Phil Johnson - Executive Director of IR John Lechleiter - President and CEO Jim Greffet - Manager, IR Deirdre Connelly - President, Lilly USA

Derica Rice - Sr. VP and CFO James Kelly - Goldman Sachs Roopesh Patel - UBS David Risinger - Merrill Lynch Robert Hazlett - BMO Capital Markets Tony Butler - Lehman Brothers Steve Scala - Cowen And Company Catherine Arnold - Credit Suisse Seamus Fernandez - Leerink Swann LLC John Boris - Bear Stearns

Ladies and gentlemen, thank you for standing by, and welcome to the Q1 2008 Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions]. And I would now like to turn the conference over to our host for today, Phil Johnson. Please go ahead. Phil Johnson - Executive Director of Investor Relations: Good morning, and thanks for joining us for the Eli Lilly & Company's first quarter 2008 earnings conference call. I am Phil Johnson, Executive Director of Investor Relations. I am joined today by our Chief Executive Officer, John Lechleiter, our Chief Financial Officer, Derica Rice; the leader of our U.S Business, Deirdre Connelly; and Jim Greffet Manager of Investor Relations. You can access the earnings press release, a supporting material, a live webcast, and Internet based replay, and a podcast of this conference call at lilly.com. The replay, the supporting materials, and the podcast will be available on our website through May 23rd, 2008. During this conference call, we anticipate making projections and forward-looking statements that are based on management's current expectations, but actual results may differ materially due to various factors. For example, our results may be affected by competitive developments, the timing and success of new product launches, regulatory and legal matters, patent disputes, government investigations, governmental actions regarding pricing, importation and reimbursement, changes in tax law, acquisitions, business development transactions, and the impact of exchange rates. For additional information about the factors that affect our business, refer to our Forms 10-K and 10-Q. In addition, the information we provide about our products and pipeline is for the benefit of the investment community. It is not intended to be promotional and is not sufficient for prescribing decisions. Now, let me turn the call over to John. John Lechleiter - President and Chief Executive Officer: Thanks Phil, good morning. The overarching purpose of our call this morning is to summarize our financial results for the quarter and their good results. So, let me start by reiterating three of my top priorities as CEO. First, speeding the flow of innovative new products through our development pipeline; second, more effectively engaging our customers, patients, healthcare providers, and payers alike; and third improving quality and productivity across the board. Many successes in the years to come will be based on our ability to execute on these priority, and I intend to see that we do. These mandates are so important that I will begin each of our earnings call this year by giving you an update on our progress. After my update, we'll review financial performance and take your questions. Let's start with advancing of pipeline. On slide 2, you'll find a summary of our achievements in the first quarter. After advancing a record 16 new molecular entities into the clinic in 2007, Steve Paul and his team set their sites on moving another 15 NMEs into the clinic in 2008. They are on pace to achieve with ambitious goal with three molecules having begun Phase I testing in the first quarter. In addition to stocking the pipeline with innovative molecules we must move these molecules through clinical testing at a pace that enables us to effectively meet the challenge posed by our patent explorations in the next decade. During the first quarter, we moved two molecules into Phase II clinical trails and we moved one our gamma-secretase inhibitor for Alzheimer's disease into Phase III. We also continue to supplement our own innovation with collaboration, including the recently announced agreements with Transition Therapeutics, for their gastrin-based therapies for type 2 diabetes. In addition, we closed the deal with BioMS Medical giving Lilly exclusive rights to a molecule already in Phase III testing for secondary progressive multiple sclerosis. Furthermore, we had a number of successes on the regulatory front. The FDA approved Cialis for once daily use. In the first quarter, European regulators gave a positive opinion for Alimta for first-line non-small cell lung cancer, and in early April we received marketing authorization. We also received marketing authorization in Europe for Forsteo for GIOP of steroid induced osteoporosis, and we received an approvable letter Forsteo in the U.S. for the syndication. We launched Cymbalta in Canada and France. Australian regulatory authorities approved Cymbalta, and Cymbalta was submitted in Japan by our partner Shionogi. We launched the Humalog KwikPen in the U.S. We received notice that the FDA granted priority review the prasugrel and we submitted prasugrel in the EU. Finally along with Amylin, we submitted the application for a monotherapy indication for Byetta. We remain very excited about the prospects for this first-in-class molecule and are working closely with Amylin to maximize its value to patients. In Phase III, development of Arzoxifene continues for the indications of prevention and treatment of osteoporosis, and risk reduction in Invasive breast cancers. While we are still blind to the Phase III data in the ongoing five year generations trial, the overall event rate for invasive breast cancer is lower than expected. Consequently, we will defer the primary analysis for submission to a slightly later date allowing additional events to occur. As a result, we now expect to submit Arzoxifene in the fourth quarter of 2009 rather than earlier in the year. Running out of pipeline will remind it that there is risk in developing first-in-class, best-in-class medicine they've shown on slide 3. We terminated development of AIR insulin and received a not-approvable letter for Zyprexa long-acting injection. Despite these challenges, our pipeline especially the mid-stage is as strong as ever. As I did this update each quarter, I expect there will be variability in the progress, some quarters will almost certainly be better than others. For example, our plans indicate that movement of molecules into the clinic will be weighted to the back-half of the year. But I can assure you there is clarity throughout Lilly for advancing the pipeline as priority one. Moving to slide 4, the second priority is more effectively engaging our customers on all fronts: patients, healthcare providers and payers; again there is much to report here. In the quarterly results, you will see continued improvement in Humalog performance. Our solutions based approach integrates Humalog therapy, patient support and tools to improve patient outcome. Some examples: our nutrition in the best lean [ph] series to enable more sensible choices in fast food, the small steps videos outlining the little things that patients with diabetes can do to improve their control and our engagement with efficacy groups to build disease awareness and improve patient outcomes. In a more traditional example in the first quarter, we announced the partnership with Sanofi-Aventis to expand Cialis promotion to urologists, especially for the new once daily, indication. For Forteo, we've made significant progress in gaining improved access in part D plans with reasonable co-pays and sensible prior authorization requirement. I work in collaboratively with the part D plan; we now have 75% access. In our U.S. operations, we continue to measure effectiveness in engaging our customers using an approach called customer value metrics or CVM. Through CVM, we systematically collect feedback from our customers to understand Lilly's performance versus the competition in delivering value. Using this approach, we better understand the evolving needs of customers and how we can improve. As a result we have improved several of our sales and marketing practices, and we are seeing results; as one example our CVM scores has significantly