Eli Lilly and Company (LLY) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Lilly Sustainability Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the conference over to our host, Senior Adviser, Environmental, Social and Governance, Jim Greffet. Please go ahead.

Thanks, Paul. Good morning, and thank you for joining us for Lilly's first stakeholder event dedicated to sustainability. I'm Jim Greffet, Senior Adviser for Environmental, Social and Governance Strategy. We have several senior executives here this morning to describe the actions we are taking throughout the company in the important areas of environmental, social impact and governance, or ESG. At the end, we'll be available to take your questions. [Operator Instructions] During this webcast, we anticipate making projections and forward-looking statements based on our current expectations. Our actual results could differ materially due to a number of factors, including the extent and duration of the effects of the COVID-19 pandemic as well as other factors listed on Slide 2 and those outlined in our latest Forms 10-K, 10-Q and any 8-Ks filed with the Securities and Exchange Commission. In particular, any information we provide about our products, pipeline and pricing arrangements is for the benefit of the investment community. It's not intended to be promotional and is not sufficient for prescribing decisions. Let me now turn the call to Dave Ricks, our Chairman and Chief Executive Officer.

Thank you, Jim. While this ESG event is new for us, the importance of sustainability at Lilly is not. Our focus on sustainability flows directly from our purpose of making life better for people and our core values of integrity, excellence and respect for people. Next week, Lilly will celebrate its 145th anniversary. We're proud of our long history of making life-changing medicines for patients and making meaningful contributions to the world. Sustainability reporting is also not new. We've been doing it for nearly 2 decades. But we know there's more work to do, and we are redoubling our commitment. While leveraging science and medicine to improve lives is by itself sustaining for humankind, we understand discovering, developing and making medicines alone is not enough. We're investing in new ways to make medicines and care more accessible, more affordable and more useful for everyone who needs them. To do this, we're reaching across industry and geographic boundaries to collaborate with all who share our goals of accelerating, improving access in the health care system. We further extend our impact by strengthening communities and making a positive difference in greater social issues that matter to our business, to our employees and society. Over the last 18 months, we conducted a comprehensive review of our ESG strategy, how we communicate progress and our governance of ESG. And we're taking several actions to get better in all those areas. To inform our efforts, we interviewed a broad spectrum of internal and external stakeholders to prioritize the ESG areas that matter most to them. We've decided to focus our reporting on 13 key topics, and we've chosen to adopt the Sustainability Accounting Standards Board, or SASB, framework for biotechnology and pharmaceuticals and the Task Force on Climate-related Financial Disclosures, or TCFD, framework for our environmental reporting. We'll also continue to report progress on the United Nations' Sustainable Development Goals. Beginning today, our ESG information will be available through a new portal on lilly.com called esg.lilly.com, which is a comprehensive source for our sustainability strategy, activities and data. This portal includes new ESG goals and enhanced data disclosures. Investors and other stakeholders expect more information, and we're now providing it. We have also implemented changes to our ESG leadership, governance and oversight. We created a new position to lead our ESG strategy and communications, and we placed Jim Greffet in that role. Our sustainability efforts involve every function in the company, and we wanted a dedicated leader to integrate across functions and to provide a single point of contact for our external stakeholders. The Lilly Board of Directors continues to have overall accountability for our sustainability strategy through the Directors and Corporate Governance Committee. This committee identifies and brings to the attention of the Board, as appropriate, current and emerging environmental, social, political and governance trends and public policy issues that may affect our business operations. We also have a clear line of responsibility from the Board to the Executive Committee to a newly formed ESG Governance Committee. With this structure, we have both a top-down and a bottom-up approach, leveraging the authority and long-term vision of the Board along with functional experts in tune with the emerging issues and opportunities in their specific areas. What hasn't changed is that we continue to amplify the importance of ESG through our annual company objectives and individual performance plans. Our company objectives in 2021 capture several key ESG priorities, including increasing the number of patients who benefit from our medicines, enhancing patient affordability and access to innovation, improving diversity and inclusion throughout the company and creating lasting social impact in the communities we serve. Finally, we strive to make ESG personal for all our employees, encouraging them to volunteer and give in ways that advance our purpose as well as their passions. This morning, 4 of our senior executives will discuss important ESG topics. Steve Fry, our Senior Vice President of Human Resources and Diversity, will discuss our actions to increase diversity and inclusion and our approach to human capital management. Tiffany Benjamin, our Senior Director of Social Impact and the President of the Eli Lilly and Company Foundation, will review our progress on community engagement, on racial justice and global health. Patrik Jonsson, Senior Vice President and President, Lilly USA and our Chief Customer Officer, will talk about the steps we are taking to increase access to our medicines. And Ed Hernandez, our newly named Senior VP and President of Lilly Manufacturing Operations, will review how we are minimizing our environmental impact. So let's move to our first speaker. Steve?

