Okay. Well, thank you, Scott. Thank you all for being here. It does look like a full room. It's been four years and a bit since I came to this lunchroom. So some of you may have come back, and I appreciate you mercifully re-attending and listening to me again. But I thought it's time to maybe revisit this group, kind of our town square for Indiana business here, and give you an update on what's been happening at the company, as well as a few comments on what's happening around us in Indiana and the world as I see it. And then finally, Scott and I will have an exchange, and hopefully you've got questions and feedback for us as well. So looking forward to the next 45 minutes or so. As I said four years ago, I came here and I made some comments about where we were as a company, but also a little bit on the environment. I'll revisit those topics, but you can maybe remember that time. And if you could put the slides up, please.
You know, at that point, Lilly was doing pretty well. We had grown the number of patients we were serving globally by about a factor of two in the prior five years. We had grown revenue, and the stock had appreciated nicely. We had just concluded a pledge we had made to launch about 20 new medicines in 10 years. And if you may recall, the period from 2005 to 2015 for Lilly, frankly, we struggled to do that. Our laboratories weren't as productive as we needed them to be. The company's revenue declined. We suffered major patent expiries. I'll revisit this in a minute, but we went through some tougher times. So we had set this goal, which at the time we thought was super ambitious, to launch two medicines a year in a decade. And we did achieve that. We had done 16 by the time I had shown up at this place, but we actually did get a little over 20. And we're now aiming a bit higher.
And one of the things that I think is a legacy of the company is a sustained commitment to performance over time. We all know businesses have ups and downs. Perhaps the medicine-making business has more ups and downs than others, in large part because of the business model related to patents. But we had committed to continue to spend and invest in R&D, which is really the seed corn for future growth of the company. And at that point, we were spending $24 billion over a five-year window or so, which was impressive and ranked us in the top 10, I believe, companies in the world. We may also remember that year because it was like the first year we could have a luncheon like this. We had emerged from the COVID period, and a lot had happened in the world. And I remember coming to this room, and it really felt like a sense of restored normalization — or was it? I think, you know, people were unsure about what was ahead and what would happen. And here's some images of Lilly. We actually made the first medicine for COVID in the world from scratch. We did that here in Indianapolis and shipped it around the world. That's a picture of some of our employees getting the first shipments out to patients at Indianapolis airport. We also helped a lot with testing. We made our own tests and had scaled testing in drive-through fashion at the corporate headquarters. And of course, did many other studies to try to overcome that contagion.
But maybe for this group more than anything, we were also part of the conversation about how to manage it and then how to get back to business and back to our daily work of whether it be educating students or running a city or running our companies. And I'm really proud of the work that Lilly did during this time. And I remember coming back to this room in '22, and one of the messages was it's time to get back to regular. And that's what we did. Since that time, you know, a lot's also occurred in the company, and here's just like a snapshot of where we've been. From about $22–23 billion in sales four years ago, we've now almost quadrupled that. This year, we expect revenue as high as $87 billion. We're in a quiet period, so we're not talking specifics today. I see some of my finance colleagues shifting in their seats here. But it's going to be a good year, I think, for the company. Earnings per share has grown by about sevenfold since that time. Employees have grown too. We've added about 10,000 employees to the company, and certainly the market capitalization of the company has grown to a little over a trillion dollars. I remember reading a few years back, actually shortly after '22 when I was here, how one of our competitors, Novo Nordisk, who also makes GLP-1 medicines, that their market cap was now larger than the GDP of their country, which was Denmark. But today, Lilly's market cap is double the GDP of Indiana. So we're a big part of the state. I think you get that, but we're proud of the achievements over the last several years, and I'm particularly proud of all of our employees. So in the state, we have 14,000 people. Some are here today. They're the ones who did this work. They're the ones that show up when it's difficult and push through problems. They're the ones that have made Lilly the number one drug company in the world. So I'm going to give them a round of applause right now. So thank you, our employees. [applause]
