• We incurred pretax charges of $105.0 million and $125.0 million in the second and third quarters, respectively, representing the currently probable and estimable exposures in connection with the claims of several states that did not participate in the EDPA settlement related to Zyprexa. These charges decreased earnings per share by $.06 and $.07 in the second and third quarters, respectively.

2008
• We recorded charges of $1.48 billion (pretax) related to the pending Zyprexa investigations led by the U.S. Attorney for the Eastern District of Pennsylvania, as well as the resolution of a multi-state investigation regarding Zyprexa involving 32 states and the District of Columbia, which decreased earnings per share by $1.33 in the third quarter.

• We recognized asset impairments, restructuring, and other special charges of $182.4 million (pretax), primarily associated with previously-announced strategic exit activities related to our Greenfield, Indiana, site, which decreased earnings per share by $.11 in the third quarter.

• We incurred an in-process research and development (IPR&D) charge associated with the acquisition of SGX Pharmaceuticals, Inc. (SGX) of $28.0 million (pretax), which decreased earnings per share by $.03 in the third quarter.

• We recognized restructuring and other special charges of $88.9 million (pretax), primarily associated with previously-announced strategic exit activities related to manufacturing operations, which decreased earnings per share by $.05 in the second quarter.

• We recognized asset impairments associated with certain manufacturing operations (included in cost of sales) of $57.1 million (pretax), which decreased earnings per share by $.04 in the second quarter.

• We incurred an IPR&D charge associated with the licensing arrangement with TransPharma Medical Ltd. of $35.0 million (pretax), which decreased earnings per share by $.02 in the second quarter.

• We recognized a discrete income tax benefit of $210.3 million as a result of the resolution of a substantial portion of the IRS audit of our federal income tax returns for years 2001 through 2004, which increased earnings per share by $.19 in the first quarter.

• We recognized asset impairments, restructuring, and other special charges of $145.7 million (pretax), primarily associated with certain impairment, termination, and wind-down costs resulting from the termination of the AIR Insulin program, which decreased earnings per share by $.09 in the first quarter.

• We incurred an IPR&D charge associated with the licensing arrangement with BioMS Medical Corp. of $87.0 million (pretax), which decreased earnings per share by $.05 in the first quarter.

II. Late-Stage Pipeline Developments Third Quarter
• We announced that initial results from a Phase III clinical trial for arzoxifene met its primary endpoints of significantly reducing the risk of vertebral fracture and invasive breast cancer in postmenopausal women. However, the study failed to demonstrate a statistically significant difference in key secondary efficacy endpoints, and certain adverse events were reported more frequently in the arzoxifene group compared with placebo. After reviewing the overall clinical profile of arzoxifene in light of currently available treatments, including our own osteoporosis products, we decided not to submit the compound for regulatory review.

• The U.S. Food and Drug Administration (FDA) approved a new use for Forteo® to treat osteoporosis associated with sustained, systemic glucocorticoid therapy in men and women at high risk of fracture.

• We and our partner BioMS Medical Corp. discontinued Phase III clinical trials for dirucotide in patients with secondary progressive multiple sclerosis. Data showed that dirucotide did not meet the primary endpoint of delaying disease progression and there were no statistically significant differences between dirucotide and placebo on the secondary endpoints of the study.

Second Quarter
• The FDA approved Effient (prasugrel) tablets for the reduction of thrombotic cardiovascular events (including stent thrombosis) in patients with acute coronary syndromes (ACS) who are managed with an artery-opening procedure known as percutaneous coronary intervention (PCI). We and our partner, Daiichi Sankyo, Inc., launched Effient in the U.S. in early August.

• The FDA approved Alimta as a maintenance therapy for locally advanced or metastatic non-small cell lung cancer (NSCLC), specifically for patients with a nonsquamous histology whose disease has not progressed after four cycles of platinum-based first-line chemotherapy.

• The European Commission granted approval for the use of Alimta as monotherapy for maintenance treatment of patients with other than predominantly squamous cell histology in locally-advanced or metastatic NSCLC, whose disease has not progressed immediately following platinum-based chemotherapy.

