Eli Lilly: Recreating Drug Discovery for the 21st

Century

• Keerthi Chandran• Lavanya Iyer• Lijo George• Malavya • Mahalakshmi• Mamatha• Manoj• Naveen S• Neha S• Nikhila C• Nithin P• Parvathy A

Group 4 Members

Contents

•Case Overview and Company History

• Shift in Strategy by Project Resilience• Targeted therapeutics and Tailored

therapeutics• Identifying and building capabilities• Stakeholder Challenges• Lilly’s Vision and Way Forward

Case overview

• Pharmaceutical company that starts to develop tailor made drugs for specific people depending upon the genetic make up, age, physical strength, gender etc.

• They face stiff resistance within the company during the initial phase.

• But a few people have identified that personalized medicine is the future.

• They formulate many strategic plans to persuade the resistance.

• Eventually the company embraces the concept. • Case also discusses in detail about the stakeholder

challenges, building new capabilities, Lily’s vision and their plan forward.

• Eli Lilly and Company is an American global pharmaceutical company.

• Products are sold in 125 countries. • Company was founded in 1876 by Col. Eli Lilly, a

pharmaceutical chemist.• Lilly was the first company to mass-

produce penicillin, the Salk polio vaccine, and insulin.• World's largest manufacturer and distributor of

psychiatric medications.• Zyprexa, a treatment for schizophrenia is their key

revenue driver

About the company

Evolving through change

• The 10th largest pharmaceutical company in the world.

• One of the major companies that strived without merger and acquisition activities of the 80s and 90s.

• Lilly has remained dedicated tor creating medicines that help improve peoples' quality of life for more than 135 years.

• R&D is their key strength. Spends more on R&D than any other major pharmaceutical company

• Their 4 therapeutic areas include neuroscience, endocrinology, oncology and cardio vascular.

Evolving through change

• Core values - excellence, integrity and respect for people

• Core capabilities – Speed to Market, Leverage existing products, Narrowing R&D focus, Spinning off non core medical devices, product focused teams

• Partnering was a big part of Lily’s strategy

PERSONALIZED MEDICINE

• 2008- Pharmaceutical industry under pressure• For more than 20 years, Industry dominated by ‘Blockbuster drugs’- mass market and huge sales• Hugely profitable but no replacements due to patent• R&D costs increased dramatically• Need for personalized medicine- tailored for particular patient

• Industry opted segmentation by disease category and patient group

• Challenge- tailored therapeutics• Differences in patient responses to particular drugs. E.g. –

Strattera and Herceptin• Use of biomarkers

Any biological measurement that provided actionable information regarding disease progression

Basis for decision making in drug development

• Case Overview and Company History

•Shift in Strategy by Project Resilience

• Targeted therapeutics and Tailored therapeutics

• Identifying and building capabilities• Stakeholder Challenges• Lilly’s Vision and Way Forward

Strategic shift from blockbuster model to

targeted model

Project Resilience

• Aided in the transition from old strategy to the targeted strategy

Resistance to change

• Case Overview and Company History• Shift in Strategy by Project Resilience

•Targeted therapeutics and Tailored therapeutics

• Identifying and building capabilities• Stakeholder Challenges• Lilly’s Vision and Way Forward

Targeted Therapeutics

• In 2005, Peter Johnson and his team focused their attention on communicating their new strategy in response to dynamic pharmaceutical environment.

• The strategy was renamed as “targeted therapeutics” as the term ‘niche’ was both misleading and inaccurate.

• Johnson presented the idea of targeted therapeutics strategy to the managers and the employees like implementing the innovative strategy particularly in R&D and sales and marketing etc.

FIPCO (Fully Integrated Pharmaceutical Company)

• • Traditional drug development model for Pharmaceutical

companies in which the company owns and manages the value chain.

• With the FIPCO model, the strategy is to build and fully integrate most parts of the drug discovery and development chain.

• It was a successful business paradigm began in 1980 in which drug discovery, research, development, manufacturing, and marketing were all conducted in-house. Pharmaceutical companies are doing less of their drug R&D

internally than they did decades ago Today the common business paradigm is the virtually

integrated pharmaceutical company (VIPCO), or one that outsources much of drug development.

• Under the FIPCO model, which all of Big Pharma believed that individual companies needed to own nearly every part of R&D, manufacturing, and marketing etc. in order to bring innovative products to patients efficiently and at a high level of quality

• Now the company created a structure model called FIPNet (Fully Integrated Pharmaceutical Network) – Open drug development structure in which a network of

organizations participate. – This can include sharing information, talent, ideas,

resources, and capital within a web of partners

– The table below indicates that the targeted therapeutic and the conventional FIPCO models took very different approaches to R&D, marketing and

manufacturing.

