in asset impairment, restructuring, and other special charges during the three months ended March 31, 2019 (see Note 6). Under the terms of the agreement, we acquired a pipeline of investigational medicines, including selpercatinib (LOXO-292), an oral RET inhibitor granted Breakthrough Therapy designation and Priority Review by the FDA, and LOXO-305, an oral BTK inhibitor. Assets Acquired and Liabilities Assumed The following table summarizes the amounts recognized for assets acquired and liabilities assumed in the acquisition of Loxo as of the acquisition date:
(1) $4.60 billion of the acquired IPR&D relates to selpercatinib (LOXO-292). (2) Contract-based intangibles (primarily related to Vitrakvi®) which are being amortized to cost of sales on a straight-line basis over their estimated useful lives, were expected to have a weighted average useful life of approximately 12 years from the acquisition date. (3) The goodwill recognized from this acquisition is attributable primarily to future unidentified projects and products and the assembled workforce for Loxo and is not deductible for tax purposes. Asset Acquisitions The following table and narrative summarize our asset acquisitions during the three months ended March 31, 2020 and 2019:
(1) The phase of development presented is as of the date of the arrangement and represents the phase of development of the most advanced asset acquired, where applicable. (2) We recognized an additional acquired IPR&D expense of $30.2 million in September 2019 upon entering into an amendment to the license agreement. We entered into an agreement with AbCellera Biologics Inc. (AbCellera) to co-develop antibody products for the potential treatment and prevention of COVID-19. Under the terms of the agreement, we have committed to equally share initial development costs towards a product with AbCellera, after which we will be responsible for all further development, manufacturing, and distribution. We expect to record an acquired IPR&D charge of $25.0 million in the second quarter of 2020 upon closing of the transaction. In connection with these arrangements, our partners may be entitled to future royalties and/or commercial milestones based on sales should products be approved for commercialization and/or milestones based on the successful progress of compounds through the development process.
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Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | Financial Instruments Financial instruments that potentially subject us to credit risk consist principally of trade receivables and interest-bearing investments. Wholesale distributors of life-science products account for a substantial portion of our trade receivables; collateral is generally not required. We seek to mitigate the risk associated with this concentration through our ongoing credit-review procedures and insurance. A large portion of our cash is held by a few major financial institutions. We monitor our exposures with these institutions and do not expect any of these institutions to fail to meet their obligations. Major financial institutions represent the largest component of our investments in corporate debt securities. In accordance with documented corporate risk-management policies, we monitor the amount of credit exposure to any one financial institution or corporate issuer. We are exposed to credit-related losses in the event of nonperformance by counterparties to risk-management instruments but do not expect any counterparties to fail to meet their obligations given their high credit ratings. We consider all highly liquid investments with a maturity of three months or less from the date of purchase to be cash equivalents. The cost of these investments approximates fair value. Our equity investments are accounted for using three different methods depending on the type of equity investment:
We review equity investments other than public equity investments for indications of impairment and observable price changes on a regular basis. Our derivative activities are initiated within the guidelines of documented corporate risk-management policies and are intended to offset losses and gains on the assets, liabilities, and transactions being hedged. Management reviews the correlation and effectiveness of our derivatives on a quarterly basis. For derivative instruments that are designated and qualify as fair value hedges, the derivative instrument is marked to market, with gains and losses recognized currently in income to offset the respective losses and gains recognized on the underlying exposure. For derivative instruments that are designated and qualify as cash flow hedges, gains and losses are reported as a component of accumulated other comprehensive loss and reclassified into earnings in the same period the hedged transaction affects earnings. For derivative and non-derivative instruments that are designated and qualify as net investment hedges, the foreign currency translation gains or losses due to spot rate fluctuations are reported as a component of accumulated other comprehensive loss. Derivative contracts that are not designated as hedging instruments are recorded at fair value with the gain or loss recognized in earnings during the period of change. We may enter into foreign currency forward or option contracts to reduce the effect of fluctuating currency exchange rates (principally the euro, British pound, and the Japanese yen). Foreign currency derivatives used for hedging are put in place using the same or like currencies and duration as the underlying exposures. Forward and option contracts are principally used to manage exposures arising from subsidiary trade and loan payables and receivables denominated in foreign currencies. These contracts are recorded at fair value with the gain or loss recognized in other–net, (income) expense. We may enter into foreign currency forward and option contracts and currency swaps as fair value hedges of firm commitments. Forward contracts generally have maturities not exceeding 12 months. At March 31, 2020, we had outstanding foreign currency forward commitments to purchase 946.2 million U.S. dollars and sell 856.3 million euro, commitments to purchase 1.57 billion euro and sell 1.75 billion U.S. dollars, commitments to purchase 291.2 million U.S. dollars and sell 31.26 billion Japanese yen, and commitments to purchase 168.1 million British pounds and sell 210.3 million U.S. dollars which will all settle within 30 days. Foreign currency exchange risk is also managed through the use of foreign currency debt and cross-currency interest rate swaps. Our foreign currency-denominated notes had carrying amounts of $5.43 billion and $5.49 billion as of March 31, 2020 and December 31, 2019, respectively, of which $4.02 billion and $4.10 billion have been designated as, and are effective as, economic hedges of net investments in certain of our euro-denominated foreign operations as of March 31, 2020 and December 31, 2019, respectively. At March 31, 2020, we had outstanding cross currency swaps with notional amounts of $2.35 billion swapping U.S. dollars to euro, $1.00 billion swapping Swiss francs to U.S. dollars, and $396.0 million swapping U.S. dollars to British pounds, which have settlement dates ranging through 2028. Our cross-currency interest rate swaps, for which a majority convert a portion of our U.S. dollar-denominated floating rate debt to foreign-denominated floating rate debt, have also been designated as, and are effective as, economic hedges of net investments. In the normal course of business, our operations are exposed to fluctuations in interest rates which can vary the costs of financing, investing, and operating. We seek to address a portion of these risks through a controlled program of risk management that includes the use of derivative financial instruments. The objective of controlling these risks is to limit the impact of fluctuations in interest rates on earnings. Our primary interest-rate risk exposure results from changes in short-term U.S. dollar interest rates. In an effort to manage interest-rate exposures, we strive to achieve an acceptable balance between fixed- and floating-rate debt and investment positions and may enter into interest rate swaps or collars to help maintain that balance. Interest rate