Eli Lilly Outlines Growth Strategy

Eli Lilly (Indianapolis, IN) outlined its growth strategy at its annual meeting with the investment community last week. Chief among the company’s goals are plans to launch two new drugs per year beginning in 2013 and a strategy to increase its position in emerging markets.

“In 2009, Lilly has once again exhibited strong performance in a tough environment, and we've continued with a series of actions aimed at speeding innovation to patients and delivering greater value to our customers," said John C. Lechleiter, Lilly's president and chief executive officer, in a company press release. " Through these actions and more, we are transforming Lilly to compete and to win in an ever-more demanding and challenging environment. We see a divergence of strategies among our peers to deal with these challenges, including the wave of consolidation this year. Many companies are seeking to lower risk by reducing their focus on innovative medicines. This is not our path. Our strategy is to create value by accelerating the flow of innovative new medicines that provide improved outcomes for individual patients.”

The company plans to have at least 10 molecules in Phase III clinical development by the end of 2011 and hopes to launch two new drugs per year beginning in 2013, according to comments by Steve M. Paul, executive vice-president of science and technology, and president of Lilly Research Laboratories, in the company press release. He pointed to efforts by the company to accelerate drug discovery and development to help meet these goals. These include a phenotypic drug-discovery program, risk-sharing collaborations, the early-stage work of its Chorus team (a global network of internal and external partners in drug development) and its new Development Center of Excellence.

Eli Lilly currently has 60 new molecules in development, including 25 in Phases II and III, according to Paul. He added that biotechnology-based molecules now represent more than one-third of the company’s clinical pipeline. Lilly strengthened its position in biologics through the acquisition of the biopharmaceutical company ImClone Systems (New York) in 2008.

Lilly recently refocused its operations around five business units: oncology, diabetes, established markets, emerging markets, and animal health, and part of the company’s growth strategy is to enhance its position in seven key emerging markets: Brazil, Russia, India, China, Mexico, South Korea, and Turkey, with its top priority being China. These seven markets accounted for 9% of the company’s revenues in the first nine months of 2009. The company’s sales in China increased 20%, and Lilly doubled the size of its affiliate in China from 1100 to 2200 employees, according to the release. The company is currently building a second insulin-manufacturing plant in Suzhou, Jiangsu Province. In 2008, Lilly’s sales in China were more than $200 million.

Lilly has a three-pronged strategy to increase its growth in emerging markets. First, it says it will seek to maximize core assets, which includes both patented and postpatent drugs, and will seek to accelerate new product launches and to capitalize on longer product life cycles in select countries, including China. Second, it wants to add select competitor drugs to build upon its core therapeutic focus, particularly in diabetes, oncology, and neuroscience, which could include product acquisitions and copromotion and comarketing agreements. And thirdly, the company wants to establish local alliances in select countries where the company’s current infrastructure is not well-suited for growth.

Offering a long-term outlook for its overall performance, the company expects to achieve annual revenues of at least $20 billion between 2012 and 2014.