increased with psychiatrists showing they now perceive Lilly as a leader in answering product related questions effectively, tailoring our communications to their needs, and providing relevant information to enable them to treat their patients in the most appropriate way. I'll now turn the call over to Derica, who will recap our strong financial results for the quarter, beginning with a review of progress on a third priority, productivity. Derica? Derica Rice - Senior Vice President and Chief Financial Officer: Thanks John. Let me begin on slide 5 by focusing on our productivity and flexibility agendas. We continue to make good progress on both fronts. Starting with productivity, let me begin with this chart that shows the trends and sales growth versus operating expense growth and the growth margin percentage. As shown here, operating expenses represents the sum of R&D and SG&A. Furthermore, sales and operating expense growth is on a pro forma basis as if we own ICOS as of January 1st, 2007. The line represents the gross margin percentage overtime. The bars represent the spread between sales growth and OpEx growth. During the period in which sales are going faster than OpEx, the bars are positive and vice versa. One of the ways we have highlighted the benefits of our productivity initiatives is through the operating leverage on our income statement, growing sales at a faster rate than cost and expenses. For Q1, the 12% growth and pro forma sales is 3 percentage points higher than the growth in pro forma operating expenses. While this shows substantial leverage on operating expenses, the Q1 growth and cost of sales was 18%, well above the sales growth. Consequently, the gross margin percentage declined slightly from 2007. Now on the surface, these results may appear inconsistent with our productivity objective; however, I like to provide some perspective on the effect of foreign exchange rates in these results. When we consider exchange rate, a different picture emerges as shown on slide 6. This analysis is particularly relevant this quarter given a movement in rate. If we remove the impact of exchange rate, sales grew 7%, almost entirely from volume. Cost of sales grew in a low single digit, and operating expense grew less than sales. Thus as you can see the underlying performance continues to show, operating the leverage and the positive effect of our productivity initiative. In addition, our bottom line is largely hedged against movements in currency exchange rates. Our productivity efforts continue to drive decreases in our infrastructure and headcount. We have reduced onboard headcount by over 5,500 people or 12% since the peak in mid-2004. Last week, we announced a further stream lining of our manufacturing operations in selected areas of research and development in Indianapolis. We expect the voluntary exit program we are offering will reduce headcount by up to 500 people. This announcement continues to trend a headcount reduction already achieved. Going forward, we will continue to undertake productivity initiatives across the entirety of our business. Along recruiting management of working capital, these productivity improvements are also producing robust cash flow. In addition, we continue to implement programs to increase our flexibility as shown on slide 7. In the sales force, we are using a number of tools to increase our flexibility. John already summarized our collaboration with the Sanofi-Aventis by the promotion of Cialis. We have discussed our use of contract sales organization supporting Cymbalta and insulin products. We are also expanding the use of a variety of flexible staffing arrangements, including contractors and fixed duration employees. These approaches provide a greater level of flexibility to adjust the sales staff and broader work force to match the needs of the business during a time of significant change. In R&D, we recently announced expanded collaboration with Nicholas Piramal and Suven Life Sciences, adding molecule...adding additional molecules to these developmental arrangement. As part of our fitness[ph] strategy, these arrangements increase our flexibility and reach enabling us to develop more molecules without expanding Lilly Infrastructure. These are just some of the examples of how we are improving productivity and flexibility throughout Lilly. Now, let's move to slide 8 and the specific results for the quarter. The Q1 results met our expectation, and we are tracking to our EPS guidance for the year. The solid business fundamental continue. The 12% growth in pro forma sales reflects 6% from volume, 5% from exchange rate and 1% from price. This slide summarize price in volume trends back to the year 2000. The volume growth of 6% in Q1 continues solid volume performance. This volume growth was achieved despite the drag from generic Zyprexa entries in Canada and Germany. Furthermore, on slide 9, you can see how our major products contribute to their overall volume growth. Led by Cymbalta, all of our growth products are contributing positively to volume growth. You will notice that Zyprexa shows a volume decline, reflecting both the impact of generic entries in Canada and Germany as well as the inventories build in the U.S. during Q4 2007, that depress Zyprexa volume in the first quarter of this year. Moving to slide 10; before Jim provides the detailed results for each product, let me comment on operating expense trends for the quarter. R&D grew 4% and SG&A grew 13%, though a couple of factors are to consider in these results. For R&D, the growth in Q1 of this year is affected by the conclusion last year of TRITON study of prasugrel, as well as targets in Q1 of 2007, related to Arxxant. These factors there to understate the underlying trends and R&D spend. For SG&A, the Q1 growth rate was elevated by several factors. First, we continue to make significant investments in Q1 behind our key products including Cymbalta, Cialis, and Humalog. We believe these investments are a key to drive a continued growth of these products. Second, foreign exchange rates added significantly to SG&A growth. Compared to R&D, the geographic distribution of our SG&A costs makes it more acceptably to changes in currency exchange rates. Finally, increased legal costs also contributed to year-on-year growth and SG&A. These costs include the $50 million settlement with the state of Alaska. Now let me the turn the call to Jim to give a more in-depth review of result. Jim? Jim Greffet - Manager, Investor Relations: Thanks Derica. Moving on to review financial results for the quarter; worldwide pro forma sales grew 12% to $4.808 billion. We will begin with a review of the sales performance of selected products and then discuss the other lines of the income statement. Slide 11 shows worldwide Zyprexa sales increased 1% to $1.12 billion. Sales in the U.S. decreased 5% to $499 million due primarily to lower demand. International sales increased 6% to $621 million due to the favorable impact of exchange rate. International demand decreased slightly as the impact of generic entries in Germany and Canada more than offset increased demands in other markets. Moving to slide 12, Cymbalta sales in the first quarter were $605 million, up 37% compared with the first quarter 2007. U.S. sales increased 32% to $511 million due to increased demands. International sales totaled $94 million, an increase of 69% over the prior year. Slide 13 shows worldwide Byetta sales for the quarter for $169 million, a 15% increase driven by demand. Lilly reports half of the gross margin from U.S. sales of Byetta, plus sales of pen to Amylin and 100% of international sales. Total Byetta revenue recognized in Lilly's income statements was $83 or 16% increase. Neither Lilly nor Amylin is satisfied with the performance of Byetta and a number of efforts are being implemented to sustain and improve Byetta performance, particularly in the U.S. First, sales territories are being aligned to improve accountability and coordination across the Lilly and the Amylin team, and to improve the reach and frequency of customer contact. Second, messaging between the clients is better addressed and is accessible and finalizes their position. Market research