swaps or collars that convert our fixed-rate debt to a floating rate are designated as fair value hedges of the underlying instruments. Interest rate swaps or collars that convert floating-rate debt to a fixed rate are designated as cash flow hedges. Interest expense on the debt is adjusted to include the payments made or received under the swap agreements. Cash proceeds from or payments to counterparties resulting from the termination of interest rate swaps are classified as operating activities in our consolidated condensed statements of cash flows. At March 31, 2020, substantially all of our total long-term debt is at a fixed rate. We have converted approximately 11 percent of our long-term fixed-rate notes to floating rates through the use of interest rate swaps. We also may enter into forward-starting interest rate swaps, which we designate as cash flow hedges, as part of anticipated future debt issuances in order to reduce the risk of cash flow volatility from future changes in interest rates. The change in fair value of these instruments is recorded as part of other comprehensive income (loss), and upon completion of a debt issuance and termination of the swap, is amortized to interest expense over the life of the underlying debt. As of March 31, 2020, the total notional amounts of forward-starting interest rate contracts in designated cash flow hedging instruments were $1.75 billion, which have settlement dates ranging between 2023 and 2025. In April 2020, we agreed to issue $1.00 billion of 2.25 percent fixed-rate notes due in May 2050, with interest to be paid semi-annually. We intend to use the net proceeds from the sale of these notes for general corporate purposes, which may include the repayment of outstanding commercial paper. The offering of notes is expected to close in May 2020. The Effect of Risk-Management Instruments on the Consolidated Condensed Statements of Operations The following effects of risk-management instruments were recognized in other–net, (income) expense:
During the three months ended March 31, 2020 and 2019, the amortization of losses related to the portion of our risk management hedging instruments, fair value hedges, and cash flow hedges that was excluded from the assessment of effectiveness was not material. The Effect of Risk-Management Instruments on Other Comprehensive Income (Loss) The effective portion of risk-management instruments that was recognized in other comprehensive income (loss) is as follows:
During the next 12 months, we expect to reclassify $16.4 million of pretax net losses on cash flow hedges from accumulated other comprehensive loss to other–net, (income) expense. During the three months ended March 31, 2020 and 2019, the amounts excluded from the assessment of hedge effectiveness recognized in other comprehensive income (loss) were not material. Fair Value of Financial Instruments The following tables summarize certain fair value information at March 31, 2020 and December 31, 2019 for assets and liabilities measured at fair value on a recurring basis, as well as the carrying amount and amortized cost of certain other investments:
(1) For available-for-sale debt securities, amounts disclosed represent the securities' amortized cost. (2) Fair value disclosures are not applicable for equity method investments and investments accounted for under the measurement alternative for equity investments.
Risk-management instruments above are disclosed on a gross basis. There are various rights of setoff associated with certain of the risk-management instruments above that are subject to enforceable master netting arrangements or similar agreements. Although various rights of setoff and master netting arrangements or similar agreements may exist with the individual counterparties to the risk-management instruments above, individually, these financial rights are not material. We determine our Level 1 and Level 2 fair value measurements based on a market approach using quoted market values, significant other observable inputs for identical or comparable assets or liabilities, or discounted cash flow analyses. Level 3 fair value measurements for other investment securities are determined using unobservable inputs, including the investments' cost adjusted for impairments and price changes from orderly transactions. The fair values of equity method investments and investments measured under the measurement alternative for equity investments that do not have readily determinable fair values are not readily available. The table below summarizes the contractual maturities of our investments in debt securities measured at fair value as of March 31, 2020:
The net unrealized gains recognized in our consolidated condensed statements of operations for equity securities were $164.7 million and $149.6 million for the three months ended March 31, 2020 and 2019, respectively. We adjust our equity investments without readily determinable fair values based upon changes in the equity instruments' values resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. Downward adjustments resulting from an impairment are recorded based upon impairment considerations, including the financial condition and near term prospects of the issuer, general market conditions, and industry specific factors. Adjustments recorded during the three months ended March 31, 2020 and 2019 were not material. A summary of the fair value of available-for-sale securities in an unrealized gain or loss position and the amount of unrealized gains and losses in accumulated other comprehensive loss follows:
We periodically assess our investment in available-for-sale securities for other-than-temporary impairment losses. Other than temporary impairment losses were not material in the three months ended March 31, 2020. There were no other-than-temporary impairment losses in the three months ended March 31, 2019. For debt securities, the amount of credit losses are determined by comparing the difference between the present value of future cash flows expected to be collected on these securities and the amortized cost. Factors considered in assessing credit losses include the position in the capital structure, vintage and amount of collateral, delinquency rates, current credit support, and geographic concentration. Credit losses related to debt securities were not material in the three months ended March 31, 2020. As of March 31, 2020, the available-for-sale securities in an unrealized loss position include primarily fixed-rate debt securities of varying maturities, which are sensitive to changes in the yield curve and other market conditions. Approximately 96 percent of the fixed-rate debt securities in a loss position are investment-grade debt securities. As of March 31, 2020, we do not intend to sell, and it is not more likely than not that we will be required to sell, the securities in a loss position before the market values recover or the underlying cash flows have been received, and there is no indication of default on interest or principal payments for any of our debt securities. Activity related to our investment portfolio, substantially all of which related to equity and available-for-sale securities, was as follows:
Realized gains and losses on sales of available-for-sale investments are computed based upon specific identification of the initial cost adjusted for any other-than-temporary declines in fair value that were recorded in earnings. Accounts Receivable Factoring Arrangements We have entered into accounts receivable factoring agreements with financial institutions to sell certain of our non-U.S. accounts receivable. These transactions are accounted for as sales and result in a reduction in accounts receivable because the agreements transfer effective control over and risk related to the receivables to the buyers. Our factoring agreements do not allow for recourse in the event of uncollectibility, and we do not retain any interest in the underlying accounts receivable once sold. We derecognized $687.0 million and $678.8 million of accounts receivable as of March 31, 2020 and December 31, 2019, respectively, under these factoring arrangements. The costs of factoring such accounts receivable on our consolidated condensed results of operations for the three months ended March 31, 2020 and 2019 were not material.