• Alimta received regulatory approval in Japan as both a first- and second-line treatment of NSCLC.

• We and our partners Amylin Pharmaceuticals, Inc., and Alkermes, Inc. submitted a New Drug Application (NDA) to the FDA for exenatide once weekly. Exenatide once weekly is an investigational sustained release medication for type 2 diabetes that is injected subcutaneously and administered only once a week.

• We resubmitted our supplemental New Drug Application (sNDA) for Cymbalta for the management of chronic pain to the FDA.

• We began enrolling patients in two separate but identical Phase III clinical trials of solanezumab, an anti-amyloid beta monoclonal antibody being investigated as a potential treatment to delay the progression of mild to moderate Alzheimer's disease. The trials each include a treatment period that lasts 18 months and are expected to enroll a total of 2,000 patients age 55 and over from 16 countries.

First Quarter
• The European Commission granted marketing authorization for Efient (prasugrel) for the prevention of atherothrombotic events in patients with ACS undergoing PCI.

• The FDA approved two new combination indications for Zyprexa (olanzapine) and fluoxetine for the acute treatment of bipolar depression and TRD in adults.

• We received a complete response letter from the FDA for the first-line squamous cell carcinoma of the head and neck (SCCHN) supplemental Biologics License Application (sBLA) for Erbitux.

• We submitted a reply to the FDA regarding the agency's complete response letter for Zyprexa long-acting injection. We also launched this product under the tradename ZypadheraTM in several countries within the European Union.

III. Legal, Regulatory, and Other Matters In September 2009, we set a goal to reduce our expected cost structure by $1 billion by the end of 2011. We also plan to lower global headcount to 35,000 by the end of 2011, excluding strategic sales force additions in high-growth emerging markets and Japan. In January 2009, we reached resolution with the Office of the U.S. Attorney for the Eastern District of Pennsylvania (EDPA), and the State Medicaid Fraud Control Units of 36 states and the District of Columbia, of an investigation related to our U.S. marketing and promotional practices with respect to Zyprexa. We recorded a charge of $1.42 billion for this matter in the third quarter of 2008. In 2009, we paid substantially all of this amount, as required by the settlement agreements. In addition, in October 2008, we reached a settlement with 32 states and the District of Columbia related to a multistate investigation brought under various state consumer protection laws, under which we paid $62.0 million. However, we have been served with lawsuits brought by Alaska, Arkansas, Connecticut, Idaho, Louisiana, Minnesota, Mississippi, Montana, New Mexico, Pennsylvania, South Carolina, Utah, and West Virginia, alleging that Zyprexa caused or contributed to diabetes or high blood-glucose levels, and that we improperly promoted the drug and seeking to recover the costs paid for Zyprexa through Medicaid and other drug-benefit programs, as well as the costs alleged to have been incurred and that will be incurred to treat Zyprexa-related illnesses. The Alaska case was settled in March 2008 for a payment of $15.0 million, plus terms designed to ensure, subject to certain limitations and conditions, that Alaska is treated as favorably as certain other states that may settle with us in the future over similar claims. We are in advanced discussions with the attorneys general for several states that were not part of the EDPA settlement, seeking to resolve their Zyprexa-related claims, and we have agreed to settlements with the states of Connecticut, Idaho, South Carolina, Utah, and West Virginia. In the second and third quarters of 2009, we incurred pretax charges of $105.0 million and $125.0 million, respectively, reflecting the currently probable and estimable exposures in connection with these claims. The Pennsylvania case is set for trial in April 2010 in state court.
In the United States, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) continues to provide an effective prescription drug benefit under the Medicare program (known as Medicare Part D). Health care reform is currently the subject of intense debate in Congress. The impact of reform on the pharmaceutical industry is uncertain. Further reform proposals to expand coverage to the uninsured could include some form of price rebates or tax on the pharmaceutical industry. Various measures have been discussed and/or passed in both the U.S. House of Representatives and U.S. Senate that would impose additional pricing pressures on our products, including proposals that would increase the rebates we pay on sales to Medicaid patients or impose additional rebates on, or otherwise subsidize, sales to patients who receive their medicines through Medicare Part D or other government programs. Additionally, various proposals have been introduced to legalize the importation of prescription drugs and either allow or require the Secretary of Health and Human Services to negotiate drug prices within Medicare Part D directly with pharmaceutical manufacturers. In addition, many U.S. states are facing substantial budget difficulties due to the downturn in the economy and are expected to seek aggressive cuts or other offsets in healthcare spending. We expect pricing pressures at the federal and state levels to become more severe, which could have a material adverse effect on our consolidated results of operations.
In its budget submission to Congress in May 2009, the new administration proposed changes to the manner in which the U.S. would tax the international income of U.S.-based companies. While it is uncertain how the U.S. Congress may address this issue, reform of U.S. taxation, including taxation of international income, continues to be a topic of discussion for the U.S. Congress. A significant change to the U.S. tax system, including changes to the taxation of international income, could have a material adverse effect on our consolidated results of operations.