indicates their perception of Byetta's efficacy, particularly with binary care position are less than what has been demonstrated. Reinforcing Byetta's efficacy and glycemic control these two [ph]. Third, due to fields domain will help to reinforce glycemic control efficacy. Both Lilly and Amylin continue to play significant resources behind this first-in-class product to address performance that is inconsistent with what we believe to be is true potential. On slide 14, Humalog sales grew 20% to $407 million. U.S. sales increased 13% to $239 million driven by higher demand and increased prices. Sales outside the U.S. increased 31% to $169 million, driven by increased demand and the favorable impact of foreign exchange rate. Slide 15 shows growth trends in Humalog new prescriptions and total prescription since 2006. Two trends on this graph are particularly encouraging as we continue the efforts to reaccelerate Humalog performance. First, overall Humalog volume grew for the full year 2007, which was the first time annual Humalog volume grew since 2004. Second, through the first quarter of 2008, we see accelerating growth in both new and total prescription. These trends reflect the sustained efforts behind Humalog, the introduction of several new pen devices and more effective engagement of our customers on all fronts. On slide 16, Humulin sales for the quarter were up 14% to 258 million. U.S. sales increased 9% to 93 million driven by higher prices. International sales increased 17% due to the favorable impact of foreign exchange rate and increased demand partially offset by lower prices. Slide 17 shows worldwide Cialis sales. The global sales were up 27% in the quarter reaching 337 million. Sales in the U.S. were up 25% to 123 million due to higher prices and increased demand while sales outside the U.S. increased 28% to $214 million driven by increased demand and the favorable impact of foreign exchange rate. Moving to slide 18, Alimta sales in the first quarter were $247 million, an increase of 32% over Q1 2007. U.S. sales increased 17% to $122 million due primarily to increased demand. Sales outside the U.S. were up 50% to $125 million due to increased demand and the favorable impact of foreign exchange rate, partially offset by lower prices. Slide 19 shows quarterly Forteo sales of $185 million, up 21% over Q1 of last year. U.S. sales were up 10% to $118 million, primarily due to increased volume caused by variations in wholesale or buying pattern and higher prices. International sales of Forteo were up 45% to $67 million due to higher demand and the favorable impact of foreign exchange rate. Slide 20 shows the revenues from the products Lilly has launched this decade: Alimta, Byetta, Cialis, Cymbalta, Forteo, Strattera, Symbyax, Xigris, and Yentreve. On a pro forma basis, these products grew 26% reaching $1.7 billion or 35% of our sale. On a reported basis, sales of these products grew 33% in the quarter. Before looking at the rest of the income statement, let's look at the impact of price, exchange rates, and volume on the sales result; a summary by geography on a pro forma basis is shown on slide 21. For the quarter, Lilly sales growth of 12% was driven by a volume impact of 6% and a favorable impact of 5% from exchange rate, and 1% from price. For your information, slide 22 shows the impact of price rate and volume on a reported basis. For the quarter, Lilly's reported sales growth of 14% was driven by a volume impact of 8%, a favorable exchange rate impact of 5% and a favorable price impact of 1%. Now let's look at the rest of the income statement. Slide 23 shows the pro forma income statements. Gross margin as a percentage of sales in the first quarter was 76.9%, a decrease of 130 basis points compared to Q1 2007. As discussed earlier, this decrease was due to the impact of foreign exchange rate offset impart by manufacturing expenses growing at a slower rate than sale and by price. Operating expenses including marketing, selling and administrative and research and development expenses increased 9% in the quarter or 3% less than sale. Marketing, selling, and administrative expenses were up 13% to $1.6 billion. This increase was primarily driven by increase marketing expenses in support of key products, including Cymbalta, Cialis and Humulin; the effect of foreign exchange rate and the increased legal cost including the settlement with the state of Alaska. R&D expense grew 4% to $877 million or 18% of sale. The increase was primarily due to increases in discovery, research, and late stage clinical trial cost offset by lower prasugrel clinical trial costs. In the first quarter 2007, write off of Arxxant inventory as a result of the U.S. FDA's approval decision and the withdrawal of the Arxxant application in Europe. Other significant items decreased from $451 million in Q1 2007 to $233 million in Q1 2008. The 2008 amount includes the $145.7 million charge, primarily related to the decision to terminate the development of their influence and the $87 million charge related to acquired in-process R&D, associated with the BioMS Medical in licensing transaction. The 2007 amount includes $123 million charge, primarily related to manufacturing site closures and the $328.5 million charge related to acquired in-process R&D, associated with the ICOS acquisition and the OSI in-licensing transaction. The Q1 2008 effective income tax rate reflects a discreet benefit of $210.3 million, resulting from the conclusion of the substantial portion of an IRS audit for the years 2001 through 2004. For your information, we have provided a reported earnings statement on slide 24. Slide 25 shows fourth quarter... shows first quarter other income and deductions, which contributed $20 million, an increase of $3 million. Slide 26 shows the significant items affecting net income. These items include the $210.3 million after tax benefit or $0.19 per share from the resolution of the companies IRS tax audit for the years 2001 trough 2004. The $145.7 million pre-tax charge or $0.09 per share for asset impairments and restructuring primarily related to certain wind down costs associated with the termination of the AIR Insulin program, and the $87 million pretax charge or $0.05 per share for acquired in-process research and development for a compound acquired from BioMS Medical. You can see the impact of these items on earnings per share for this quarter in the table. The table also shows the impact of similar items from 2007 for comparison purposes. Now, let me turn the call back over to Derica to update you on our financial guidance. Derica? Derica Rice - Senior Vice President and Chief Financial Officer: Thanks, Jim. As shown on slide 27, our 2008 earnings guidance is now $3.90 to $4.05 per share. The change from earlier guidance results from a tax benefit of $0.19 per share resulted from the resolution of the IRS tax audit. A $0.09 per share charge related to the asset impairments and restructuring primarily related to the termination of the AIR Insulin program, and a $0.05 per share charge related to the end licensing transaction with BioMS Medical. After these items, our expected 2008 earnings per share would have remained in the range of $3.85 to $4.00 per share. Note also that this guidance does not reflect potential charges related to the recently announced voluntary exit program. Slide 28, shows our line item financial guidance. Excluding the effect of the resolution of the IRS tax audit, the estimated effective tax rate has been revised to approximately 22% from the previously stated 23%. This reduction is the result of a more favorable forecast of the mix of income between domestic and international operations, and the alignment of practices with conclusion of the IRS tax audit. No other elements of our previously issued line item guidance have been changed. As discussed on past earnings call, we no longer provide quarterly financial guidance. We realize that financial estimates will be produced by those following our stock. However, we will not comment on the accuracy of these estimates. This concludes our review for the first quarter, and we will now be happy to take your questions. Operator, first caller please? Question And Answer