Thanks, Dave. To solve the toughest challenges in medicine, Lilly is committed to attracting, retaining and developing a diverse workforce of top talent around the world. Not only do we want a diverse workforce, we also want a leadership team that reflects the communities we serve at all levels of management. Our innovation-based strategy requires an inclusive environment, where everyone is fully engaged and can contribute their best. Our employees are encouraged to speak up and share their ideas while bringing their full authentic selves to work every day. I will start by discussing our rigorous research-based approach to diversity and inclusion, which we refer to as employee journeys. And then we'll expand to the overall well-being of our team. Improving diversity and inclusion begins with an understanding of the lived experiences of our employees. Over the past 6 years, we've developed deep insights into the experiences of women, Black, Latinx, Asian and LGBTQ employees. Our research informed a multifaceted people strategy and company-wide agenda to improve leadership, people-related systems and our culture. Dave and the Executive Committee consistently communicate and reinforce expectations for inclusive leadership and hold leaders accountable for building diverse and inclusive teams, and our Chief Diversity and Inclusion Officer is a Vice President who reports directly to me. We have applied the patient journey approach we use for our medicines to create employee journeys that highlight the common experiences of various employee groups. The insights gleaned from this research have been shared widely throughout the company and are having an impact. We now have a network of D&I champions and allies in every business area, and we better understand how to support our colleagues. Beyond the awareness generated by the employee journeys, we have established and expanded numerous development programs, including explore your career, a global framework of tools and resources for career development and advancement where employees don't have to wait to be tapped on the shoulder by their supervisor for developmental opportunities, but rather can raise their own hand; leadership programs to develop talent from diverse backgrounds, including a 3-day session Dave personally leads called EMERGE, which focuses on developing women and minority talent at Lilly; a program called Make it Safe to Thrive, an education and awareness program to build cultural literacy, an understanding of the conditions needed for employees to feel psychologically safe at work, a thriving network of employee resource groups with 11,400 participants worldwide and formal sponsorship programs where senior leaders guide and support the careers of diverse employees. In 2018, we established recruiting aspirational goals to increase the representation of women globally and of Black, Asian and Latinx employees in the United States. We require hiring managers to field a diverse pool of candidates and to deploy a diverse panel of interviewers for every open position. We partner with a range of professional associations and top colleges and universities for diverse talent. And each summer, we invite first and second year college students from minority groups to participate in a summer work experience at our headquarters that leads to opportunities for full-time employment. We believe these efforts are producing results. From the end of 2017 through the end of 2020, the number of women in management roles globally increased from 41% to 46%. Management representation of racial and ethnic minorities in the United States increased from 16% to 22%. 47% of our Executive Committee members are women, including one woman of color. And we named our first-ever female Chief Financial Officer in February of 2021. Beyond management, at the end of 2020, women represent 50% of our global workforce. And in the United States, we have increased the representation of minorities across all levels. The progress on diversity extends to our Board. 40% of our Board are women, and 40% -- 47% of our Board come from minority or underrepresented groups. By contrast, the average S&P 500 company is only 27% female and 17% minority. While we are proud of the progress we've made, we believe we can and we should do more. Our goal is to build a workforce that mirrors the customers we serve and the communities in which we operate. We are strengthening our culture so that every employee can be their authentic selves, achieve their career aspirations and contribute towards our purpose. Next, let me discuss our commitment to the well-being of our employees. We have a broad global well-being program that focuses on creating a healthy workplace, promoting physical wellness and behavioral health, improving financial literacy and keeping our employees safe. The COVID pandemic brought this commitment to the forefront. We moved quickly to transition most employees to remote work and offered reimbursement for home office expenditures, allowing more flexibility to our employees. For employees whose job required continued on-site work, we enhanced benefits such as premium pay and meal provisions in the United States. And we launched or expanded other programs for child care, elder care, self-care and resiliency. Beyond COVID, we take a comprehensive approach to well-being. For example, at our headquarters, we have medical clinics for preventative screenings and lab work, fitness centers and 2 child development centers. New parents, be it mothers, fathers, partners, adoptive and foster parents may take 10 weeks paid leave. Birth mothers may take an additional 8 weeks of paid leave for physical recovery for a total of 18 paid weeks. In addition, all new parents may take an additional 10 weeks of unpaid leave. We offer individual financial counseling at no out-of-pocket cost to employees. Lilly affiliate sites around the world also offer extensive wellness programs. Our pay and benefit programs reward employee contributions and overall business success. We are committed to ensuring pay equity for all employees and have regularly conducted pay equity studies in the United States. The overall results in 2020 were positive with a small percentage of employees receiving a pay adjustment. Keeping our employees safe is one of our highest priorities. We measure leading and lagging indicators to track our safety progress over time and influence change where needed. Since we introduced global safety goals in 2007, our total recordable injury and illness rate has declined by over 60%, and the lost time injury rate has declined by over 70%. And we successfully achieved our 2020 goals for the 3 key occupational safety metrics: recordable injuries, lost time injuries and motor vehicle collision rate. As part of our focus on motor vehicle safety, we have established a new global procedure applicable to all employees across the company, which prohibits with limited exceptions for brief and urgent scenarios the use of mobile electronic devices while driving any company-owned or leased vehicle. Starting in 2021, we have established a new safety goal: to continuously reduce our injury rate with the ultimate goal of achieving 0 severe injuries. We listened to our employees in many ways, including through employee engagement surveys. Our current quarterly survey asked more than 80 questions related to meaningful work, rewards and recognition, well-being, job satisfaction and retention. For 2020, employee engagement scores were 78%. And the Team Lilly score, which measures sentiments like I feel like I belong in this company, I can be myself around here and there's a free exchange of views scores even higher at 80%. In 2020, we outscored the Mayflower Group, a recognized consortium of large private sector companies focused on employee attitude measurement in 12 of 13 common questions. Building on the culture we have established for our employees, Tiffany will now discuss our efforts to create positive social impact and improve lives and community. Tiffany, over to you.

