FORM 4 Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF SECURITIES Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940

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(Print or Type Responses)

1. Name and Address of Reporting Person * TAUREL SIDNEY   2. Issuer Name and Ticker or Trading Symbol LILLY ELI & CO [LLY] 5. Relationship of Reporting Person(s) to Issuer (Check all applicable) __X__ Director _____ 10% Owner __X__ Officer (give title below) _____ Other (specify below) Chairman and CEO (Last) (First) (Middle) LILLY CORPORATE CENTER 3. Date of Earliest Transaction (Month/Day/Year) 08/03/2006 (Street) INDIANAPOLIS, IN 46285 4. If Amendment, Date Original Filed(Month/Day/Year) 6. Individual or Joint/Group Filing(Check Applicable Line) _X_ Form filed by One Reporting Person ___ Form filed by More than One Reporting Person (City) (State) (Zip) Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned

1.Title of Security (Instr. 3) 2. Transaction Date (Month/Day/Year) 2A. Deemed Execution Date, if any (Month/Day/Year) 3. Transaction Code (Instr. 8) 4. Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5) 5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4) 6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4) 7. Nature of Indirect Beneficial Ownership (Instr. 4) Code V Amount (A) or (D) Price Common Stock 08/03/2006   M   77,110 A $ 34.595 656,027 D   Common Stock 08/03/2006   F   31,067 D $ 57.05 624,960 D   Common Stock 08/03/2006   F   287 D $ 57.06 624,673 D   Common Stock 08/03/2006   F   2,900 D $ 57.07 621,773 D   Common Stock 08/03/2006   F   20,800 D $ 57.08 600,973 D   Common Stock 08/03/2006   F   1,400 D $ 57.09 599,573 D   Common Stock 08/03/2006   F   2,700 D $ 57.1 596,873 D   Common Stock               15,982 I 401(k) Common Stock               1,290 I by child, A. Taurel Common Stock               1,290 I by child, O. Taurel Common Stock               1,290 I by child, P. Taurel Common Stock               100,000 I (1) by wife, K. Taurel Common Stock               95,623 I (2) Family Limited Partnership 1 Common Stock               20,500 I (3) Family Limited Partnership 2 Common Stock               113,797 I (4) S. Taurel Waterfield GRAT Common Stock               20,000 I (4) ST Family Investment GRAT II U/A DTD 11/22/05 Common Stock               80,000 I (4) ST Grantor Retained Annuity Trust U/A 11/22/05

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
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Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned
(e.g., puts, calls, warrants, options, convertible securities)

1. Title of Derivative Security (Instr. 3)

2. Conversion or Exercise Price of Derivative Security

3. Transaction Date (Month/Day/Year)

3A. Deemed Execution Date, if any (Month/Day/Year)

4. Transaction Code (Instr. 8)

5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4, and 5)

6. Date Exercisable and Expiration Date (Month/Day/Year)

7. Title and Amount of Underlying Securities (Instr. 3 and 4)

8. Price of Derivative Security (Instr. 5)

9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4)

10. Ownership Form of Derivative Security: Direct (D) or Indirect (I) (Instr. 4)

11. Nature of Indirect Beneficial Ownership (Instr. 4)

Code

V

(A)

(D)

Date Exercisable

Expiration Date

Title

Amount or Number of Shares

Employee stock option 10/96 (right to buy)

$ 34.595

08/03/2006

M

77,110

10/21/1999

10/20/2006

Common Stock

77,110

$ 0

35,000

D

Reporting Owners

Reporting Owner Name / Address	Relationships
	Director	10% Owner	Officer	Other
TAUREL SIDNEY LILLY CORPORATE CENTER INDIANAPOLIS, IN 46285	X		Chairman and CEO

Signatures

Bronwen Mantlo for Sidney Taurel, authorization on file		08/04/2006
**Signature of Reporting Person		Date

Explanation of Responses:

*	If the form is filed by more than one reporting person, see Instruction 4(b)(v).
**	Intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
(1)	Reporting person disclaims beneficial ownership of these shares.
(2)	Held by Family Limited Partnership 1 in which reporting person is sole general partner. Reporting person, his wife, children, and a trust for the benefit of his grandchildren have limited interests, and reporting person disclaims beneficial ownership in the shares held by the partnership except to the extent of his pecuniary interest therein.
(3)	Held by Family Limited Partnership 2 in which an LLC controlled by the reporting person is the sole general partner and the reporting person is the sole limited partner. Reporting person's children own an interest in the LLC, and reporting person disclaims beneficial ownership in the shares held by the LLC, except to the extent of his pecuniary interest therein.
(4)	Grantor retained annuity trust established by reporting person. Reporting person is trustee.

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