Our first question will come from the line Jim Kelly from Goldman Sachs. Please go ahead. James Kelly - Goldman Sachs: Thank you, and good morning. I have a question about the impact in volumes, just taking a look at the comparison from the last quarterly report, where volumes whether it was done in a pro forma or reported basis were slightly higher on a full year basis for 2007. I am really focusing on some markets like Japan, rest of world and animal health. Could you give us some color on those markets, where we don't often see a lot IMS data and other third party sources? Thank you.

Perfect way to ask a question, Jim? [ph]: Derica Rice - Senior Vice President and Chief Financial Officer: Good morning, Jim. When you look at our volume growth and especially if you were to look at Q4 2007 or even Q1 '08, there are a number of factors. First of all, overall we still continue to see strong volume growth; the 6% is more than half of our total revenue growth is focused on a pro forma basis and that is a net that 6% is the negative impact of generic Alimta scheme [ph] entrance in Canada and Germany, which we have been able to offset. You also had some wholesaler de-stocking in the U.S. in both the retail channel as well as the wholesale channel. And then you also had some unusual buying patterns in Elanco Animal Health business Q4 '07, but if you were to take those out, you would actually see a fairly solid and pretty much continued sustained effort of volume growth in the business. John Lechleiter - President and Chief Executive Officer: Jim, this is John Lechleiter. I think in Japan, we also have the impact of the by annual price decrease, which goes into effect April 1. So, it's going to have the impact of depressing volume in the first quarter somewhat there. Derica Rice - Senior Vice President and Chief Financial Officer: We continue by the way, just to make the point on Japan to move up in the table, where we are now, I think either number 22 or number 23 based on our growth relative to others in that market employees to move into the top 20 by the turn of the decade. James Kelly - Goldman Sachs: Thank you. Phil Johnson - Executive Director of Investor Relations: Next caller, please.