Thanks, Steve. Our business thrives when our communities thrive. As the leader of our social impact team and the President of the Lilly Foundation, I see the contributions that Lilly makes to society every day. I want to highlight 3 areas of focus: community engagement, racial justice and global health. Our community engagement begins with our employees who generously volunteer their time and talent. Our employees want to make an impact and providing company-sponsored approaches to volunteer and give back to the community increases employee engagement and connects all of us more deeply to our purpose. Every year, Lilly hosts a global day of service, where employees volunteer worldwide to improve health, education and communities around the globe. Our global service program, Connecting Hearts Abroad, enables Lilly employees to volunteer in communities with limited resources. In the 10 years since the inception of Connecting Hearts Abroad, more than 1,500 employees have volunteered in 20 countries. We extend our reach through relationships with organizations that align with our purpose. For example, the Lilly Foundation supports several groups that focus on ensuring equitable K-12 education in Indianapolis, the location of our headquarters. We have partnered with the United Way of Central Indiana for more than a century. The Lilly Foundation matches employee and retiree contributions to the Lilly United Way campaign dollar for dollar. This partnership has been transformational with over $328 million in contributions since the start of our relationship. We also donate medication to the Lilly Cares Foundation, Inc., a separate nonprofit charitable organization that provides prescribed Lilly medications for free for up to 12 months at a time for qualifying U.S. patients. Over the past 20 years, Lilly Cares has helped more than 1 million patients with financial need receive medicines donated by Lilly. In 2020, Lilly Cares helped nearly 160,000 people obtain Lilly medication. Finally, we donate medicines to leading disaster relief organizations to help communities recover from disasters. In 2020 alone, we donated $1.8 billion of Lilly products and made over $29 million in cash donations, which includes nearly $27 million from the Lilly Foundation. Grounded in our value of respect for people, in 2020, Lilly and the Lilly Foundation launched the Racial Justice Initiative to combat racial inequity. The Lilly Foundation has pledged $25 million, and Lilly has committed to provide 25,000 volunteer hours over 5 years to decrease the burden of racial injustice and its effects on local and national communities of color. Through February of 2021, we have already completed 5,000 hours of racial justice volunteer work. We also helped create and join a coalition of leading corporate and civic organizations across Central Indiana in signing the Indy Racial Equity Pledge with the aim to advance racial equity for Black Americans. As part of this pledge, we announced 3 new commitments: increasing the current representation of Black Americans in our U.S. workforce from approximately 10% to 13%, doubling our annual spend with Black American suppliers and vendors over the next 2 years and providing $1 million to Lynx Capital Corporation to support Black American-owned businesses and entrepreneurship. In addition, the Lilly Foundation granted the Indianapolis Urban League $250,000 to help establish an entrepreneurship center to provide impactful programming and support to Black entrepreneurs in Indianapolis. In early 2021, we announced a $30 million commitment limited partner investment to Unseen Capital Health Fund LP, a newly formed venture capital fund created by racially diverse and historically underrepresented business leaders. The fund will provide support for minority-owned, early-stage health care companies. We are pursuing racial equity in all facets of our business, including the clinical trials of our medicines. First, our U.S. clinical trials team aim for each clinical trial's participant to match the composition of the U.S. patient population that might use that medicine if approved. Globally, we identify and address barriers that keep underrepresented populations from participating in clinical trial. Second, we aim to recruit more clinical trial investigators and external advisers who represent women and racial or ethnic minority population. And third, we collaborate with other stakeholders to identify and implement solutions that will result in diverse representation, improve health equity and