Indianapolis-based Eli Lilly and Co. (NYSE: LLY) says it is “appalled and very disappointed” with the crimes allegedly committed by two former employees. The federal government has arrested the ex-workers and charged them with theft of trade secrets and conspiracy to commit theft of trade secrets. Senior Vice President and General Counsel Michael Harrington says the accusations are very serious, but do not ” significantly jeopardize our overall research and development pipeline.” A federal indictment has been unsealed in the case.

It suggests that Lilly believes the alleged theft has cost the company more than $55 million.

The secrets at the center of the case were allegedly passed along to a Chinese competitor.

A Lilly executive who testified in court said the trade secrets that were allegedly leaked cost Lilly more than $55 million to discover over the course of 10 years.

October 8, 2013

News Release

INDIANAPOLIS, Ind. – Eli Lilly and Company (NYSE:LLY) today issued the following statement from Michael J. Harrington, senior vice president and general counsel, in response to the U.S. government’s arrest of two former employees. These former employees, who are U.S. citizens, are charged with theft of Lilly trade secrets and conspiracy to commit theft of trade secrets.

“We are appalled and very disappointed by the crimes allegedly committed by these former Lilly employees. Scientific discovery and the proprietary information gained from our research are the foundation of the company’s efforts to bring breakthrough medicines to patients around the world. This same research and intellectual property also are vital to Lilly’s economic success. Theft of Lilly’s confidential information harms Lilly by depriving the Company of the value of its costly research efforts while giving unfair competitive advantage to others.

“With this in mind, Lilly will aggressively pursue every legal remedy to protect and safeguard its scientific discoveries. This includes assisting law enforcement in prosecuting and holding accountable those attempting to steal Lilly’s valuable research.

“The confidential information these former employees are accused of stealing relates to early stage clinical development of potential new medicines. While very serious, the theft does not significantly jeopardize our overall research and development pipeline.

“Lilly has always taken extensive measures to protect its intellectual property. These safeguards continue to be refined and adapted in light of an ever-changing threat landscape.

“Lilly wishes to acknowledge the collaborative partnership we’ve maintained with each of the agencies involved in this investigation and subsequent prosecution. Lilly has worked closely with the U.S. Attorney’s Office and the Federal Bureau of Investigation to assist in the investigation and will continue to work collaboratively with these agencies to prosecute these former employees who are accused of breaching our trust and violating the law.

“The alleged conduct of these two individuals does not reflect the broader values of the overwhelming majority of Lilly employees. Every day, thousands of Lilly employees from around the world demonstrate the company’s core values of integrity, excellence, and respect for people through their hard work and dedication to bringing innovative new medicines to patients.

“Finally, due to the ongoing criminal investigation, Lilly will not provide any additional comments or details regarding this matter — all other questions should be directed to the U.S. Attorney’s Office.”

About Eli Lilly and Company

Lilly, a leading innovation-driven corporation, is developing a growing portfolio of pharmaceutical products by applying the latest research from its own worldwide laboratories and from collaborations with eminent scientific organizations. Headquartered in Indianapolis, Ind., Lilly provides answers – through medicines and information ─ for some of the world's most urgent medical needs. Additional information about Lilly is available at Eli Lilly and Co.

Story Continues Below