You can see the medicines we've launched since I was here last, and the idea that we continue to launch at least two medicines a year continues apace. We're actually aiming to double that over the next 10 years to four a year. We went 10 years launching two medicines in the 2000s. So just to give you a sense of the scale of this, and globally in our industry, typically there's about 40 new medicines invented and launched. So that would make Lilly a meaningful part of the substrate of the industry. This isn't happening by accident. Of course, picking the right areas to invest, making medicines that make a big difference, matters. Some of these medicines you may recognize the name of, like Mounjaro or Zepbound, which are now literally the largest-selling medicine in the history of the industry by far, just in four years since their introduction. I think this year most analysts have those two combined over $50 billion in revenue. And then some medicines you may not know, but important medicines for people with bad diseases that we don't want. Jaypirca is for B-cell-driven lymphomas. Inlurio is for breast cancer, a new medicine that just came out. Ebglyss is for atopic dermatitis. Kisunla is for Alzheimer's disease, which, as you may recall, was a feature of my prior talk as well, which is a 30-plus-year commitment to the company to make a difference in that condition, now launched, under investigation also for prevention of Alzheimer's. And Envo is a medicine for Crohn's and colitis. This has been enabled by huge investments. So we have announced a $55 billion capital program since I spoke to you last. This is basically constructing 12 or 13, depending on how you count, new factories around the world. We're also building laboratory space. Several of those investments are here in Indiana, the largest of which is happening just up the road in northern Boone County. If you've driven up I-65 to Chicago, turn to the east as you pass Lebanon, and you will see the largest medicine plant ever constructed in the United States. It's not actually done yet, so that's a topic I take up every afternoon with our head of manufacturing. But next year we'll begin to ship medicines from that site, and super proud of the achievements there. That will make our GLP-1 medications, which are now reaching tens of millions of people around the world, and for a disease that has a billion people on the planet who could benefit, thus the need for more scale and the great outlook for the company. We also invested extensively in R&D. I mentioned on the last slide we had $24 billion in investment over five years. Here you can see we're investing $14 billion in one year on R&D projects. So a very significant ramp-up in our commitment to future growth. This is funded, by the way, through our income statement. Maybe we'll get a question on drug pricing. But one thing to remember: when you buy a Lilly medicine, about 20 to 25 cents on the dollar of the cost goes to research. So it's to invent a medicine that maybe not for you and maybe not for a condition you'll ever have, but that's how we fund innovation in our world. And Lilly's leading that with, I think, the largest R&D investment in our sector and now one of the top five in the world in R&D expenditures. And a fair amount of that lands in Indiana as well. Three billion of that is happening here. Actually, the biggest part is clinical trials, which are happening in the healthcare system. That's about two-thirds of our total R&D spend is studying our medicines in people. Actually, Indiana, we're underrepresented in clinical trials, but never satisfied with the current state. We're working with both Dan's medical school and Pam's to improve the scope and reach of clinical trials to patients who have diseases in Indiana. I think a super important initiative. Watch that space. We hope to make a big difference there. And then AI. What would you do if we didn't mention AI in a business talk over lunch? So we've done a bunch of stuff here. I think Toun Lab, some of you may know this, but this is the first and I think only functional representation of using an AI toolbox for scientists and externalizing it. So we took the tools we make for our team and we productized them. Now, if you're a biotech, you can sign up and use those tools as well for free. All we ask for is to use your data to help train the models to improve them. And then everyone's systems get better. We don't look at your data. We just use it to improve the training. NVIDIA and Lilly are in a deep collaboration to make really the future of models to help scientists in biology. We built a supercomputer here in Indianapolis. Who knew? You can build data centers, by the way, and not get in the newspaper. We did that. It's inside our Lilly Technology Center campus down on Kentucky Avenue, but it's the largest supercomputer in the industry here in Indiana. And its purpose is to take the data we have in-house and generate new data to be able to predict biological interactions, help our scientists discover more medicines. And then we're building with NVIDIA also a co-innovation lab in the San Francisco area to look at new software models that scientists can use, and Lilly and NVIDIA are creating those together. And as it's mentioned, the Lilly Pod supercomputer, which is what we call it, is based right here in Indiana. So a good period we just went through, and I think the best is still yet to come. A lot of impact on Indiana because of our 150th. We did a study with the Kelley School at IU to look at the company's impact on the state. You can see the numbers here, but over 14,000 direct employees, but in our sector, it's three to one. So I know we have many, many collaborators and partners in the room. I want to thank you all for helping Lilly become successful. Whether you work to help us build our new plant in Lebanon, and I know there's a lot of construction industry people involved in that, you help us clean our buildings, you help us deliver goods, you help us in so many other ways, administrative services, etc. I want to thank you. The team of Lilly is 50,000 direct employees, but more than double that in indirect. And without your collaboration, we could not be as successful as we are. We have a big GDP impact, as you can see here, and also, you know, a really strong commitment to the community. These numbers are real, and I think we're in the middle of the United Way kind of fundraising campaign, and a reminder that Lilly plays a huge part in that organization, but also so many around the city, and both our hours as well as our employees and the company's resources. So really proud of the impact we do have here in our state. And of course, you know, if we look at the performance of the company, it's been pretty good. We are now number one in market cap in our sector. We're one of, I think, 11 or 12, depending on the day, companies in the world that are worth more than a