generate evidence to support better patient outcomes. While there's more to do, we are seeing progress. Among the most recent 12,000 U.S. patients we have enrolled in clinical trials, 39% were minorities, roughly the same as the overall U.S. population. Finally, just yesterday, as part of our racial justice and health equity work, we announced we are expanding our ongoing support of Direct Relief and their establishment of the health equity fund in the U.S. Through this fund, health centers and free and charitable clinics in both urban and rural areas will be offered the opportunity to apply for grants from Direct Relief of up to $250,000 annually. Direct Relief will make grants aimed at strengthening the capacity of these organizations to provide high-quality, culturally appropriate health care as well as focus on social determinants of health that play a significant role in health outcome for the underserved populations cared for by these organizations. Lilly will be committing $5 million to the Direct Relief fund over 5 years. Lilly and the foundation have a long history of standing beside our neighbors and communities, and we are committed to addressing the injustices in America that disadvantage people of color every day. Let's now move to my third topic: global health. Ensuring access to medicines and quality care is an important component of investing in community health and well-being. Our company-wide effort to improve global health is called 30x30. We aim to improve access to quality health care for 30 million people living in resource-limited settings annually by 2030. Our 30x30 initiative encompasses 3 areas of impact: pipeline, programs and partnerships. Our internal and external pipeline can be a source for potential medicines to treat diseases, disproportionately affecting people in resource-limited settings. We explore compounds in our labs for application to new targets. We are also collaborating externally. For instance, along with 20 other leading biopharmaceutical companies, we formed the Antimicrobial Resistance Action Fund and committed $100 million. This fund aims to accelerate antimicrobial -- antibiotic development with the goal of delivering up to 4 new antibiotics by 2030. In 2020, we demonstrated the power of our research capabilities and increasing development speed, which resulted in 2 treatments for COVID-13 (sic) [ COVID-19 ]. We have announced global pricing and access principles for these treatments, where allocation will be based on unmet medical needs globally. And patients will have no out-of-pocket costs for the therapy wherever possible, and pricing will be tiered based on a country's ability to pay. The second pillar of our 30x30 initiative is programs. Programs include exploring and expanding alternative business models, access strategies and patient support programs for Lilly medicines. We offer more than 160 patient support programs across 40 countries that reached nearly 1.5 million people annually. These programs address many of the challenges that patients face when battling disease, such as assistance with reimbursement and product access, answering questions about living with disease and managing health and education on Lilly medicine and training on devices. And third, through partnerships, we work to strengthen local health care system, improve access to care and advance government priorities. We also recently announced an expansion of our support for the Life for a Child program. This program provides access to care, education and life-saving medicines and supplies to children with diabetes in developing countries. Along with our partners, we intend to increase access to care to approximately 150,000 youths annually over the next 10 years. We've also expanded our partnership with AMPATH, which provides an integrated health model in Kenya that includes access to medicines and care, economic empowerment and universal health insurance. Over the next 4 years, Lilly has committed $2.8 million, and the Lilly Foundation will provide $1.2 million to support the expansion of the AMPATH model to Ghana and Mexico. In 2015, our baseline year, we reached an estimated 5 million people through our 30x30 effort. In 2020, this was increased to 7.3 million people. We are making steady progress and have the commitment and resources in place to achieve our goal. With the backdrop of our global health agenda and our efforts to positively impact society, let's now move to a more specific discussion of our access and affordability initiatives in the U.S. Patrik?

