Supply Chain

At Lilly, we manage our supply chain to help maintain a safe and uninterrupted supply of our medicines. Within our own operations and the broader pharmaceutical industry, we work to support the United Nations Global Compact principles, ensure adherence to labor laws, and protect the environment. We partner with our suppliers around the world to encourage them to adopt the same global leadership standards that we have set for ourselves. We also aspire to broaden the participation of small and diverse businesses in the Lilly supplier base to levels more reflective of the wider business community.

We maintain relationships with thousands of suppliers of materials and services. We categorize suppliers into three tiers, which help to identify their type of impact from a supply risk perspective.[1]

Lilly supports the Pharmaceutical Industry Principles for Responsible Supply Chain Management, as set forth by the Pharmaceutical Supply Chain Initiative (PSCI), an industry group in which Lilly is an active participant. PSCI principles were designed to align with the principles of the United Nations Global Compact; they represent high-level expectations set for industry suppliers in the areas of ethics, labor, health and safety, the environment, and related management systems. Upon adopting the principles, we revised and updated our Supplier Code of Conduct to reflect these principles.

Through our participation in the PSCI, we’re proud to stand alongside 13 other pharmaceutical companies that share a goal of providing suppliers and service providers with common health and safety, environmental, labor, ethics, and business management standards. Together with our industry peers, we are working to educate suppliers and ensure that our partners operate in a way that is consistent with our own company values.

Lilly fully embraces the PSCI vision: that through the application of the principles, better social, economic, and environmental outcomes will result for those involved in the pharmaceutical supply chain. This includes improved conditions for workers, expanded economic development, and a cleaner environment for local communities. As a member of the PSCI, Lilly is committed to influencing positive social and environmental change in the pharmaceutical industry, and we will work to build our suppliers’ capabilities in these areas.

Our ability to manufacture quality medicines for patients depends on the quality and availability of the materials used in the manufacturing process. In 2008, we intensified our focus on implementing a proactive supply-chain risk management process. This annual process assesses the risk associated with our supplier base based on nine factors. We are also developing global maps that show supplier locations, identifying potential risks for the relevant geographic areas, and creating mitigation plans to further protect our supply chain.

Counterfeit Medicines

 

"At the European Alliance for Access to Safe Medicine, we are raising public awareness of the dangers posed by counterfeit medicines available in the legitimate supply chain and over the Internet. As we undertake major projects each year, Lilly’s much-valued support helps bring our message to wider audiences and effect real change. We are tremendously proud to have Lilly stand shoulder-to-shoulder with us in this important work."

Jim Thomson

Chair, European Alliance for Access to Safe Medicines
 

Counterfeit medicines pose a real and growing threat to patient safety and worldwide public health. Pharmaceutical counterfeiting crosses geographic boundaries and affects patients suffering from a variety of diseases. Medicines commonly involved in counterfeiting include those used for erectile dysfunction, oncology, cardiovascular disease, and mental health, preventing the proper treatment of these conditions.

Criminals are drawn to pharmaceutical counterfeiting by the prospect of high profits and low risk, as offenders are rarely prosecuted. Because of its unregulated environment, full anonymity, and access to patients, the Internet is a hot spot for counterfeiters. Criminal organizations dupe customers into buying counterfeit medicines through fake online “pharmacies,” which use images of trademarked or branded pharmaceutical products.

We believe that governments around the world need to increase enforcement activities and penalties related to counterfeit and substandard medicines. Lilly is actively engaged in efforts to combat counterfeiting, and we partner with governments and others to protect the health and safety of our patients. In 2006, we established an anti-counterfeit office. This office coordinates Lilly’s response to counterfeit drugs, including:

  • Working with global stakeholders in the supply chain to secure the integrity of Lilly products through legitimate distribution channels,
  • Adding enhanced anti-counterfeiting technology for Lilly products and packaging in our retail-product portfolios,
  • Seeking to deter major counterfeiters of Lilly products through targeted investigations, Internet monitoring, litigation, and prosecution, and
  • Working with government and nongovernment organizations and trade associations to strengthen, enact, and enforce anti-counterfeiting laws and raise awareness with health care professionals and patients about the dangers of counterfeit drugs.

Lilly is a founding member and steering group participant of the Alliance for Safe Online Pharmacies, a broad coalition of stakeholders who have an interest in protecting patient safety and ensuring patient access to safe and legitimate online pharmacies. In Europe, Lilly is active in the European Alliance for Access to Safe Medicine to further patient education about the dangers of counterfeit medicine.

For more information on Anti-Counterfeiting, including FAQs, click here.

Supplier Diversity

Diversity in our workforce is critical, but equally important is diversity in our supplier networks. Supplier diversity development meets a business need by helping our supplier base be more reflective of the diverse marketplace. A supply base that is reflective of the changing demographic of the patient population fosters creativity and innovation. Since 2005, the U.S. Small Business Administration has recognized Lilly as “outstanding” in our efforts to promote and maintain supplier diversity.

Our goal is to achieve greater than 10 percent of our external spend with small and diverse suppliers. In 2011, we spent $522 million with diverse suppliers, exceeding our goal of $430 million in diverse-supplier spending.

[1] Supply risk is the risk associated with Lilly's dependence on a third party for either services or materials that are critical to the operation of our business. Supply risk can come from many factors, including but not limited to supplier financial stability, ability to produce or provide services in a quality manner, or the impact of a natural disaster on the supplier's site. This risk is monitored on an annual basis, and mitigation plans are implemented and monitored to minimize it.