Roopesh Patel from UBS. Your line is open. Roopesh Patel - UBS: Hi, thanks a lot. Just a couple of questions; first on prasugrel, I was just wondering if you could comment on whether or not based on your discussions with the FDA to date you still expect approval by the June 26th PDUFA date and any light you can shed it on your expectations relative to an advisory committee or panel meeting? And then separately if you could also kindly just comment on the flattishness we've seen in Cymbalta trends and what we should expect going forward? Thanks.

Okay, Roopesh, we'll have John handle your first two questions on prasugrel and then Deirdre on Cymbalta. John Lechleiter - President and Chief Executive Officer: Roopesh we are very much engaged with the FDA as they continue their review of prasugrel toward the June26 action date. It would be impossible for me to speculate on what that action is going to be except to say that there has been considerable amount of back and forth between the FDA and Lilly's. One would expect in a priority review period that shortened down to six months; we still at this point have no indication if there is going to be an advisory committee. Deirdre Connelly - President, Lilly USA: Good morning, and in terms of Cymbalta; first of all, we continue to see Cymbalta growing faster than any other branded entity present in the marketplace, which makes us obviously very pleased. Those parts of that product that is pen related, as you know, the PNP [ph]. And we've seen a slow down of that part of our business with the recent launch. Now we have every expectation given the many opportunities fibromyalgia offers or pen offers in the future to recapture all part of that business and when we launch our fibromyalgia indication. Phil Johnson - Executive Director of Investor Relations: Next caller, please.

David Risinger from Merrill Lynch. Please go ahead. David Risinger - Merrill Lynch: Yes, thanks very much. I have a couple of questions. First, could you please update us on the Zyprexa Depo formulation, just provide a little bit more detail following your discussions with the FDA in terms of how we should think about that product on a go-forward basis? Second, could you please provide an update on Byetta LAR manufacturing and whether that product is being used in the current clinical trials from the new facility yet? And then finally on Evista; if you could just walk us through the patent challenge situation with Evista, so that we have the appropriate framework for that. Thank you. Phil Johnson - Executive Director of Investor Relations: Okay. I would ask John to go ahead and handle the Zyprexa Depo and the LAR manufacturing question and Jim handle the second question. John Lechleiter - President and Chief Executive Officer: Good morning David. When we received the non-approval letter in March, we immediately contacted FDA obviously in effort to really understand the root of their concerns. That has to do with these inadvertent intravascular administration issues that tend to cause or have caused among... about 1% the patients in clinical trials that essentially profound sedation. So, we need to understand that better; we do have a meetings scheduled. It's not yet taken place, and once that meeting is complete and we have a better idea how we might proceed forward, we'll communicate that. With respect to Byetta LAR, we are just... Amylin is really just bringing up the plant that's going to manufacture the commercial commodities online now. So, our goal is in the intervening March is to really make sure that the material risks that coming out of that plan is in fact equivalent to material that was made using the same process, but on a smaller scale, and that's one of the things we'll need to complete before we file, and the date that we've given remains before the second half... before the first half of 2009. Jim Greffet - Manager, Investor Relations: And on the specific use in clinical trials, Dave, we've not yet put that commercial scale material from the facility in Ohio into our clinical trials. That may happen this year, but has not happened to-date. On your question for the Evista litigation and challenge from those given bars [ph], we have essentially a couple of dates you want to keep in mind. One is the expiration of a 30 month stay for Teva in November of this year, and then we also have a court date with them in early March here in the southern district of Indiana. The... as you are copying from some of our past comments, the status with bar is frankly on hold; you can say we've not yet provided any actual description of or physical samples of material. I do believe that well it's actually worthy, first filer in this case. So, the status of payments that just recently announced tentative approval for this generic Evista is I think a little bit unclear at this point of time for that reason. Phil Johnson - Executive Director of Investor Relations: One other thing, just to be absolutely clear on the Byetta once weekly submission timing, it is by the end of the first half of 2009. John, I think you said by the first half of 2009; so, to be clear that timing hasn't changed. David Risinger - Merrill Lynch: Great; thanks, gentlemen. Phil Johnson - Executive Director of Investor Relations: Next caller, please.