Thanks a lot, Tiffany. The global health discussion illustrates our dedication to increasing access to our medicines and to quality care. We are committed to working with stakeholders to make sure people can get the medicines they need at reasonable out-of-pocket costs and with pricing information they can understand. This includes finding new solutions that help address the affordability of our medicines such as for people who need insulin. Helping patients get access to our medicines is an important part of my job as President of Lilly USA and Chief Customer Officer. To address this important topic, I will cover 4 things today. First, the way medicines are priced and paid for in the U.S. health care system; secondly, the trend of Lilly prices over time, especially the amount we ultimately receive for our product, sometimes called the net price; thirdly, actions we are taking to increase access to our medicines; and finally, the need for longer-term systemic changes. Understanding the pricing structure of the U.S. health care system helps illustrate the multilateral systemic changes that will ultimately be needed to improve patient access on a large scale. The price of a medicine begins with the list price, which we set for each of our products. There are numerous other entities in the U.S. health care system that are important to getting patients access to medicine. This includes insurance companies, pharmacy benefit managers, wholesalers, distributors and governments. We pay rebates and discounts to these counterparties so that our medicines are available to the patients who need them. After paying these rebates and discounts, the final amount that Lilly receives is called the net price. This is an important measure for our business as it is the value we ultimately earn for our innovation. We are transparent about our pricing information. Our website, lillypricinginfo.com provides the list price of our medicines as well as average out-of-pocket costs and financial assistance information. The rebates and discounts we pay have continued to grow over time for our entire U.S. portfolio of products. Our average net price is now 40% of our list price. We are paying more than half of the list price to other players in the system. Specifically, in the U.S. in 2020, our average net price, what we realize from our medicines decreased more than 5%. This is the third straight year of net price decline for Lilly. The net price has also declined for the past 3 years for our Humalog and Lispro brands of insulin to $50 in 2020. And we have not taken a list price increase on any insulin since 2017. Even in an environment of declining prices, Lilly is taking actions within our control to improve access and affordability. In 2020, we took steps that make anyone, regardless of insurance status, eligible to obtain the monthly prescription of Lilly insulin for $35. We have also launched the Lilly Diabetes Solution Center, which helps people who use Lilly insulin find affordable solutions that fit their personal circumstances. And we are a financial supporter of GetInsulin.org, a tool launched by the patient advocacy group beyond type 1 that helps people easily find the most affordable insulin options in their area regardless of brand or manufacturer. Beyond insulin, Lilly offers affordability solutions through the patient support programs and co-pay assistance across the major products of our portfolio, including medicines for migraine, immunology diseases and cancer. For migraine and immunology, we have designed co-pay assistance programs to bring eligible patients out-of-pocket costs to as little as $25 or lower. In the case of cancer, we have also created a Lilly Oncology Support Center that assist eligible patients in identifying affordability options related to the Lilly treatment. Beyond the price for the patient, we're also working with payers on value-based arrangements, or VBAs, across our portfolio. These arrangements link the cost of our medicine to patient outcomes. In the U.S., more than 20% of revenue flowing through our access-based contracts has a value-based component. And we have more than 300 alternative access contracts in other global market, many of which are value-based. These arrangements have the potential to improve patient outcomes while lowering cost for the entire health care system. But they require increased collaboration between payers, health systems, patients and the pharmaceutical industry to make them happen. They also require the pharmaceutical industry to bring new innovation that improves patient outcomes. Lilly is pleased to be ranked #1 in the 2021 Pharmaceutical Innovation Index recently published by IDEA Pharma. There are numerous other policy solutions to improve access and affordability that we support. For example, rebate pass-through, where insurers pass through our negotiated rebates directly to the customer at the pharmacy counter rather than using the rebate to subsidize overall premium levels. Also, first dollar coverage, which exempts certain health care services for chronic conditions, including medicines such as insulin, from an insurance plan’s deductible; and Medicare Part D out-of-pocket caps, which would limit the out-of-pocket costs for Medicare Part D patients, providing a critical financial safeguard. While we work towards system reform, we will continue to provide affordability solutions to people who need them. Clearly, this is a complex topic with many interested parties, but we are committed to working multilaterally to bring our innovation to the patients who need it. Let's now move to a discussion of our environmental strategy. Ed?