trillion dollars. We're the only healthcare company in that group. And fun fact, we're the only one east of the Mississippi. So proud of that history we have in our state, but also proud to show you can be a high-performance modern company on this side of the country. And revenue is growing aggressively. This chart shows J&J above us, but J&J has a $30 billion non-pharma business, which makes us number one actually in human pharma already. A lot of questions I get is, okay, so what was the recipe that's led to Lilly's performance? And really, it's grounded actually in place. We're really proud to be the most interesting biotech company in the world and be based in the heartland. I don't think that's an accident, by the way. Our work is hard, it's long, and it's slow. And I think people here are used to staying on problems a little longer. This isn't a flashy part of the country. This isn't a place where people jump jobs and move around too much. I think that's really been a source of strength for our company in a business where sometimes it takes, in the case of Alzheimer's, three decades to invest and get one product. We need that kind of discipline and resolve in our workforce and in our company. But we've also taken what was a very strong company and really done some things to try to make it even better. One of those things was focus. I really believe that unless you are very clear every morning when you wake up what your one thing is, it's going to be very hard to achieve it if you've got five or six. We decided our one thing was making breakthrough medicines for people. And one of the consequences of that was to shed businesses that were off-patent and not maybe financially productive, but not interesting, as well as spin out our animal health business, which is now a thriving company here at Elanco Animal Health. Another thing I really believe is that, you know, there's not that much when you run a big company you actually can control. Scott's nodding aggressively there. But one of the things you can control is cadence and speed. And this turns out to be, I think, a compelling competitive advantage no matter what your size. Lilly's embraced that in spades. And I think while the early days of these initiatives were slower, I think we can see the flywheel really starting to spin. And I'm proud to say that whether it be going from a concept in a scientist's mind to a medicine that's being tested in humans, or taking that medicine tested in humans and getting it to patients around the world, or launching that medicine and getting to the peak performance and mass and kind of in the gestalt of the medical community and used as a standard of care, Lilly is the fastest at all those things. And maybe a 150-year-old company you wouldn't associate with speed, but we're proud of our speed and agility even though we're quite scaled and quite old. Finally, you've got to put resources to work, and that's dollars and people, and you have to do that in a smart way, but also not be afraid to take risks. I think our business is incredibly risky. We manage that risk by diversifying it across many, many bets. But the probability that a new medicine entering clinical trials gets to be a productive return is less than one in 10 in our industry. Lilly, it's a little higher. We bat a little bit above the average of the league, but it's a risky business. So we need to spread out those bets and not be afraid to fail. And when we do fail, to go back and ask why. And when we find out there's a reason we can affect, we try again. If there's not a reason to affect, we stop and we work on other productive ideas. I think that sounds simple, but I think in our sector, in an effort to manage risk, sometimes people actually take more by concentrating too much on ideas that may work but not be that helpful. I think we've taken a little different approach here. And then same with people. I think I look at myself 30 years ago walking in the doors of Eli Lilly. I knew nothing about the pharmaceutical industry. I was a freshly minted MBA with experience in the computer business. I worked at IBM, and the company in a series of events put me in jobs I had no business being in, and somehow they kept doing that, and I learned to do things. I was uncomfortable. I collaborated with others. I asked lots of questions, and eventually succeeded. And I think that's not an uncommon thing for Lilly people to say, that we take people with, I guess, good raw material and put them in situations where they can learn and grow. Taking risks on people has been a hallmark of the company's success, not just in the latest period, but over the course of 150 years.
So a good period for us in the past, but what about the future? You know, we have done well, but we are not at all done yet. I think if you look at the development of biomedical research and what's possible now, we can think of scale and scope and reach of what we do in a totally new way. And I can tell you I'm more excited than ever for the mission of our company. So excited. We've now tried to reframe sort of what we're doing. And you can see some of this represented in our TV advertising a little more subtly. We've changed our tagline to a medicine company, which is a very simple word in a way, practically what we do. But we're also using the word medicine, not drug, for a reason, because medicine is also the things around the drug, the way to find out if you're ill, the way to access care, the way to get to cure or success, whatever that definition is. This period of the company will be hallmarked by three goals, which is to really move more toward medical interventions that we make that free people from disease, if not permanently, semi-permanently. Now, this has sort of always been a goal. What's changed, I think, is a weighting in our investment toward these types of projects, but also what the technology is showing us it can do. So we are pretty excited about possibilities in our pipeline, and I think you will see many projects that begin to meet this definition of treatment to a cure.