|
Acquisitions (Asset Acquisitions) (Details) - USD ($) $ in Millions |
1 Months Ended | 3 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2019 |
Mar. 31, 2019 |
Jan. 31, 2019 |
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Business Acquisition [Line Items] | |||||
Acquired IPR&D Expense | $ 52.3 | $ 136.9 | |||
Sitryx Therapeutics Limited | |||||
Business Acquisition [Line Items] | |||||
Acquired IPR&D Expense | $ 52.3 | ||||
AC Immune SA | |||||
Business Acquisition [Line Items] | |||||
Acquired IPR&D Expense | $ 30.2 | $ 96.9 | |||
ImmuNext, Inc. | |||||
Business Acquisition [Line Items] | |||||
Acquired IPR&D Expense | $ 40.0 |
Other–Net, (Income) Expense (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nonoperating Income (Expense) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other–net, (income) expense | Other–net, (income) expense consisted of the following:
|
Income Taxes (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Income Tax Disclosure [Abstract] | ||
Effective income tax rate, percentage | 13.30% | 23.30% |
Financial Instruments (Realized Gains and Losses) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Fair Value Disclosures [Abstract] | ||
Proceeds from sales | $ 63.3 | $ 93.7 |
Realized gross gains on sales | 11.6 | 2.5 |
Realized gross losses on sales | $ 0.8 | $ 0.4 |
Financial Instruments (Fair Value of Financial Instruments) (Details) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity investments without readily determinable fair values | $ 405.0 | |
Noncurrent investments | $ 2,148.7 | 1,962.4 |
Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 417.1 | 1,025.4 |
Short-term investments, debt securities | 78.4 | 101.0 |
Equity investments without readily determinable fair values | 426.3 | |
Noncurrent investments | 2,148.7 | 1,962.4 |
Short-term commercial paper borrowings | (3,243.1) | (1,494.2) |
Long-term debt, including current portion | (13,987.2) | (13,823.0) |
Cost | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 417.1 | 1,025.4 |
Estimate of Fair Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 417.1 | 1,025.4 |
Short-term commercial paper borrowings | (3,239.0) | (1,491.6) |
Long-term debt, including current portion | (15,119.0) | (15,150.0) |
Estimate of Fair Value Measurement | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 417.1 | 1,025.4 |
Short-term commercial paper borrowings | 0.0 | 0.0 |
Long-term debt, including current portion | 0.0 | 0.0 |
Estimate of Fair Value Measurement | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0.0 | 0.0 |
Short-term commercial paper borrowings | (3,239.0) | (1,491.6) |
Long-term debt, including current portion | (15,119.0) | (15,150.0) |
Estimate of Fair Value Measurement | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0.0 | 0.0 |
Short-term commercial paper borrowings | 0.0 | 0.0 |
Long-term debt, including current portion | 0.0 | 0.0 |
U.S. government and agency securities | Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | 9.3 | 7.2 |
Noncurrent investments, debt securities | 81.2 | 77.2 |
U.S. government and agency securities | Cost | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | 9.2 | 7.2 |
Noncurrent investments, debt securities | 77.4 | 76.3 |
U.S. government and agency securities | Estimate of Fair Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | 9.3 | 7.2 |
Noncurrent investments, debt securities | 81.2 | 77.2 |
U.S. government and agency securities | Estimate of Fair Value Measurement | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | 9.3 | 7.2 |
Noncurrent investments, debt securities | 81.2 | 77.2 |
U.S. government and agency securities | Estimate of Fair Value Measurement | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | 0.0 | 0.0 |
Noncurrent investments, debt securities | 0.0 | 0.0 |
U.S. government and agency securities | Estimate of Fair Value Measurement | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | 0.0 | 0.0 |
Noncurrent investments, debt securities | 0.0 | 0.0 |
Corporate debt securities | Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | 61.2 | 81.4 |
Noncurrent investments, debt securities | 230.6 | 271.1 |
Corporate debt securities | Cost | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | 62.7 | 81.1 |
Noncurrent investments, debt securities | 241.0 | 267.8 |
Corporate debt securities | Estimate of Fair Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | 61.2 | 81.4 |
Noncurrent investments, debt securities | 230.6 | 271.1 |
Corporate debt securities | Estimate of Fair Value Measurement | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | 0.0 | 0.0 |
Noncurrent investments, debt securities | 0.0 | 0.0 |
Corporate debt securities | Estimate of Fair Value Measurement | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | 61.2 | 81.4 |
Noncurrent investments, debt securities | 230.6 | 271.1 |
Corporate debt securities | Estimate of Fair Value Measurement | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | 0.0 | |
Noncurrent investments, debt securities | 0.0 | 0.0 |
Asset-backed securities | Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | 2.5 | 2.6 |
Noncurrent investments, debt securities | 30.1 | 30.0 |
Asset-backed securities | Cost | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | 2.5 | 2.6 |
Noncurrent investments, debt securities | 30.1 | 29.6 |
Asset-backed securities | Estimate of Fair Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | 2.5 | 2.6 |
Noncurrent investments, debt securities | 30.1 | 30.0 |
Asset-backed securities | Estimate of Fair Value Measurement | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | 0.0 | 0.0 |
Noncurrent investments, debt securities | 0.0 | 0.0 |
Asset-backed securities | Estimate of Fair Value Measurement | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | 2.5 | 2.6 |
Noncurrent investments, debt securities | 30.1 | 30.0 |
Asset-backed securities | Estimate of Fair Value Measurement | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | 0.0 | 0.0 |
Noncurrent investments, debt securities | 0.0 | 0.0 |
Other securities, current investments | Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | 5.4 | 9.8 |
Other securities, current investments | Cost | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | 5.4 | 9.8 |
Other securities, current investments | Estimate of Fair Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | 5.4 | 9.8 |
Other securities, current investments | Estimate of Fair Value Measurement | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | 0.0 | 0.0 |
Other securities, current investments | Estimate of Fair Value Measurement | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | ||
Other securities, current investments | Estimate of Fair Value Measurement | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments, debt securities | 5.4 | 9.8 |