Thanks, Patrik. Our purpose of making life better includes protecting and preserving the world we live in. Making medicines require the use of valuable resources, so we continually look for ways to minimize our environmental footprint. We have a long history of embedding environmental responsibility into our operations and have been setting challenging environmental goals for more than a decade. Our focus areas are: climate change, waste management and water security, including a new set of goals for 2030. Starting with climate. We have invested in our infrastructure to reduce our energy footprint. When we build new facilities or update existing facilities, we design for energy efficiency. We conduct energy assessments and act on recommendations, and we facilitate the use of advanced energy monitoring and control systems. To support our efforts, we have invested over $50 million through our energy waste reduction fund and implemented over 190 projects globally. We established climate goals in 2013. By 2020, our goals were to reduce both our energy intensity and the associated greenhouse gases emissions measured per square foot of space by 20% as compared to our baseline in 2012. Through 2020, we reduced our energy intensity by 6.2%, falling short of our target, but we reduced our emissions intensity by 22.2%, surpassing our target compared to our 2012 baseline. These achievements, including a 15% improvement in energy efficiency for heating and cooling our Indianapolis headquarters, were made through a comprehensive energy efficiency agenda and while 6 of our 8 largest manufacturing sites significantly increased production rates since 2012. Our emissions reductions were driven by a combination of direct emission, energy and processes efficiencies and changes in our energy supply mix. Going forward, we have established 3 climate goals for 2030 to contribute to a low-carbon economy. First, to purchase 100% of our electricity from renewable sources. Second, to achieve carbon neutrality in our own operations. This encompasses the emissions generated in our facilities and vehicles, those known as Scope 1; and emissions from purchased energy sources, those known as Scope 2. Our third objective is to enhance tracking and reporting of emissions from our value chain, which encompasses Scope 3 emissions. To achieve these goals, we are starting with our own footprint. We have already installed solar arrays at sites in France, Italy and India. Additionally, we are in the process of installing new solar arrays in Puerto Rico, Spain, France and our plant in Ireland, where we are completing a new 4.5 megawatt solar project that will come online this year, which at the time of construction represented the largest solar development in Ireland. These installations will add more than 10 megawatts to our solar capacity. Co-generation is another effort to improve energy efficiency and resiliency, where we use primarily natural gas combustion to generate electricity on site. We're also recovering usable heat. Our vehicle fleet is another area of focus. We choose vehicles with better fuel economy, and we promote driving practices that emphasize safety and fuel savings. We are also introducing hybrid or electric vehicles in several geographies. And we will look to transition to electric vehicles more broadly where infrastructure exists. Our strategy is to directly reduce emissions and replace carbon-intensive sources with clean energy sources. We expect to use high-quality carbon offsets for emissions and energy sources that cannot be reduced or replaced. Our second focus area, waste management. We understand the most effective way to reduce waste is not to create it in the first place. We use a hierarchy of waste management focused on beneficial impact. We prioritize reducing then reusing then recycling, and finally, consuming for energy production. Only as a last resort and where required by law do we incinerate or send waste to a landfill. The first metric we track is waste efficiency, the waste we produce normalized to the size of our operations. From 2012 through 2020, we improved our waste efficiency by 32%. This is a meaningful improvement. We have also been striving to increase our recycling rate, which improved to 78% in 2020. As a result, we have also reduced the percentage of our waste going to landfill, which declined to 6% in 2020. With this performance, we have successfully achieved all 3 of our 2020 waste goals. We have 3 new challenging goals for 2030. The first one, to send 0 waste to landfill from our routine operations; the second one, to repurpose 100% of plastic waste for beneficial use with at least 90% recycle or reuse; and the third one is to integrate sustainability-focused design principles into the product and packaging design processes. These goals represent a continuation of our progress and a recognition that plastic waste is one of our most pressing global environmental issues. As examples of our focus on plastics, we optimized plastic use of our manufacturing facility in Indianapolis through a reuse and recycling program. Each year, we send approximately 2.6 million pounds of packaging material for incoming components to our recycling partner. The diverted plastics are used as inputs for other products such as decking and carpet padding. We continue our efforts to incorporate sustainability into the life cycle of our products and devices. For delivering our medicines with waste reduction in mind without sacrificing safety, user experience or patient outcomes, we are researching renewable or bio-based materials for future packaging and devices while also evaluating feasibility for existing devices. We have also initiated a pilot device take/back program in Germany for our insulin KwikPen. This program is in early stages, but it's the first step in our efforts to increase the circularity of our devices. Product packaging is also a source of opportunity. Regulations can limit degrees of freedom with recycled content, which in the case -- which is the case with containers that come into direct contact with our products. However, we look at our packaging program. Last year, we investigated how we could improve the sustainability of packaging used for transporting medicines by air and sea freight. Historically, we use a single-use insulated package. After researching and testing alternatives, we arrived at a reusable shipping container that improves performance and increases capacity. We are currently testing this solution with a planned global rollout in 2022. Our third and final area of focus is water security. Water is essential to our operations and the facilities where we discover and manufacture medicines. And we are committed to using this critical resource efficiently. Our manufacturing operation accounts for most of our water usage, and we work with our sites around the world to identify water saving and wastewater technologies to support our environmental goal. To reduce our water consumption, we use reclaimed water when possible, and we have optimized our current systems to reduce water usage. In 2020, our facilities recycle or reuse over 270 million liters of water. We have also made concerted efforts to reduce the absolute phosphorus emissions in our wastewater discharge. Between 2013 and 2020, we reduced the absolute amount of phosphorus emissions by nearly 35%. Our 3 new 2030 water goals built on this progress and expand our water sustainability agenda. First, we intend to implement water management plans for Lilly sites in water-stressed areas. Second, we will continue to achieve 100% of Lilly sites meeting the predicted no-effect concentrations for pharmaceuticals in the environment. And third, we will ensure appropriate controls are in place with Lilly contract manufacturers to prevent discharge of pharmaceuticals in wastewater above applicable no-effect concentration values. We have initiated assessments and have completed a number of them already. We are extremely pleased that our water management efforts received an A- rating from the Carbon Disclosure Project water program, which is above for biotech and pharmaceutical industry sectors. The efforts and oversight we have in place give us confidence that we can continue to be a good steward of this critical resource. With that discussion of our environmental strategy, let me turn it back to Dave for concluding thought.

