Eli Lilly – Response to HIV, TB, and Marlaria Pandemics (2003 – 2004)

Outcome: Successfully Withdrawn

Investors have an interest in how our company balances long-term issues with shorter term performance;
One long-term factor relevant to our company is the public health crisis confronting emerging markets and its implications for the future sustainability of our company’s sector’s current business model;
There are more than 42 million people worldwide currently living with HIV/AIDS, over 95% of whom live in the developing world;
According to UNAIDS, the HIV/AIDS pandemic is “creating or aggravating poverty among millions of people, eroding human capital, weakening government institutions and threatening business activities and investment”;
TUBERCULOSIS, one of the world’s leading infectious causes of death, takes 2 million lives a year and is a leading killer of people with HIV/AIDS;
Virtually no new research is being conducted to develop new treatments for TB, a disease which Doctors Without Borders calls “a political and social problem that could have incalculable consequences for generations to come.”
In a report for the UN Conference on Financing for Development, UNAIDS states: “Increasing illness and death of large numbers of productive members of society will reduce overall production and consumption.”
The highly touted agreement at the World Trade Organization related to easing access to essential medicines in developing countries has several riders. They place new regulatory burdens and additional uncertainty on countries and companies importing and exporting generic essential medicines.
In an analysis of how the world’s largest pharmaceutical companies are managing the investment risks arising from the issues surrounding the acute health problems of developing countries, our company’s rating was only 30%, while the highest rating was over 80%. Core Ratings found that “the extent of our company’s clinical trials programmes in developing countries means the company faces potential risks if it does not have policies to address the social challenges of operating in a developing country environment.” While our company “has a general policy on access [to essential medicines] this does not specificaly address differential pricing or patent flexiblity on set targets.” (Philanthropy of Good Business? Emerging Market Issues for the Global Pharmaceutical Industry, Core Ratings, May 2003).
The World Bank reports that in southern Africa and other affected regions “a complete economic collapse will occur” unless there is a response to the HIV/AIDS pandemic. Even “a delay in responding to the outbreak of the epidemic, however, can lead to collapse.” (The Long-run Economic Costs of AIDS, June 2003, The World Bank).
RESOLVED: Shareholders request that our Board review the economic effects of the HIV/AIDS, tuberculosis, and malaria pandemics on the company’s business strategy, and its initiatives to date, and report to shareholders within six months following the 2004 annual meeting. The report, developed at reasonable cost and omitting proprietary information, will identify the impacts of these pandemics on the company.

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