Another thing, which is what we need to all work on, but Lilly needs to do our part as well, is make healthcare work better for people. The healthcare system right now is not the most pleasant experience in our lives. In fact, I think for many people it's the worst consumer experience they have every day. And I think that's a shame because it's also the most important thing to most people. We can play a role in fixing that, making care more accessible, easier to find out what to do, where to go, how to do it, and yes, more affordable. And speaking of that, I think it's our job also in this period to create value for everybody, not just ourselves. I think for a long time our industry has been looked at as kind of extractive. I think that's not true, but it's the perception we have. But we within our company, and then of course outside it, need to work with all parties, payers like the federal government or the state, and certainly healthcare providers and hospitals, to make sure when we have a medical intervention everybody's doing well with that, we're creating value at all parts of the system, and particularly for patients. So that's what our future will entail. When I come back in four and a half years, you can hold me to it. But we are incredibly excited about what the future of Lilly can be. And of course, we're building that future right here at home. Some people may say, well, this sounds like pie in the sky. Are you just dreaming? I would say, well, we actually are just doing that now. If you look at what's the real driver of our success right now, the differential drivers are our success with Mounjaro and Zepbound. Here's a picture of me with the three inventors of that product. They all live in Indiana, by the way. That happened here. It's an overhead picture next to it. This is about a year old now, so we need to update it. Of the Lebanon LEAP project, it's a 600-acre pharmaceutical plant, the largest ever constructed, and will be capable of supplying these medicines at a planetary scale. And that's important because of the last chart, which shows the rate of diabetes and obesity in our country. Diabetes, most of which is caused by overweight and obesity as we age. You can see that line hasn't moved, but I project it will, because the top line is the rate of obesity, which peaked in 2022, the year I was here, and is now declining at the nation scale. What happened in 2022? We launched Mounjaro, and I think really the only reason this is occurring is our intervention. We can and should get this medicine to more people. By the way, applaud the state of Indiana, which is now one of the first states to embrace a new deal we worked on with the Trump administration to provide GLP-1 coverage to all Medicaid patients in the state effective January 1. I think that's going to really change the health status of our state in a major way. July 1, the federal government's covering for seniors. So coverage and access is key. If you run a company and run a drug plan, come see me at the break about why you should be covering GLP-1s. It will save you money inside of two years. That's what the data says. So it's not just good for people, it's good ROI. But we are doing this now. The question is, can we repeat this hit? And our ambition is to do so over and over again.
And we do it from this place, from the heartland. And I think when I travel to the coast and talk about the Lilly story, I get a lot of questions about what's going on in Indiana and like, how do you do this in this place? Many people have never been here. They fly over it. Don't think a lot about it, but we're proud to be here and proud to be a Hoosier company. It's said often that, you know, what would Indiana be without Lilly? And that's obviously true, but I also think about what would Lilly be without Indiana. I think some of those attributes, the culture we have, our commitment to our people, the community to be persistent on hard problems, all come from this place. The last time I was here, I was trying to spur the administration to think differently about the possibilities ahead. And if you look at our state and how we're doing, I think there's a lot to be proud of actually since the four years I was here. These are some rankings by the various groups that rank, and you know, it's probably no surprise that on sort of the business friendliness, business attributes of infrastructure, cost of living, tax burden, etc., Indiana does pretty well. And by the way, on most of those things, we've improved in the last four and a half years. Well, on some of the areas that were more lagging, we've also improved. I think perhaps two that are really worth focusing on because I think the legislature purposely put money against these problems. Other people worked hard on them. Our education system has stepped up substantially. Hats off here to the science of reading program in particular, which is moving in a very significant way. Third-grade reading scores, which is key to unlock a future for our children. And workforce development too, which is about re-educating people or upgrading their skill set to earn more. Indiana is a standout on both of these. The trend lines are great. We need to continue and finish the job. We should aim for number one in both. But good work there. What's declining actually is quality of life. And I think that's kind of disappointing. This amalgamation of scores is driven by a bunch of things, but for Indiana, it seems to be driven down by both access to health care and quality of health as well as safety, public safety. So I think we can all agree both those issues need attention. I've been in more than one discussion about downtown Indianapolis public safety. We need to do something about that. Let's stop talking about it. I think it's really too much to read one more time about a