Lilly Pharmaceutical Logistics Converting Air to Ocean Maintaining

Lilly Pharmaceutical Logistics Converting Air to Ocean; Maintaining Resiliency in Face of Change Greg Magnusen – Senior Director Global Supply Chain © 2017 Eli Lilly and Company

Agenda Lilly Overview Ocean Shiping Strategy Qualification Process Validation Master Plan Lessons Learned Executive Summary 9/25/2020 2

Our Fundamentals • Our Mission: We make medicines that help people live longer, healthier, more active lives. • Our Vision: We will make a significant contribution to humanity by improving global health in the 21 st century. • Our Values: Integrity, excellence, respect for people © 2016 Eli Lilly and Company 3

Employees— 2016 Indianapolis Indiana (excluding Indianapolis) U. S. (excluding Indiana) Outside U. S. Worldwide total** 11, 382 1, 253 6, 093 23, 671 42, 399 ** As of September 30, 2016 4

Caring + Discovery Lilly unites caring with discovery to make life better for people around the world. We’re committed to bringing life-changing medicines to those who need them, advancing the understanding and management of disease, and providing meaningful support to patients living with illness and to the people who care for them. Since our founding by Colonel Eli Lilly in 1876, we have pioneered medical breakthroughs like human insulin, the polio vaccine, and many other breakthrough therapies. We’ve also set a high standard for giving back to our communities. We are passionate about building on this precedent in our continued quest to make life better for individuals, communities, and the world around us. © 2016 Eli Lilly and Company 5

Our Global Presence Research Manufacturing Sales Offices © 2017 Eli Lilly and Company 6

Our Strategy • Our fundamental strategy is predicated on discovering new medicines. • Discovering new medicines means never being satisfied with what we’ve achieved. It means pushing beyond convention and then pushing again. • The science has never been more promising and the need for new medicines never greater. • Lilly currently has one of the richest mid-to-late stage pipelines in its history, with 7 molecules currently in Phase III clinical development* • 16 molecules are in Phase II testing • 18 molecules are in Phase I testing • Lilly continues to build a pipeline that consists of high-quality, innovative molecules, which will meet the challenges of the next decade and drive future growth. * Numbers updated October 26, 2016 © 2016 Eli Lilly and Company 7

Awards and Recognition • Barron’s, “Top 100 World’s Most Respected Companies” • Corporate Responsibility Magazine, “ 100 Best Corporate Citizens” list • Aon Hewitt/Fortune Magazine, "Global Top Companies for Leaders" • PM 360, Pharmaceutical/Biotech Company of the Year • Enterprise Engagement Alliance, “Top 25 Most People-Centric Company” • Diversity Inc. , “Top 50 Companies for Diversity” and a top company for Opportunity; Mentoring; LGBT Employees; Employee Resource Groups • 2020 Women on Boards Winning Company, Corporate Champion • Top 50 Leading Companies for Women in the Asia-Pacific Economic Cooperation region • Working Mother Magazine, “ 100 Best Companies for Working Mothers” for 22 consecutive years • Top Companies for Executive Women, National Association of Female Executives • Human Rights Campaign Foundation, “Corporate Equity Index–Perfect Score” • LATINO Magazine, LATINO 100 “Top Companies Providing the Most Opportunities for Latinos” • Best Adoption Friendly Workplaces, Dave Thomas Foundation • Science Magazine, One of top 20 employers in the biotechnology and biopharmaceutical industries • Civilian. Jobs. com, “Most Valuable Employers for Military” list • U. S. Small Business Administration, “Outstanding Rating for Supplier Diversity Initiatives” • A member of the Civic 50, an initiative of Points of Light • Ranked number 7 in the Thomson Reuters Diversity and Inclusion (D&I) Index © 2016 Eli Lilly and Company 8