In addition, the federal government is considering creating a regulatory pathway for biosimilars (copies of biological compounds) for the majority of biologic products in the U.S.; the proposals vary as to which biologic products would be eligible, how quickly a biosimilar might reach the market, and the ability to interchange the biosimilar and the original biologic product at the pharmacy. International operations also are generally subject to extensive price and market regulations, and there are many proposals for additional cost-containment measures, including proposals that would directly or indirectly impose additional price controls, limit access to or reimbursement for our products, or reduce the value of our intellectual property protection. Revenue
Revenue for the third quarter and the first nine months of 2009 increased 7 percent and 5 percent to $5.56 billion and $15.90 billion, respectively, and was driven primarily by the increase in net product sales related to the collective growth of Alimta, Cymbalta, and Humalog, and the increase in collaboration and other revenue due to the inclusion of Erbitux revenue as a result of the ImClone acquisition. Revenue in the U.S. increased by $377.1 million, or 14 percent, and $1.04 billion, or 13 percent, for the third quarter and first nine months of 2009, respectively, compared with the same periods of 2008. Revenue outside the U.S. decreased $24.7 million, or 1 percent, and $302.5 million, or 4 percent, for the third quarter and first nine months of 2009, respectively. For the third quarter, worldwide sales volume increased 8 percent, while selling prices contributed 2 percent of revenue growth, partially offset by the unfavorable impact of foreign exchange rates of 3 percent. For the first nine months of 2009, worldwide sales volume increased 7 percent, while selling prices contributed 3 percent of revenue growth, partially offset by the unfavorable impact of foreign exchange rates of 5 percent.

The following tables summarize our revenue activity for the three- and nine-month periods ended September 30, 2009 and 2008:

                                                                                          Three Months
                                                  Three Months Ended                         Ended
                                                  September 30, 2009                     September 30,           Percent
                                                        Outside                               2008               Change
Product                                 U.S.1            U.S.            Total3              Total              from 2008
                                                                    (Dollars in millions)
Zyprexa                               $   569.6        $   653.4        $ 1,223.0        $      1,189.5                3
Cymbalta                                  652.7            137.5            790.2                 716.4               10
Humalog                                   310.6            189.6            500.2                 432.6               16
Alimta                                    215.5            246.4            461.9                 313.9               47
Cialis®                                   158.7            238.5            397.2                 376.6                5
Gemzar                                    191.0            140.8            331.8                 440.2              (25 )
Animal health products                    176.8            137.8            314.6                 277.1               14
Humulin®                                  105.8            154.6            260.4                 271.6               (4 )
Evista                                    174.4             85.1            259.5                 265.7               (2 )
Forteo                                    135.1             78.0            213.1                 192.7               11
Strattera                                 106.8             38.7            145.5                 149.5               (3 )
Other pharmaceutical products             200.5            287.6            488.1                 466.6                5

Total net product sales                 2,997.5          2,388.0          5,385.5               5,092.4                6
Collaboration and other revenue2          148.5             28.0            176.5                 117.1               51

Total revenue                         $ 3,146.0        $ 2,416.0        $ 5,562.0        $      5,209.5                7