Rob Hazlett from BMO Capital market. Your line is open. Robert Hazlett - BMO Capital Markets: Yes, thanks. Good morning everyone; just a couple of quick ones. Regarding prasugrel, could you discuss any efforts you have made so far to construct the sales effort and the status there? Secondly regarding gross margin, the Zyprexa Canada and Germany generics have an effect in gross margin and maybe you did state that there... but could you just discuss the potential for gross margin effects for the remainder of the year? And third, was there stocking during the quarter of KwikPen... Humalog KwikPen and/or Cialis QD? Thanks. Phil Johnson - Executive Director of Investor Relations: Okay, I'm going to ask Deirdre to go ahead and take your question on the prasugrel sales effort as well as maybe your last piece on if we can take an initial stocking for Cialis once daily as well as Humalog KwikPen. Deirdre Connelly - President, Lilly USA: Thank you, Phil. First, thank you very much for the question. Yes, we are absolutely ready for the eventual launch if the FDA... after their review allow us to launch prasugrel, which grows. We all are looking forward to and our preparations consist of and hospital sales division that has been in place now for two quarters, so ready to go when we get the product in our bag. And a primary care division that we have been building in the last few months. Robert Hazlett - BMO Capital Markets: And in terms of the initial sales as for Cialis once a day as well as the Humalog KwikPen, Deirdre. Deirdre Connelly - President, Lilly USA: Yes,in terms of KwikPen like John and Jim mentioned previously, the result that we see was our share market with Humalog, we believe reflects the great reception of the marketplace of our KwikPen. So, it has been launched very effectively; in terms of Cialis? John Lechleiter - President and Chief Executive Officer: Yes, the Cialis daily is 700,000 stocking and then the KwikPen is a little bit of stocking, but with the decline in regular pen. Deirdre Connelly - President, Lilly USA: Thank you. Phil Johnson - Executive Director of Investor Relations: Jim, do you want to go forward? Jim Greffet - Manager, Investor Relations: Sure. On the gross margin, you saw gross margin for the quarter declined 1.3 percentage points, but if you were to exclude the impact of exchange rate, we actually saw gross margin improvement in the quarter and in terms of outlook for the year, I feel while we cannot predict what will happen when exchange rates. In terms of the underlying business fundamentals, we still expect to grow our manufacturing expenses at a slower rate in sales than we should see on a fundamental basis gross margin improvement excluding the impact of exchange rates. Phil Johnson - Executive Director of Investor Relations: Okay. Next caller, please.

Tony Butler from Lehman Brothers. Your line is open. Tony Butler - Lehman Brothers: Just again on the same question on KwikPen; was it also wanted internationally. And then second, Derica could you provide some range for what FX, the FX contribution for SG&A was in the quarter? Thank you. Phil Johnson - Executive Director of Investor Relations: Well, John will take your question KwikPen and Derica on the SG&A. John Lechleiter - President and Chief Executive Officer: Totally, we've not yet launched, we had a few... actually a few early pilot countries that we launched in a year or two ago. We have not had a major rollout in another market outside the U.S. We did get approval this quarter in Japan for the pen called MirioPen in Japan, and we have a sequence of rollout that will initiate later this year that outside U.S. Tony Butler - Lehman Brothers: Okay. Derica Rice - Senior Vice President and Chief Financial Officer: And Tony regards to the FX impact on SG&A, essentially if you look at the 13% SG&A growth, over half of that was due to the impact of exchange rates and then also a small impact of also the impact of increased litigation costs. Phil Johnson - Executive Director of Investor Relations: Next caller, please.

From the line is Steve Scala from Cowen. Please go ahead. Steve Scala - Cowen And Company: Thank you, I have two questions. What was the first quarter tax rate without the tax benefit and the one time charges? Was it 22%, which would be consistent with the full year guidance? And secondly, given that the 30-month span, GEMZAR expires in July and Teva had extended approval. What are your range of options here? Would you say now that you absolutely will not settle this litigation or would you consider that as one of your options? Thank you.

Let me take your first question and I'll have Jim take the second one. Steve Scala - Cowen And Company: Sure.

In regards to the tax rate tax, if you would our reported tax rate if you were to exclude the... or did not have the impact of the tax settlement, we would be in the range of approximately 22% for the quarter. Jim Greffet - Manager, Investor Relations: Regarding GEMZAR, so we... this has been a frequent topic of conversation. So, we talked with our patent folks and have spent some time with them. And they have really sized up our patent to stay with GEMZAR in comparison to what we've seen in the marketplace with Protonix and others. And at the bottom line, we feel very strong about our protection. We think we will prevail if we did get to the point, where we are looking at an at risk launch, we feel confident in our ability to get a preliminary injunction and the patent folks have looked through the forecast that the court would do for preliminary injunction including the likelihood of wining ultimately a trial. So, their status is we believe that are putting and sound if it... if push came to shall so to speak, we would be successful in getting FDI. Phil Johnson - Executive Director of Investor Relations: Next caller, please.