shooting downtown of one of our young people. And of course, healthcare in our state needs to improve. We are not a healthy state. As I just mentioned, the coverage of our medicines and Medicaid will help, but it's not the only thing. We can work together on that. That said, we have many, many strengths right now, which also make the company stronger. World-class research universities. We are the manufacturing state, number one in percent of our GDP for manufacturing. And manufacturing is booming in our country, and it's booming here in Indiana. We of course have a really strong life sciences ecosystem and the number one life sciences company in the world. [cough] Let's take advantage of that. The new BioHeartland branding makes sense. We've got big medical schools, all kinds of assets to bring to bear to make this a reality. Really a BioHeartland. And we're growing in our ability of analytics and AI. I mentioned Lilly's efforts there. It is still an inexpensive place to do business. And there is progress, and I think real intention, particularly from Governor Braun, to do something about that stubborn and lagging healthcare issue that we face, which isn't just about cost, but it's about quality. And we need to make a difference there, and welcome anyone's efforts to join arms and try to fix that across our state. There's also some externalities I see, and I hope you do as well. But boy, they really point in our favor. So I think around the world there's lots of challenges. It's a complex economy we face. But the US, despite all our problems, is still the most compelling place to do business on the planet. And of course we're right in the middle of it. Within that, we do see a big push post-COVID to reshore manufacturing. Part of this is ignited by, I think, the challenge many of us face by having optimized maybe too much on efficiency, not enough on resiliency of supply chains. That's bringing more jobs back home, more manufacturing and distribution here to our country, closer to customers. But also, to be honest, the tax policy of this administration has also made a difference. It is now no longer a penalty for high-value goods to be made in the US, which it was before. We had the least competitive tax code in the world. Now we have one of the most competitive, and we're taking advantage of that. That's one of the reasons we're building 10 factories in the US. Huge opportunity. And of course, AI — Lilly is active here, but the country is leading the world in AI, and that will drive, I think, both significant opportunities for more advanced manufacturing, more advanced facilities including data centers, but also making everyone's companies more efficient and effective. I'll add one more, which is when I travel around our country, people, despite their own strengths and despite these tailwinds for every state in the country, you do hear a lot more concern about growth and building than you do interest in developing it. I think that's different here. I think people here in this room and at the statehouse want to see Indiana grow and build, and we should lean into that and advertise it. I think that makes us stand out to the top of any list of 50 states just on that dimension alone, let alone the other attributes I mentioned.
So in 2017, I was a new CEO, and I invited a guy named Jim Collins to come talk to my leadership team. And the topic of it was a book he wrote called Good to Great. Anyone read this book? Yeah. Jim's a great, great author, and he compares companies that were in similar situations then made different sets of choices, and which led some to just be okay, and which led some to be great. There's many attributes he analyzes to conclude, you know, what the great choice needs to have. But at the fundamental root of it is one word to me, which is ambition. Are you willing to make the tradeoffs you need to make to be the best? And I think at Lilly that day and every day since, we've decided to make those choices. They're not free. Okay. It's not easy to work at our company. My days are not short. What we do is long, and often you get frustrated. But it's worth it in the end if you want to be number one. There's nothing like that feeling. Just ask Pam. Choosing to be great is not a free choice, but it is a choice that is worth it. And I wonder as we sit here today, as we've got an election cycle coming up, as we think as the collective industry of Indiana, if we're willing to make that choice.
We did. I think it made a pretty big difference. Here's a chart of our stock price over the last 20 years. You can see a number of events along the way that were challenging and difficult. The patent expiries we faced, the failures in Alzheimer's. By the way, you know that was the 20 days before I took this job was that solanezumab failure. The next day we had a meeting about what could we learn and how could we do better, or should we stop. We decided we could learn and do better. We did. We got a medicine called Kisunla out of it, and every day since, aiming to be the best at what we do. And it's certainly paid off handsomely for Lilly, our shareholders, and our community. And I will end just by saying, you know, here in this room and for our friends up at the statehouse, does our state share that same view? Do we want to be the best? We could be the number one state in the country in many, many things, including healthcare, including growth rate. Today, our GDP, I think, is two to three times every surrounding state we have in growth. It could be a lot more. I think we need to send that message collectively to our leaders, and we need to act accordingly. Lilly's doing our part right now. I think we're building plenty and growing fast, and hoping you'll join us. So without further ado, I'll ask Scott to come up, and we'll have a little conversation. [applause]