                                                                                           Nine Months
                                                   Nine Months Ended                          Ended
                                                   September 30, 2009                     September 30,           Percent
                                                        Outside                                2008               Change
Product                                 U.S.1            U.S.             Total3              Total              from 2008
                                                                     (Dollars in millions)
Zyprexa                               $ 1,687.2        $ 1,862.0        $  3,549.2        $      3,549.5                -
Cymbalta                                1,871.0            372.9           2,243.9               1,975.9               14
Humalog                                   888.8            539.5           1,428.2               1,277.8               12
Alimta                                    586.9            595.6           1,182.5                 836.0               41
Cialis                                    457.2            662.4           1,119.6               1,075.7                4
Gemzar                                    556.1            496.7           1,052.8               1,306.5              (19 )
Animal health products                    484.5            369.5             854.0                 766.9               11
Evista                                    506.3            261.4             767.7                 806.6               (5 )
Humulin                                   299.9            449.2             749.1                 800.8               (6 )
Forteo                                    389.0            214.9             603.9                 584.3                3
Strattera                                 328.2            119.0             447.2                 432.7                3
Other pharmaceutical products             546.5            845.9           1,392.5               1,422.9               (2 )

Total net product sales                 8,601.6          6,789.0          15,390.6              14,835.6                4
Collaboration and other revenue2          431.4             79.8             511.2                 331.9               54

Total revenue                         $ 9,033.0        $ 6,868.8        $ 15,901.8        $     15,167.5                5

1 U.S. revenue includes revenue in Puerto Rico.

2 Collaboration and other revenue is primarily comprised of Erbitux royalties and 50 percent of Byetta's gross margin in the U.S.

3 Numbers may not add due to rounding.

Product Highlights
Zyprexa, our top-selling product, is a treatment for schizophrenia, acute mixed or manic episodes associated with bipolar I disorder, and bipolar maintenance. In the third quarter and first nine months of 2009, Zyprexa sales in the U.S. increased 3 percent and 4 percent, respectively, compared with the same periods of 2008, due primarily to higher net effective selling prices, partially offset by lower demand. Sales outside the U.S. increased 3 percent for the third quarter and decreased 4 percent for the first nine months of 2009, respectively, with third quarter increases due to increased demand partially offset by the unfavorable impact of foreign exchange rates. The decrease during the first nine months of 2009 was due to the unfavorable impact of foreign exchange rates partially offset by increased demand. Demand outside the U.S. was favorably affected by the withdrawal of generic competition in Germany. U.S. sales of Cymbalta, a product for the treatment of major depressive disorder, diabetic peripheral neuropathic pain, generalized anxiety disorder, and fibromyalgia, increased 9 percent and 13 percent during the third quarter and first nine months of 2009, respectively, driven primarily by increased demand and higher net effective selling prices. Sales outside the U.S. increased 15 percent for both the third quarter and first nine months of 2009, compared with the same periods in 2008, driven primarily by increased demand, partially offset by the unfavorable impact of foreign exchange rates and lower selling prices.