From the line of Catherine Arnold from Credit Suisse. Please go ahead. Catherine Arnold - Credit Suisse: Hi, thanks. I have a couple of questions; first of all on Byetta. I just want to clarify my understanding was at the timing was the fine by the end of the second... first half '09; however there was an expectation that was it either going to be reaffirm or updated, because there were some strategies in mind that might bring some up side to that. And if I got that wrong, are you really going to hear from you to list that changes? And then on expenses, I wonder if you could just give any color to what you expect in the three quarters of the year, are there unique expense that we should be looking out for in terms of SG&A cost or R&D that would prevent sort of the mistiming of expenses by street estimates? Phil Johnson - Executive Director of Investor Relations: Thanks Catherine; we'll have Jim handle your first question on the Byetta timing and then Derica the second on the expenses? Jim Greffet - Manager, Investor Relations: So, you are right Catherine. The affirmative statement we have made on the filing timings for exenatide once weekly as by the end of the first half of 2009, I think in Amylin's analyst meeting late last year, they provided a sort of a continue of options. Remember that one of the key factors influencing the timing is the reconciliation that we will do with the FDA from the lower scale manufacturing that was done in the clinical trial to full commercial scale. The timing that we have given by the end of the first half of '09 really assumes the most robust reconciliation is done. In the event, we are able to get a more streamlined reconciliation agreed to with the FDA that timing could conceivably be sooner. We realized that this is an important question; so for the time being, that's really the state of play as we have more definitive timing to provide based on the developments with GSK [ph], we will give it to you. Derica Rice - Senior Vice President and Chief Financial Officer: Okay. And Catherine on the expense side, are you not aware of any other unusual expense items now and the next nine months? We... if you recall, when we gave our guidance for the year, I clearly stated that we expect operating leverage both in terms of our gross margins improvements as well as expenses in SG&A and R&D growth in total at a sole rate than revenue growth. As you saw when I took out the FX impact, I think I made it very clear we thought Q1 result that we were able to achieve that leverage and I fully expect that we will continue to drive for the same kind of leverage in the last nine months as well. Once again, knowing where the exchange rates will go. I think that's also consistent with the guidance we gave for the year and when I look at our first quarter results, which I think is very solid in our minds, we are very much on track to achieve the range that we gave for the year as well in the bottom line. Phil Johnson - Executive Director of Investor Relations: Catherine, it's not in issue for 2008 necessarily. As Derica is mentioning, when you get to the year-on-year compare, Q4 of this year compared to Q4 of '07, you should see a significant step-down what's likely in the FX impact. As well as the fact that in Q4 2007, we had a confluence of quite a number of investment opportunities that raise the SG&A expense in particular in that particular quarter. Next caller, please.

Seamus Fernandez from Leerink Swann. Your line is open. Seamus Fernandez - Leerink Swann LLC: Thanks very much. I have a few questions. First, can you just help me better understand if the mix came in better than your anticipated than your expectations. Can you help me better understand the gross margin percentage printed in the quarter? It seems to have missed my expectations by a substantial amount. And I am just wondering why that would occur, where their accruals booked last year that simply were not booked this quarter that would have come in at 100% gross margin or what really is the impact in the quarter there? Then secondly animal health, three companies or at least two companies have reported so far on the animal health businesses and those are coming in below at least my expectations. Just wondering if there is some buying patterns in the animal health businesses that we should anticipate on a quarter-over-quarter or year-over-year basis or is there something structural in the animal health business that would suggest an economic slowdown would have impact there. And I'll go offline. Thanks. Phil Johnson - Executive Director of Investor Relations: Thanks very much. I'll have Derica addressable to your question. Derica Rice - Senior Vice President and Chief Financial Officer: Okay, in regards to the mix impact that was what we saw was driving our gross margin and I think I can cover the mix question as well as if we had booked any charges in this response. Our gross margin declined was entirely driven by the impact of foreign exchange rate. If you were to exclude that the impact of foreign exchange rate, we simply saw substantial gross-margin improvement in the first quarter alone. If you look, there were no special charges in gross margin and so forth; it was all exchange rates. We also... if you look back... by the time you get to the bottom line, we have a natural hedge for the most part in our P&L. For a while, we've had a positive impact on sales; it has a negative effect on gross margin in terms of positives as well as our expense base. So, when you get to the bottom-line, pretty much naturally hedged. In regards to animal health, we did see some buying patterns in the fourth quarter in U.S. of 2007, but for the most part, our underlying trends have been very solid that we think. And we've also had the continued positive effect of the expansion of our companion animal business most recently with the launch of Comfortis in the U.S. Phil Johnson - Executive Director of Investor Relations: Seamus,one other comment on the manufacturing expenses and gross margin as a percent of sales, as Derica mentioned, excluding the impact of foreign exchange rates, we actually would have seen an expansion in the gross margin as a percent of sales. That really is not due to mix, it's due to the fact of our manufacturing expenses are growing much slower than sales. We talked in the past year or so about actions we've taken at a plant over in the UK at Basingstoke, also down in Virginia, Prince William County as well as up in Central Indiana at Lafayette, Indiana. We are obviously looking to continue our productivity efforts in this area. We still have a strong gross margin going forward as evidenced by some of the announcements that we talked about just a week ago on restructuring our Indianapolis bulk manufacturing operations. Next caller, please.