Commitment to Diversity - Strategic Areas of Focus (Global) Canada D and I education, Eu. Can Diversity Summit, Lean In Circles United Kingdom Champion Group, external partners, leadership workshops, D and I education Germany D and I education France U. S. Diverse recruiting, retention and development, ERG development, D and I education Mexico Peru Female representation Female and development; development Inclusive culture; Millennials Central America/Caribbean Female development; Inclusive culture; Diverse representation Disabilities awareness, Intergenerational mentoring, gender Europe D and I education, Eu. Can Diversity Summit, multiple ERGs, diversity champion network China Female leadership development Russia Female development Turkey Female leadership development; Disabilities Spain Female representation; inclusion Japan Inclusive culture; Female leadership development; Disability compliance Korea Female leadership development; Diversity education Saudi Arabia Female representation; Philippines Diversity India, Provencial education Pakistan diversity Female development; Brazil Diversity Disability education compliance; Indonesia South Africa Asia Female leadership Female development Ethnic diversity development Asia Talent Strategy; 10 active women’s ERGs NOTE: This map is not all-inclusive Italy Female leadership development, Diversity education, generational and LGBT awareness *ERG = Employee Resource Group. D & I = Diversity and Inclusion 9

Conversion to Ocean Shipments: OBJECTIVE Maximize conversion of Air to Ocean lanes globally to achieve significant reduction of transportation spend while maintaining reliable processes to protect our products and speed to market Air Freight Transportation • High cost due to premium services • Higher incidence of temperature excursions and damages • Shorter transit times 9/26/2020 © 2017 Eli Lilly and Ocean Transportation • 30 -70% cost savings • Reliable temperature protection • Longer transit times 10

Ocean Shipping Strategy Setting the ocean shipping platform Select Test Document • • • Analysis showed a 3070% transportation spend reduction business case by moving from air to ocean Identified 200 pallet /yr lanes Conducted Global RFP Lanes awarded to strategic Freight Forwarder. • • • 9/26/2020 Gathered container specs Established criteria for Cold Chain and CRT. Implemented pallet loading and protection measures Developed test protocol Performed chamber and live ocean tests (temperature and vibration). Perform concurrent studies • Developed Master Validation Plan Document studies as part of the MVP. (temperature, shock &vibration, PQs) 11

Risk Management Dec 2016 + Announcement 12/2016 9/26/2020 12

Ocean Shipping Strategy Implementation “Playbook” to standardize processes and replicate globally Key Objectives • • Facilitate Logistics, Technical and Quality documentation package to eliminate additional work at sites and affiliates (Pre-work). Provide specific steps to streamline and replicate processes globally (Implementation Steps). • Focused on optimizing savings (by maximizing container utilization / cargo consolidation). • Require alternate / contingent process to ensure supply continuity. • “Go live” within weeks rather than months Fr Pre-work O Screen Product Candidates R R O O O O Analyze volumes Develop Business case Perform RFP (Include Risk Management requirements; LOI) Validate shipping terms and conditions Include awarded Lane in MSA Implement Global Quality Agreement Implement Standard ocean SOP template with standard lock and bracing equipment/ material specs Develop a Global Change Control Collect supporting shipping studies Fr Implementation Steps Areas Involved GL Get from GSC GL Get From GSC GL GP &GL GP GL&GQ GL GL GL Areas Involved Obtain local sailing schedule and shipping / booking requirements from O Freight Forwarder SL Shipping site evaluate demand forecast and build scenarios with specific dates for ocean consolidation, include product availability R timeline, Agree on scenarios with receiving site. SSC O Setup local procedure and contacts with Freight Forwarder SL O Perform local vendor setup (SAP) SL O Quality Vendor Management system (Update vendor in Vendor list) R Perform Lane Risk Assessment SL & SQ R Develop continuity plan (contingency) R Update local SOPs as needed SL & SQ Perform any specific shipping studies and molecule assessments (if R/O required by country regulation) SL, TSMS &SQ O Revise Supply or Quality Agreements as required SSC &SQ R Order material R Perform Booking © 2017 Eli Lilly and 13

Ocean Shipping Strategy Plan throughout 2017 Highlights • 28 lanes • CRT and Cold Chain • 45% approx. of total pharma volume to be shipped by ocean in 2017 Continue to add new lanes 9/26/2020 © 2017 Eli Lilly and Company 14