U.S. sales of Humalog, our injectable human insulin analog for the treatment of diabetes, increased 27 percent and 21 percent for the third quarter and first nine months of 2009, respectively, driven primarily by higher net effective selling prices and increased demand. Sales outside the U.S. increased 1 percent for the third quarter and decreased 1 percent for the first nine months of 2009, with third quarter increases due to increased demand, partially offset by the unfavorable impact of foreign exchange rates. The decrease during the first nine months of 2009 was due to the unfavorable impact of foreign exchange rates and lower prices, partially offset by increased demand.
U.S. sales of Alimta, a treatment for various cancers, increased 44 percent and 46 percent during the third quarter and first nine months of 2009, respectively, due to increased demand and, to a lesser extent, higher prices. Alimta sales outside the U.S. increased 50 percent and 37 percent for the same periods, due to increased demand, partially offset by the unfavorable impact of foreign exchange rates. Demand outside the U.S. benefited from the addition of the non-small cell lung cancer indication in Japan.
U.S. sales of Cialis, a treatment for erectile dysfunction, increased 13 percent and 17 percent during the third quarter and first nine months of 2009, respectively, due to increased demand and higher net effective selling prices. Sales outside the U.S. increased 1 percent for the third quarter and decreased 3 percent during the first nine months of 2009, with third quarter increases due primarily to increased demand and higher prices, partially offset by the unfavorable impact of foreign exchange rates. The decrease during the first nine months of 2009 was due to the unfavorable impact of foreign exchange rates, partially offset by increases in both demand and prices.
U.S. sales of Gemzar, a product approved to treat various cancers, increased 1 percent for both the third quarter and first nine months of 2009, due primarily to higher net effective selling prices, partially offset by lower demand. Sales outside the U.S. decreased 44 percent and 34 percent during the third quarter and first nine months of 2009, respectively, due to reduced demand and lower prices as a result of the entry of generic competition in most major markets, as well as the unfavorable impact of foreign exchange rates. U.S. sales of Evista, a product for the prevention and treatment of osteoporosis in postmenopausal women and for risk reduction of invasive breast cancer in postmenopausal women with osteoporosis and postmenopausal women at high risk for invasive breast cancer, increased 2 percent for the third quarter and decreased 3 percent during the first nine months of 2009, with third quarter increases due to higher net effective selling prices, partially offset by lower demand. The decrease during the first nine months of 2009 was due to lower demand, partially offset by higher net effective selling prices. Evista sales outside the U.S. decreased 10 percent and 9 percent, respectively, for the same periods, driven by the outlicensing of Evista in most European markets.
U.S. sales of Humulin, an injectable human insulin for the treatment of diabetes, increased by 11 percent and 7 percent for the third quarter and first nine months of 2009, respectively, due primarily to higher net effective selling prices. Product demand in the U.S. continues to decline. Humulin sales outside the U.S. decreased 12 percent and 14 percent during the third quarter and first nine months of 2009, respectively, due primarily to the unfavorable impact of foreign exchange rates and lower prices, partially offset by increased demand. U.S. sales of Forteo, an injectable treatment for osteoporosis in postmenopausal women and men at high risk for fracture, increased 15 percent and 7 percent during the third quarter and first nine months of 2009, respectively, with third quarter increases due primarily to higher prices and the impact of wholesaler buying patterns. The increase during the first nine months of 2009 was due to higher prices, partially offset by reduced demand. Forteo sales outside the U.S. increased 3 percent for the third quarter and decreased 2 percent during the first nine months of 2009, respectively, with third quarter increases due to increased demand and higher prices, partially offset by the unfavorable impact of foreign exchange rates. The decrease during the first nine

months of 2009 was due to the unfavorable impact of foreign exchange rates, partially offset by increased demand and prices.
U.S. sales of Strattera, a treatment for attention-deficit hyperactivity disorder in children, adolescents, and adults, decreased 2 percent for the third quarter and increased 1 percent during the first nine months of 2009, with third quarter decreases due primarily to lower volume, partially offset by higher net effective selling prices. The increase during the first nine months of 2009 was due to higher net effective selling prices, partially offset by lower demand. Strattera sales outside the U.S. decreased 3 percent for the third quarter and increased 12 percent during the first nine months of 2009, with third quarter decreases due to lower prices and the unfavorable impact of foreign exchange rates, partially offset by increased demand. The increase during the first nine months of 2009 was due to higher prices and increased demand, partially offset by the unfavorable impact of foreign exchange rates.
Animal health product sales in the U.S. increased 38 percent for both the third quarter and first nine months of 2009, primarily due to the inclusion of Posilac sales following the acquisition of the product from Monsanto in October 2008. Sales outside the U.S. decreased 8 percent and 11 percent, respectively, compared with the same periods in 2008, driven primarily by the unfavorable impact of foreign exchange rates and lower volume.
We market Byetta, an injectable product for the treatment of type 2 diabetes, with Amylin. For the third quarter and first nine months of 2009, we recognized revenue for Byetta comprised of collaboration revenue related to our 50 percent share of Byetta's gross margin in the U.S., and product sales related to sales . . .