Mortgage-backed securities | Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Noncurrent investments, debt securities | 102.5 | 101.1 |
Mortgage-backed securities | Cost | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Noncurrent investments, debt securities | 99.3 | 99.6 |
Mortgage-backed securities | Estimate of Fair Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Noncurrent investments, debt securities | 102.5 | 101.1 |
Mortgage-backed securities | Estimate of Fair Value Measurement | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Noncurrent investments, debt securities | 0.0 | 0.0 |
Mortgage-backed securities | Estimate of Fair Value Measurement | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Noncurrent investments, debt securities | 102.5 | 101.1 |
Mortgage-backed securities | Estimate of Fair Value Measurement | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Noncurrent investments, debt securities | 0.0 | 0.0 |
Other securities, noncurrent investments | Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 60.0 | 60.0 |
Other securities, noncurrent investments | Cost | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 27.4 | 27.4 |
Other securities, noncurrent investments | Estimate of Fair Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 60.2 | 60.0 |
Other securities, noncurrent investments | Estimate of Fair Value Measurement | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 0.0 | 0.0 |
Other securities, noncurrent investments | Estimate of Fair Value Measurement | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 0.0 | 0.0 |
Other securities, noncurrent investments | Estimate of Fair Value Measurement | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 60.2 | 60.0 |
Marketable equity securities | Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 869.5 | 718.6 |
Marketable equity securities | Cost | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 250.1 | 254.4 |
Marketable equity securities | Estimate of Fair Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 869.5 | 718.6 |
Marketable equity securities | Estimate of Fair Value Measurement | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 869.5 | 718.6 |
Marketable equity securities | Estimate of Fair Value Measurement | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 0.0 | 0.0 |
Marketable equity securities | Estimate of Fair Value Measurement | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 0.0 | 0.0 |
Equity method investments | Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity method investments | $ 348.5 | $ 299.4 |
Discontinued Operations (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 11, 2019 |
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Net income from discontinued operations | $ 0.0 | $ 3,680.5 | |
Gain related to disposition | 0.0 | $ 3,680.5 | |
Elanco | Discontinued Operations, Disposed of by Sale | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Revenue | 580.0 | ||
Net income from discontinued operations | 3,680.0 | ||
Gain related to disposition | $ 3,700.0 | ||
Transitional services agreement, term | 24 months | ||
Eli Lilly And Company | Elanco | Discontinued Operations, Disposed of by Sale | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Disposition of ownership interest | 80.20% |
Other Comprehensive Income (Loss) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Statement of Comprehensive Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income (Loss) | Other Comprehensive Income (Loss) The following tables summarize the activity related to each component of other comprehensive income (loss) during the three months ended March 31, 2020 and 2019:
(1) Accumulated other comprehensive loss as of January 1, 2019 consists of $5.73 billion of accumulated other comprehensive loss attributable to controlling interest and $11.0 million of accumulated other comprehensive loss attributable to noncontrolling interest. The tax effects on the net activity related to each component of other comprehensive income (loss) were as follows:
Except for the tax effects of foreign currency translation gains and losses related to our foreign currency-denominated notes, cross-currency interest rate swaps, and other foreign currency exchange contracts designated as net investment hedges (see Note 7), income taxes were not provided for foreign currency translation. Generally, the assets and liabilities of foreign operations are translated into U.S. dollars using the current exchange rate. For those operations, changes in exchange rates generally do not affect cash flows; therefore, resulting translation adjustments are made in shareholders' equity rather than in the consolidated condensed statements of operations. Reclassifications out of accumulated other comprehensive loss were as follows:
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Consolidated Condensed Statements of Cash Flows (Unaudited) (Parenthetical) $ in Millions |
Dec. 31, 2018
USD ($)
|
---|---|
Statement of Cash Flows [Abstract] | |
Discontinued operations cash | $ 677.5 |
Revenue (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of disaggregation of revenue |
Numbers may not add due to rounding. (1) U.S. revenue includes revenue in Puerto Rico. (2) Humalog revenue includes Insulin Lispro. (3) Jardiance revenue includes Glyxambi®, Synjardy®, and Trijardy® XR. (4) Trajenta revenue includes Jentadueto®. . The following table summarizes revenue by geographical area:
Numbers may not add due to rounding. (1) Revenue is attributed to the countries based on the location of the customer. (2) U.S. revenue includes revenue in Puerto Rico. The following table summarizes our revenue recognized in our consolidated condensed statements of operations: (1) Collaboration and other revenue associated with prior period transfers of intellectual property was $35.4 million and $35.5 million during the three months ended March 31, 2020 and 2019, respectivel
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Schedule of amounts recorded for contract liabilities | The following table summarizes contract liability balances:
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Cover Page - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Apr. 27, 2020 |
|
Document Information [Line Items] | ||
Document Quarterly Report | true | |
Document Transition Report | false | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0000059478 | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Entity File Number | 001-6351 | |
Entity Registrant Name | ELI LILLY AND COMPANY | |
Entity Incorporation, State or Country Code | IN | |
Entity Tax Identification Number | 35-0470950 | |
Entity Address, Address Line One | Lilly Corporate Center | |
Entity Address, City or Town | Indianapolis | |
Entity Address, State or Province | IN | |
Entity Address, Postal Zip Code | 46285 | |
City Area Code | 317 | |