Thank you, Ed. I hope everyone listening takes from today's call and understanding that ESG is central to Lilly's purpose and to our growth agenda. It's something we've integrated into our business and our strategy because we believe it makes us a stronger, more resilient company. More important than setting ambitious goals is achieving them. This starts with embedding annual goals into the CEOs and key executive performance targets. We review progress on these goals as a full Executive Committee quarterly and the Board annually. Leaders are responsible for embedding these targets throughout their operations and are held accountable for progress and ultimate achievement of our targets, including through the annual compensation process. When challenges arise, we expect our team to work to overcome them and to treat ESG objectives no differently than other vital business challenges. Together with the support of our stakeholders, the contributions of our Lilly colleagues and our partners across the health care system, we believe we can fulfill the charge of Mr. Eli, the grandson of our founder, who said, "The broad overall policy of this concern is to conduct its affairs so that the greatest good for the greatest number of people over the longest period of time will result." Thanks, again, for your interest. And now I'll turn the call over to Jim to moderate our Q&A session.

Thanks, Dave. [Operator Instructions] We also have some presubmitted questions. So after you give the instructions, I'll first -- we'll address the presubmitted questions, and then we can see if we have any others that are in the queue. Paul, go ahead.

[Operator Instructions]

Thanks, Paul. Dave, the first question for you. Significant federal funding has been deployed for the development of COVID therapies. Has Lilly leveraged any of this funding for your therapies? And can you talk more broadly about your approach to various funding sources?