Ocean Shipping Strategy Early Success Stories Spain to Brazil, CRT Lane Ports: Valencia – Santos 9 shipments since Q 4 14 with no Quality exceptions. Puerto Rico to Spain, CRT Lane Ports: San Juan – Cartagena Valencia Currently in transit, Excellent temperature protection 30°C 2°C 25°C 20°C 22. 5°C 15°C “Learning and acquiring experience - Very reliable temperature protection” 9/26/2020 © 2017 Eli Lilly and Company 15

Temperature & Location Monitoring CRT Lane – PR to Spain • Freight Forwarder provided GPS sensor with temperature monitoring Cold Chain Lane (study) US - Australia • Periodic updates via Freight Forwarder Web Portal 9/26/2020 © 2017 Eli Lilly and Company 16

Qualification Process Development of a Validation Master Plan for CRT and Cold Chain Risk Assessment to Determine Performance Evaluation Testing OQ/Performance Evaluations Concurrent PQs at sites Chamber Testing • Power off tests at a range of temperatures Prepare Protocol Actual Shipment • Document temperature control • Shock and vibration Execute 3 shipments Summarize Results in a Report 9/26/2020 © 2017 Eli Lilly and Company 17

Validation Master Plan Cold Chain Cargo Preparation • 18 pallets filled with product and gel packs, conditioned at 5°C were used to simulate a representative thermal mass. • 4 stations with 5 temperature recorders per station were placed inside the trailer (as per diagrams shown in this slide). • Two types of thermal blankets were tested and several pallets were left without thermal blankets to compare the difference Station (5 TTs) • Double stacking of pallets not allowed until studies are conducted to confirm there is no impact to the integrity of the product. 4 Stations • Pallets were center loaded with airbags on the sides (against the container walls) supporting each pallet. • Load locks, similar to the ones used on normal road transport, were used to lock the pallets in place. For un even columns, empty pallets we used. 9/26/2020 © 2017 Eli Lilly and Company 18

Validation Master Plan Results Cold Chain Highlights 50°C • Air temperatures within the container varied less than +/- 3°C from set point when under power for both Cold Chain and CRT tests. • Air bags placed between the container wall and pallets stabilize the load if pallet blankets are not used. Setpoint = 5°C 10°C -20°C • Pallet blankets prevented the product temperatures from exceeding 8°C with ambient temperatures up to 30°C during the Cold Chain test. CRT Setpoint = 20°C 26°C • Maximum temperature registered during the CRT test while the genset was switched off for 4 hours at an ambient temperature of 46°C was 26. 4°C 22°C 20°C 14°C 9/26/2020 © 2017 Eli Lilly and Company 19

Validation Master Plan Additional studies • Shock, vibration and temperature mapping was included as part of additional studies. • Studies were coordinated with actual ocean shipments. • US – Australia - US; Cold Chain, • US – Puerto Rico- US; CRT. • The main driver for these studies was to document any changes to the physical stability of products when exposed to shock and vibration typically encountered in a temperature controlled International Standard Container (referenced within the protocol as “ISO Container”). • Studies are currently in progress. 9/26/2020 © 2017 Eli Lilly and Company 20

Lessons Learned During first implementations • The development of an implementation “Playbook” can provide a standard harmonized process that can reduce to total cycle time of implementation. • Ocean carriers / Freight Forwarders will require a Letter of Indemnity for high value shipments. • High value shipment may require separate negotiations with Ocean carriers / Freight Forwarders. • Additional transit time of ocean shipments does not necessarily trigger increases of safety stocks. 9/26/2020 © 2017 Eli Lilly and Company 21

Executive Summary Ocean transportation provided a 30 – 70% savings business case. Initial implementations are taking longer than expected due to documentation of studies and processes. A playbook has been created to reduce time and harmonize processes High value shipments may requires Letter of Indemnification and specific negotiations with Ocean carriers / Freight Forwarders. Ocean shipments were classified as “Low Risk” in the Quality Shipping Lane Risk Assessments. Transition to Ocean shipping can be done without adding safety stocks. 9/26/2020 22

Questions Thank You 9/26/2020 23