Local Phone Number | 276-2000 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 956,450,448 | |
Common Stock (no par value) | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock (no par value) | |
Trading Symbol | LLY | |
Security Exchange Name | NYSE | |
1.000% Notes due 2022 | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 1.000% Notes due 2022 | |
Trading Symbol | LLY22 | |
Security Exchange Name | NYSE | |
7 1/8% Notes due 2025 | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 7 1/8% Notes due 2025 | |
Trading Symbol | LLY25 | |
Security Exchange Name | NYSE | |
1.625% Notes due 2026 | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 1.625% Notes due 2026 | |
Trading Symbol | LLY26 | |
Security Exchange Name | NYSE | |
2.125% Notes due 2030 | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 2.125% Notes due 2030 | |
Trading Symbol | LLY30 | |
Security Exchange Name | NYSE | |
0.625% Notes due 2031 | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 0.625% Notes due 2031 | |
Trading Symbol | LLY31 | |
Security Exchange Name | NYSE | |
6.77% Notes due 2036 | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 6.77% Notes due 2036 | |
Trading Symbol | LLY36 | |
Security Exchange Name | NYSE | |
1.700% Notes due 2049 | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 1.700% Notes due 2049 | |
Trading Symbol | LLY49A | |
Security Exchange Name | NYSE |
Consolidated Condensed Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Receivables, Net, Current [Abstract] | ||
Allowances for doubtful accounts | $ 23.7 | $ 22.4 |
Property and equipment, accumulated depreciation | $ 9,141.5 | $ 9,161.6 |
Financial Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of effects of risk-management instruments were recognized in other–net, (income) expense | The following effects of risk-management instruments were recognized in other–net, (income) expense:
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Schedule of effective portion of risk-management instruments that was recognized in other comprehensive income (loss), net investment hedges | The effective portion of risk-management instruments that was recognized in other comprehensive income (loss) is as follows:
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Schedule of effective portion of risk-management instruments that was recognized in other comprehensive income (loss), cash flow hedges | The effective portion of risk-management instruments that was recognized in other comprehensive income (loss) is as follows:
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Summary certain fair value information | The following tables summarize certain fair value information at March 31, 2020 and December 31, 2019 for assets and liabilities measured at fair value on a recurring basis, as well as the carrying amount and amortized cost of certain other investments:
(1) For available-for-sale debt securities, amounts disclosed represent the securities' amortized cost. (2) Fair value disclosures are not applicable for equity method investments and investments accounted for under the measurement alternative for equity investments.
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Summary certain fair value information, liabilities |
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Fair value, by balance sheet grouping |
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Summary the contractual maturities of our investments in debt securities measured at fair value | The table below summarizes the contractual maturities of our investments in debt securities measured at fair value as of March 31, 2020:
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Summary of the amount of unrealized gains and losses (pretax) recognized in our statement of operations for equity securities | A summary of the fair value of available-for-sale securities in an unrealized gain or loss position and the amount of unrealized gains and losses in accumulated other comprehensive loss follows:
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Activity related to our investment portfolio, substantially all of which related to equity and available-for-sale securities | Activity related to our investment portfolio, substantially all of which related to equity and available-for-sale securities, was as follows:
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Financial Instruments (Effect of Risk-Management Instruments) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
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Cash flow hedges: | ||
Total | $ (14.6) | $ 24.4 |
Foreign currency-denominated notes | ||
Cash flow hedges: | ||
Effective portion of risk-management instruments that was recognized in other comprehensive income (loss), net investment hedges | 67.4 | 53.7 |
Cross-currency interest rate swaps | ||
Cash flow hedges: | ||
Effective portion of risk-management instruments that was recognized in other comprehensive income (loss), net investment hedges | 115.8 | 38.3 |
Effective portion of risk-management instruments that was recognized in other comprehensive income (loss), cash flow hedges | (69.8) | (30.0) |
Forward-starting interest rate swaps | ||
Cash flow hedges: | ||
Effective portion of risk-management instruments that was recognized in other comprehensive income (loss), cash flow hedges | (369.8) | (11.7) |
Designated as Hedging Instrument | Foreign currency-denominated notes | ||
Fair value hedges: | ||
Effect from hedged fixed-rate debt | 117.3 | 39.3 |
Designated as Hedging Instrument | Interest rate contracts | ||
Fair value hedges: | ||
Effect from interest rate contracts | (117.3) | (39.3) |
Cash flow hedges: | ||
Effective portion of losses on interest rate contracts reclassified from accumulated other comprehensive loss | 4.0 | 3.8 |
Designated as Hedging Instrument | Cross-currency interest rate swaps | ||
Cash flow hedges: | ||
Effective portion of losses on interest rate contracts reclassified from accumulated other comprehensive loss | (12.9) | (28.3) |
Not Designated as Hedging Instrument | Foreign currency exchange contracts | ||
Cash flow hedges: | ||
Net (gains) losses on foreign currency exchange contracts not designated as hedging instruments | $ (5.7) | $ 48.9 |
Collaborations and Other Arrangements (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Dec. 31, 2019 |
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Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Revenue | $ 5,859.8 | $ 5,092.2 | |
Contract liabilities | 307.8 | $ 264.6 | |
U.S. | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Revenue | 3,328.8 | 2,890.8 | |
Europe | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Revenue | 1,061.0 | 900.3 | |
Japan | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Revenue | 592.3 | 543.7 | |
Trajenta | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Revenue | 93.2 | 131.9 | |