Yes. Thanks for that question. We're obviously extremely proud and have such a deep commitment to our scientists who, through the course of the pandemic, rose to the challenge of finding solutions to help patients. But through that process and perhaps different from others, Lilly did not receive any financial support for its R&D or manufacturing of COVID-19 treatments, in this case, our antibodies and baricitinib. As a publicly disclosed statement we made last fall under our principles of COVID-19 antibody therapy pricing and access and on the company's website, we've disclosed how we've treated these matters and how we think about pricing and access for these therapies. We self-funded all R&D for the COVID-19 treatments and have entered into arrangements to supply those treatments to markets. But that's after the products work and that has been proven out, I think, a different position and one that we think is appropriate. Beyond COVID-19, we provide a significant amount of information regarding pricing and access overall as well as disclosures on our R&D spending. That's also on our website. And in the ESG website, we've highlighted some of that as well.

Great. Thanks. Moving on, perhaps Tiffany for you as well. Lilly had 2 press releases today about work with Direct Relief for COVID, both for low- and middle-income countries in general and India specifically. Can you provide some more color on these relationships and how you're thinking about expanding access to COVID?

Sure. So thank you for the question. We have had a long-standing relationship with Direct Relief. And we've partnered with them on a whole host of product donation initiative, whether it's our Life for a Child program, where we provide donations to children in -- with type 1 diabetes in developing countries. And in fact, under that initiative, since 2009, we've donated 2.4 million vials of insulin that provide -- and provide access care and education to life-saving medicines. As it relates to COVID, we understand that this is pandemic that is impacting everyone around the globe. And as part of our 30x30 initiative, we are focused on ensuring that those in developing countries can have access to our medicines. And so we have partnered with Direct Relief to ensure that we are getting to countries -- in low- and middle-income countries to ensure that our therapeutics get to who needs them.

Great. Your reference to 30x30 actually is a good segue to another question that we received. If the goal is getting to 30 million patients by 2030, I think you said earlier that you're at about 7.3 million now, how will you continue to make progress to get to your ultimate goal?

Yes. So the 30x30 goal is purposefully ambitious. We wanted to set an ambitious goal to keep in line with our ambitious purpose on making life better for people around the world. Reaching 30 million people is going to take every single aspect of our company. That's why we have the 3 pillars around that program, which are partnerships, program and pipeline. So we are challenging ourselves to think differently about the work we're doing in developing countries and resource-limited settings. But we're bringing the full force of all of our expertise to look at this.

Great. Thanks. Paul, I don't see any questions. Are there any in the queue?

There is none in the phone queue.

Okay. Then we'll cover the last one that was submitted in advance. Dave, your presentation this morning is a great example of the shift to stakeholder capitalism. How are you and the Board thinking about balancing the various perspectives and priorities of lots of different stakeholders as you become more focused on stakeholder capitalism?

Well, as I said in my remarks, I'm not sure, at least in how we run the firm, we're becoming more focused on stakeholder capitalism because going back to the quote from Mr. Eli in 1947, we've been in that place for a long time. I think we've long held the belief that a well-run company has a sustainable approach, both within its own operations and a long-term strategy. Certainly, we deploy capital and think about investing in new medicines that way, but also in our communities and with customers and those that rely on us for medicines. So I think those values and principles have been a part of the core of the company from the very, very beginning. The language around ESG and stakeholder capital has changed and adapted. And certainly, the transparency and reporting standards are moving up. And we want to keep well abreast to those and really be a leader in the reporting side of this. But I think all stakeholders should rest assured this will not take a huge change in direction for us. In fact, it's sort of how we've run the company for a long time. So we're proud of that. And we'll continue doing so, and the transparency will hold us accountable to that standard.

Good. That gets through the list of questions that we had received. Dave, would you like to offer any final remarks as we close out the call?

Thanks to you, Jim, and the ESG team and everyone involved in preparing this, to our Board for your support as we've rolled out these new standards and special thanks to the investors and community members who joined us on today's call. If you have follow-up questions, please contact Jim Greffet and look for the new website, the esg.lilly.com. Thanks for participating.

Then ladies and gentlemen, this conference will be available for replay after 1 p.m. Eastern Time today. You may access the AT&T replay system by dialing either 1 (866) 207-1041 or international 1 (402) 970-0847 and entering the access code 4686898. That does conclude our conference for today. Thank you for your participation and for using the AT&T TeleConference Service. You may now disconnect.