John Boris from Bear Stearns. Your line is open. John Boris - Bear Stearns: Okay, thanks for taking the questions. First question on prasugrel; can you just chat about where both manufacturing is coming from and full unfinished and whether the FDA has inspected both of those facilities and whether they have signed off on your CMC section of your NDA? And secondly, have you built large quantities and did launch quantities include five mix, 7.5 and 10 milligram tablets? Second question on Alimta, can you just characterize the EU rollout in first line, non-small cell lung cancer and whether you view that as a material or significant opportunity and when we might be seeing some contribution from that and what the rollout might look like. And then just third on at least a question for John on pricing and rebating at the government level. I think in March there is a bill passed to House Bill 1424, met the whole parody, where they are actually looking for an extra claw back of 5% from the 15.1% to 20.1% price level. I think there was a little executive that was quoted to saying that that looked like price control or form of a price control was looking to be put into effect. Just your thoughts on that going into '09 and where do you see that potentially being more broader... broadly applied to other therapeutic categories going forward? Thanks. Phil Johnson - Executive Director of Investor Relations: All right, thanks John. I'll handle your first three questions and have John handle your last one on the piping rebating here in the U.S. For prasugrel, the bulk will be coming from Kobe in Japan as the full finish will be done here at our Indianapolis facility. Neither those two facilities yet have been scheduled for the FDA pre-approval inspections are still yet to come. Large qualities, we need to get back to you. We don't have information right now on the status of the actual stocking and inventory build for the product launch. And then for EU for Alimta, it's too early tell right now what kind of uptake that we will see, but clearly this is an important indication for us and the one that we think can get an important advancement particularly if you look to go ahead and have more tailored medicines the physicians have more surety if they are going to get the intended benefit when they prescribe their use, given the fact that they have honed in on [ph] these are the products based of histology. John? John Lechleiter - President and Chief Executive Officer: John, your question about the mental healthcare and legislation [ph] there is a House version and a Senate version; and the House version includes the pay for provision that wouldn't effect the increase rebates and we are close to that. But certainly within that legislation it's very much that we would support. So, we are really trying to see if there is a way to give the right kind of legislation through that has... that doesn't have this provision in it that you referred to. Phil Johnson - Executive Director of Investor Relations: We'll take one more call.

That will come from the line of Ira Dan from Bear Stearns [ph]. Please go ahead.

Hi, this is... I am speaking for Tim Anderson. I have three questions. First what is the status of Zyprexa Depo internationally, and should we expect similar outcome in terms of safety concerns. The second question is do you have any thoughts on why FDA advisory committee has not been set up for capacity growth? And third the PDUFA Cymbalta and FMA [ph] is approaching and is this could be meaningful what do you expect in terms of regulatory clearance for this product and the syndication? Thank you. Phil Johnson - Executive Director of Investor Relations: Thanks, Ira. We'll go ahead; I think John is going try both the Cymbalta... I am sorry the Zyprexa Depo question, the FDA outcome on why there may not be accessed to prasugrel and the Cymbalta for fibromyalgia if not we'll have Jim have that as well. John Lechleiter - President and Chief Executive Officer: Okay Zyprexa Depo is currently under review in Europe; and at this point in time, it has not been the subject of BHMT [ph] decision. That's still in progress and we're still actively prosecuting that filing in Europe. With respect to the FDA advisory committee for prasugrel, we are really not provide the FDA would decide or would not decide to have an advisory committee, but what's very clear at this point is we have no indication from FDA that they will at this point require one. Jim Greffet - Manager, Investor Relations: Ira, it's Jim. Regarding the fibro PDUFA date upcoming for Cymbalta in the U.S., so you are right, we are looking toward a June timeframe that would put us to the ten month clock from when we had submitted. As Deirdre has mentioned earlier part of the explanation in Cymbalta performance today is the up tick that Lirica [ph] has had from their approval for that indication. So, we are excited about the prospects that this will provide to Cymbalta. Furthermore if you think about the continue of efficacy that we have already shown with Cymbalta with the bonafiding and allergic [ph] effects with ET&T as well as the emotional effects with major depressive indication, we think that's particularly sitting in a space such as fibromyalgia. So, we feel good about the submission package; we provide one dialogue with the agency. We are hopeful for approval on things that will be meaningful benefits for the patients and to the products. Phil Johnson - Executive Director of Investor Relations: All right. Great, thank you. Let me turn the call now back to John to wrap up the meeting. John Lechleiter - President and Chief Executive Officer: Thank all of you for your time this morning. And let me summarize a few of our key points. We are delivering on our priorities; we concluded 2007 with accelerating sales growth, solid fundamentals, robust cash flow, and earnings at the top end of our guidance range, bringing positive momentum into 2008. This strong performance is broad based across products and geographies. We have a number of important events in 2008, including U.S. launches now in progress of Cialis for once daily use and Humalog KwikPen plus ongoing all U.S. launches of Cymbalta and Byetta; FDA action on prasugrel, Cymbalta for fibromyalgia and Alimta for first line non-small cell lung cancer; submission for prasugrel in the EU and Byetta monotherapy now completes plus Cialis for pulmonary arterial hypertension and Cymbalta for chronic pain; and the initiation of Phase III studies for our Alzheimer's candidates, plus others to come in 2008 and 2009. In my new role of CEO, chief among my priorities are increasing the flow of innovative new therapies from our pipeline, engaging our customers in fundamentally new ways by focusing on improved outcomes for individual patients and continuing to reduce our cost base and improve quality and productivity. As already today, we have a sense of urgency to deliver strong results while also reshaping the company to win for the benefit of patients and shareholders alike. Thank you for joining us this morning, and I look forward to continuing minor actions with our investors.

And ladies and gentlemen, today's conference will be available for replay, beginning today this morning at 10:00 AM and running through Monday April 28 at midnight. You can access the AT&T replay system by dialing 1800-475-6701; international participants 320-365-3844 and enter the access code of 917349. Again those number are 1800-475-6701, international 320-365-3844, and the access code of 917349. This concludes our conference for today. Thank you for your participation and for using AT&T's Executive Teleconference service. You may now disconnect.