Trajenta | U.S. | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Revenue | 28.7 | 47.4 | |
Jardiance | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Revenue | 267.5 | 203.6 | |
Jardiance | U.S. | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Revenue | 144.6 | 125.2 | |
Basaglar | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Revenue | 303.7 | 251.4 | |
Basaglar | U.S. | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Revenue | 230.4 | 198.2 | |
Olumiant® | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Revenue | 139.7 | 82.1 | |
Olumiant® | U.S. | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Revenue | 11.3 | $ 6.4 | |
Lebrikizumab | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Contract liabilities | 43.8 | ||
Milestone Payments, Development and Regulatory, Capitalized (Deferred), Cumulative | Trajenta | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Milestones (deferred) capitalized | 446.4 | ||
Milestone Payments, Development and Regulatory, Capitalized (Deferred), Cumulative | Jardiance | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Milestones (deferred) capitalized | 289.0 | ||
Milestone Payments, Development and Regulatory, Capitalized (Deferred), Cumulative | Basaglar | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Milestones (deferred) capitalized | (250.0) | ||
Milestone Payments, Development and Regulatory, Capitalized (Deferred), Cumulative | Olumiant® | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Milestones (deferred) capitalized | $ 180.0 | ||
Royalty Agreement Terms | Olumiant® | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Collaborative arrangement, rights and obligations, percentage | 20.00% | ||
Milestone Payments, Development and Regulatory | Olumiant® | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Milestones (deferred) capitalized | $ 130.0 | ||
Milestone Payments, Development and Regulatory | Tanezumab | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Milestones (deferred) capitalized | 350.0 | ||
Milestone Payments, Development and Regulatory | Lebrikizumab | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Milestones (deferred) capitalized | 85.0 | ||
Milestone Payments, Sales-based | Olumiant® | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Milestones (deferred) capitalized | 150.0 | ||
Milestone Payments, Sales-based | Tanezumab | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Milestones (deferred) capitalized | 1,230.0 | ||
Milestone Payments, Sales-based | Lebrikizumab | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Milestones (deferred) capitalized | 1,250.0 | ||
Roche | Milestone Payments, Development and Regulatory | Lebrikizumab | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Milestones (deferred) capitalized | 180.0 | ||
Roche | Milestone Payments, Sales-based | Lebrikizumab | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Milestones (deferred) capitalized | $ 1,030.0 |
Financial Instruments (Unrealized Gains and Losses) (Details) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Unrealized gross gains | $ 11.2 | $ 10.3 |
Unrealized gross losses | 3.7 | 4.0 |
Fair value of securities in an unrealized gain position | 297.7 | 426.5 |
Fair value of securities in an unrealized loss position | $ 63.8 | $ 141.1 |
Retirement Benefits (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of net pension and retiree health benefit (income) cost | Net pension and retiree health benefit (income) cost included the following components:
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Consolidated Condensed Balance Sheets - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Current Assets | ||
Cash and cash equivalents (Note 7) | $ 1,699.0 | $ 2,337.5 |
Short-term investments (Note 7) | 78.4 | 101.0 |
Accounts receivable, net of allowances of $23.7 (2020) and $22.4 (2019) | 5,106.1 | 4,547.3 |
Other receivables | 1,246.4 | 994.2 |
Inventories | 3,102.4 | 3,190.7 |
Prepaid expenses and other | 2,761.9 | 2,538.9 |
Total current assets | 13,994.2 | 13,709.6 |
Investments (Note 7) | 2,148.7 | 1,962.4 |
Goodwill | 3,779.1 | 3,679.4 |
Other intangibles, net | 7,766.7 | 6,618.0 |
Deferred tax assets | 2,471.6 | 2,572.6 |
Property and equipment, net of accumulated depreciation of $9,141.5 (2020) and $9,161.6 (2019) | 7,897.9 | 7,872.9 |
Other noncurrent assets | 3,044.6 | 2,871.2 |
Total assets | 41,102.8 | 39,286.1 |
Current Liabilities | ||
Short-term borrowings and current maturities of long-term debt | 3,248.0 | 1,499.3 |
Accounts payable | 1,207.7 | 1,405.3 |
Employee compensation | 565.8 | 915.5 |
Sales rebates and discounts | 4,703.9 | 4,933.6 |
Dividends payable | 0.0 | 671.5 |
Income taxes payable | 667.4 | 160.6 |
Other current liabilities | 2,217.4 | 2,189.4 |
Total current liabilities | 12,610.2 | 11,775.2 |
Other Liabilities | ||
Long-term debt | 13,982.3 | 13,817.9 |
Accrued retirement benefits (Note 9) | 3,632.0 | 3,698.2 |
Long-term income taxes payable | 3,621.9 | 3,607.2 |
Deferred tax liabilities | 2,186.2 | 2,187.5 |
Other noncurrent liabilities | 1,873.0 | 1,501.0 |
Total other liabilities | 25,295.4 | 24,811.8 |
Commitments and Contingencies (Note 10) | ||
Eli Lilly and Company Shareholders’ Equity | ||
Common stock | 598.1 | 598.8 |
Additional paid-in capital | 6,556.1 | 6,685.3 |
Retained earnings | 5,879.4 | 4,920.4 |
Employee benefit trust | (3,013.2) | (3,013.2) |
Accumulated other comprehensive loss (Note 11) | (6,885.9) | (6,523.6) |
Cost of common stock in treasury | (55.7) | (60.8) |
Total Eli Lilly and Company shareholders’ equity | 3,078.8 | 2,606.9 |
Noncontrolling interests | 118.4 | 92.2 |
Total equity | 3,197.2 | 2,699.1 |
Total liabilities and equity | $ 41,102.8 | $ 39,286.1 |
Other–Net, (Income) Expense |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nonoperating Income (Expense) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other–Net, (Income) Expense | Other–Net, (Income) Expense Other–net, (income) expense consisted of the following:
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Acquisitions (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the amounts recognized for assets acquired and liabilities assumed as of the acquisition date | The following table summarizes the amounts recognized for assets acquired and liabilities assumed in the acquisition of Loxo as of the acquisition date:
(1) $4.60 billion of the acquired IPR&D relates to selpercatinib (LOXO-292). (2) Contract-based intangibles (primarily related to Vitrakvi®) which are being amortized to cost of sales on a straight-line basis over their estimated useful lives, were expected to have a weighted average useful life of approximately 12 years from the acquisition date. (3) The goodwill recognized from this acquisition is attributable primarily to future unidentified projects and products and the assembled workforce for Loxo and is not deductible for tax purposes.
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Schedule of asset acquisition | The following table and narrative summarize our asset acquisitions during the three months ended March 31, 2020 and 2019:
(1) The phase of development presented is as of the date of the arrangement and represents the phase of development of the most advanced asset acquired, where applicable. (2) We recognized an additional acquired IPR&D expense of $30.2 million in September 2019 upon entering into an amendment to the license agreement.
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Consolidated Condensed Statements of Cash Flows (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Cash Flows from Operating Activities | ||
Net income | $ 1,456.5 | $ 4,241.6 |
Adjustments to Reconcile Net Income to Cash Flows from Operating Activities: | ||
Gain related to disposition of Elanco (Note 5) | 0.0 | (3,680.5) |
Depreciation and amortization | 273.6 | 356.5 |
Change in deferred income taxes | 11.2 | (72.4) |
Stock-based compensation expense | 71.8 | 75.8 |
Acquired in-process research and development (Note 3) | 52.3 | 136.9 |
Other changes in operating assets and liabilities, net of acquisitions and divestitures | (1,408.1) | (714.3) |
Other non-cash operating activities, net | (74.9) | (32.3) |
Net Cash Provided by Operating Activities | 382.4 | 311.3 |
Cash Flows from Investing Activities | ||
Net purchases of property and equipment | (258.3) | (203.7) |
Proceeds from sales and maturities of short-term investments | 36.8 | 35.9 |
Purchases of short-term investments | 0.0 | (33.7) |
Proceeds from sales of noncurrent investments | 54.5 | 83.6 |
Purchases of noncurrent investments | (83.0) | (60.6) |
Cash paid for acquisitions, net of cash acquired (Note 3) | (849.3) | (6,917.7) |
Purchases of in-process research and development | (13.0) | (196.9) |
Other investing activities, net | 51.4 | (385.6) |
Net Cash Used for Investing Activities | (1,060.9) | (7,678.7) |
Cash Flows from Financing Activities | ||
Dividends paid | (671.3) | (637.2) |
Net change in short-term borrowings | 1,748.7 | 1,850.4 |
Proceeds from issuance of long-term debt | 0.0 | 4,448.3 |
Repayments of long-term debt | (276.3) | (600.0) |
Purchases of common stock | (500.0) | (3,500.0) |
Other financing activities, net | (194.4) | (193.7) |
Net Cash Provided by Financing Activities | 106.7 | 1,367.8 |
Effect of exchange rate changes on cash and cash equivalents | (66.7) | 37.8 |
Net decrease in cash and cash equivalents | (638.5) | (5,961.8) |
Cash and cash equivalents at January 1 (2019 includes $677.5 of discontinued operations) | 2,337.5 | |
Cash and Cash Equivalents at March 31 | $ 1,699.0 | $ 2,036.4 |
Collaborations and Other Arrangements |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Collaborations and Other Arrangements | Collaborations and Other Arrangements We often enter into collaborative and other similar arrangements to develop and commercialize drug candidates. Collaborative activities may include research and development, marketing and selling (including promotional activities and physician detailing), manufacturing, and distribution. These arrangements often require milestone and royalty or profit-share payments, contingent upon the occurrence of certain future events linked to the success of the asset in development, as well as expense reimbursements from or payments to the collaboration partner. See Note 2 for amounts of collaboration and other revenue recognized from these types of arrangements. Operating expenses for costs incurred pursuant to these arrangements are reported in their respective expense line item, net of any payments due to or reimbursements due from our collaboration partners, with such reimbursements being recognized at the time the party becomes obligated to pay. Each collaboration is unique in nature, and our more significant arrangements are discussed below. Boehringer Ingelheim Diabetes Collaboration We and Boehringer Ingelheim have a global agreement to jointly develop and commercialize a portfolio of diabetes compounds. Currently included in the collaboration are Boehringer Ingelheim’s oral diabetes products: Trajenta, Jentadueto, Jardiance, Glyxambi, Synjardy, and Trijardy XR as well as our basal insulin, Basaglar. Jentadueto is included in the Trajenta product family. Glyxambi, Synjardy, and Trijardy XR are included in the Jardiance product family. The table below summarizes significant milestones (deferred) capitalized for the compounds included in this collaboration:
(1) In connection with the regulatory approvals of Basaglar in the U.S., Europe, and Japan, milestone payments received were recorded as contract liabilities and are being amortized through the term of the collaboration (2029) to collaboration and other revenue. In connection with the regulatory approvals of Trajenta and Jardiance, milestone payments made were capitalized as intangible assets and are being amortized to cost of sales through the term of the collaboration. This represents the cumulative amounts that have been (deferred) or capitalized from the start of this collaboration through the end of the reporting period. (2) The collaboration agreement with Boehringer Ingelheim for Trajenta ends upon expiration of the compound patent and any supplementary protection certificates or extensions thereto. (3) The collaboration agreement with Boehringer Ingelheim for Jardiance ends upon expiration of the compound patent and any supplementary protection certificates or extensions thereto. Through December 31, 2019, in the most significant markets, we and Boehringer Ingelheim shared equally the ongoing development costs, commercialization costs, and agreed upon gross margin for any product resulting from the collaboration. We recorded our portion of the gross margin associated with Boehringer Ingelheim's products as collaboration and other revenue. We recorded our sales of Basaglar to third parties as net product revenue with the payments made to Boehringer Ingelheim for their portion of the gross margin recorded as cost of sales. For all compounds under this collaboration, we recorded our portion of the development and commercialization costs as research and development expense and marketing, selling, and administrative expense, respectively. Each company was entitled to potential performance payments depending on the sales of the molecules it contributes to the collaboration. These performance payments may have resulted in the owner of the molecule retaining a greater share of the agreed upon gross margin of that product. Subject to achieving these thresholds, in a given period, our reported revenue for Trajenta and Jardiance may have been reduced by any performance payments we made related to these products. Similarly, performance payments we may have received related to Basaglar effectively reduced Boehringer Ingelheim's share of the gross margin, which reduced our cost of sales. Effective January 1, 2020, we and Boehringer Ingelheim modernized the alliance. In the most significant markets, we and Boehringer Ingelheim share equally the ongoing development costs and commercialization costs for the Jardiance product family. We receive a royalty on net sales of Boehringer Ingelheim's products in the most significant markets and recognize the royalty as collaboration and other revenue. We pay to Boehringer Ingelheim a royalty on net sales for Basaglar in the U.S. We record our sales of Basaglar to third parties as net product revenue with the royalty payments made to Boehringer Ingelheim recorded as cost of sales. For the Jardiance product family, we record our portion of the development and commercialization costs as research and development expense and marketing, selling, and administrative expense, respectively. Boehringer Ingelheim is entitled to potential performance payments depending on the net sales of the Jardiance product family; therefore, our reported revenue for Jardiance may be reduced by any potential performance payments we make related to this product. Beginning January 1, 2021, the royalty received by us related to the Jardiance product family may also be increased or decreased depending on whether net sales for this product family exceed or fall below certain thresholds. The following table summarizes our net product revenue recognized with respect to Basaglar and collaboration and other revenue recognized with respect to the Jardiance and Trajenta families of products:
Olumiant We have a worldwide license and collaboration agreement with Incyte Corporation (Incyte), which provides us the development and commercialization rights to its Janus tyrosine kinase (JAK) inhibitor compound, now known as Olumiant, and certain follow-on compounds, for the treatment of inflammatory and autoimmune diseases. Incyte has the right to receive tiered, double-digit royalty payments on future global sales with rates ranging up to 20 percent. The agreement calls for payments by us to Incyte associated with certain development, success-based regulatory, and sales-based milestones. In connection with the regulatory approvals of Olumiant in the U.S., Europe, and Japan, milestone payments made of $180.0 million were capitalized as intangible assets and are being amortized to cost of sales through the term of the collaboration. This represents the cumulative amounts that have been capitalized from the start of this collaboration through the end of the reporting period. As of March 31, 2020, Incyte is eligible to receive up to $130.0 million of additional payments from us contingent upon certain development and success-based regulatory milestones. Incyte is also eligible to receive up to $150.0 million of potential sales-based milestones. We record our sales of Olumiant to third parties as net product revenue with the royalty payments made to Incyte recorded as cost of sales. The following table summarizes our net product revenue recognized with respect to Olumiant:
Tanezumab We have a collaboration agreement with Pfizer Inc. (Pfizer) to jointly develop and globally commercialize tanezumab for the treatment of osteoarthritis pain, chronic low back pain, and cancer pain. Under the agreement, the companies share equally the ongoing development costs and, if successful, in gross margins and certain commercialization expenses. As of March 31, 2020, Pfizer is eligible to receive up to $350.0 million in success-based regulatory milestones and up to $1.23 billion in a series of sales-based milestones, contingent upon the commercial success of tanezumab. Lebrikizumab As a result of our acquisition of Dermira, we have a worldwide licensing agreement with F. Hoffmann-La Roche Ltd and Genentech, Inc. (collectively Roche), which provides us the global development and commercialization rights to lebrikizumab. Roche has the right to receive tiered royalty payments on future global net sales ranging in percentages from high single digits to high teens if the product is successfully commercialized. The agreement calls for payments by us to Roche associated with certain success-based regulatory and sales-based milestones. As of March 31, 2020, Roche is eligible to receive up to $180.0 million of payments from us contingent upon the achievement of success-based regulatory milestones and up to $1.03 billion in a series of sales-based milestones, contingent upon the commercial success of lebrikizumab. As a result of our acquisition of Dermira, we have a license agreement with Almirall, S.A. (Almirall), under which Almirall licensed the rights to develop and commercialize lebrikizumab for the treatment or prevention of dermatology indications, including, but not limited to atopic dermatitis, in Europe. We have the right to receive tiered royalty payments on future net sales in Europe ranging in percentages from low double digits to low twenties if the product is successfully commercialized. The agreement calls for payments to us by Almirall associated with certain development, success-based regulatory, and sales-based milestones. As of March 31, 2020, $43.8 million was recorded as a contract liability on the consolidated condensed balance sheet and is expected to be recognized as collaboration and other revenue over the remaining Phase III development period. During the three months ended March 31, 2020, milestones received and collaboration and other revenue recognized were not material. As of March 31, 2020, we are eligible to receive additional payments of $85.0 million from Almirall contingent upon the achievement of success-based regulatory milestones and up to $1.25 billion in a series of sales-based milestones, contingent upon the commercial success of lebrikizumab.
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