FIPCO v/s Targeted Therapeutic Models

Conventional FIPCO Targeted Therapeutic Model

• Large patient populations • Targeted patient populations

• One size fits all the products • “customized” treatment

• Few, large products generate majority of revenue

• Many, equally sized products generate most revenue

• Mid-sized R&D portfolio • Large R&D portfolio

• Dedicated manufacturing focused on few , high volume products

• Highly flexible manufacturing capability

• Primary care, large sales force • Specialty, technical, smaller sales force

• One size fits all marketing • Targeted marketing positioning and messages

• Higher development costs involved

• Lower development costs and improved probability of technical success

Tailored Therapeutics

• Struggling to find the right language – Targeting had limited scope

• ‘Tailored’ advocated their strategy better– Analogy of a tailor; different from buying ‘one size fits all’

and ‘tailored’ choices

• The model was not solely about drug development– Information delivery system– Marketing the drug to target customers– Giving choices to pharmacies as to how they would

receive the Lilly products– Tailoring messages– Identifying responder and non - responders

Tailoring Scenarios

• Drug– For a specific sub population

• Patient– For responders; benefits outweigh risks

• Dose– Optimizing according to patients

• Time– Intervening therapies, completion or alteration

• Information/ Tools– Biomarkers, specific questions etc.

Why Tailored Therapies

• Inversion in the age pyramid– Too few younger working people to pay for medical

services used by older generation

• Can reduce trial and error health care.– Less resource wastage and cost sustenance

• Biomarkers can weed out unpromising molecules early, compress development times, run smaller and more focused trials and explore secondary indications earlier.

• The tailored model promises a larger share of a more segmented pie

• Case Overview and Company History• Shift in Strategy by Project Resilience• Targeted therapeutics and Tailored

therapeutics

• Identifying and building capabilities

• Stakeholder Challenges• Lilly’s Vision and Way Forward

Organizational Structure

• Put together a strategic team ‘watching over’ the implementation of tailored therapeutics

• The two strategies they incorporated are:– Every team working on the new therapy

always considered tailoring in its plan.– Each team had the access to capabilities

that are needed to execute the new tailored strategy.

INTEGRATING TAILORING INTO DRUG DISCOVERY AND

DEVELOPMENT

• A Toolkit was introduced by the group to ensure that every team member focused on tailoring a potential option for its drug discovery & development.

• Toolkit included a value proposition template which allowed teams to look at the value, needs and agendas of the group.

• Each team was responsible for developing a value based input from medical, discovery, new product development etc.

• The main objective of the toolkit was to ensure that at every significant review of drug process the review managers queried their team members.

• The teams met periodically with Tailored Therapeutics Stakeholders group to talk about the new strategy.

Building Capabilities

• Lilly also set aside roughly $100 million to develop the new capabilities needed to support the tailored therapeutics strategy.

• It was identified that the new capabilities needs to be developed in the following areas R& D Sales & Marketing Manufacturing

Research & Development

• A cross functional Tailored Therapeutics Review Panel for identifying and overseeing the building of capabilities within LRL .

• It identified that the following two capabilities needs to be built

Integrative informaticsDiagnostics

Integrative informatics

• It is pulling together data generated across various functions and attempting to use it to generate hypotheses as to where tailoring could be applied.

• A workbench was designed to look at data across a wider spectrum—including medical, pharmakinetics and discovery.

• “Having access to this information across the value chain will enable us to better generate hypotheses, and to better understand diseases and how patients react to certain drugs.”

Diagnostics

• It had limited development and no diagnostic commercial experience.

• As of 2006, the company had fee-for-service arrangements with a wide range of companies including small biotechs and large diagnostic companies.

• Gaps were identified with regard to the company’s diagnostic capabilities.

• Lilly continued to build upon its existing biomarker capability

Sales and Marketing

• The company required a more “focused and scientifically sophisticated sales and marketing organization” .

• They needed a tight linkage , so that the parameters of the market segment could be understood as early in the development life cycle as possible.

• They needed insights from patients, payers and physicians into their development process earlier to avoid failures.

• Direct to consumer advertising is an important marketing tool.

• Marketing and sales messages would be less about how a tailored therapeutic was better than competing products and more about how it addressed specific disease states.

• Sales and marketing would need to develop other capabilities including– Payer partnership in health management– Early collaboration on planning with R&D– Consumer marketing– Evaluation of patient outcomes etc

• Marketing organization should find more and better ways to be integrated with their development organization.

• This could help them providing the data that answers the real world questions of their customers .

Manufacturing

• Flexibility would be the key capability that Lilly needed to possess when it came to manufacturing.

• Manufacturing requirements was less predictable than they were under the traditional FIPCO model .

• There was number of products and volumes to be produced, potency of the products, mix of large vs. small molecule products, complexity of compound manufacturing, type of distribution to final market.

Core Competencies, Capabilities and

Advantages - Nutshell

• Hence Lilly relied much on enhancing their core capabilities .

• They developed new competencies and enhanced their existing skills as well.

• “It is about building new capabilities and approaches to help them think differently”.

• By these endeavors they were able to gain competitive advantage than others in the market.

• Case Overview and Company History• Shift in Strategy by Project Resilience• Targeted therapeutics and Tailored

therapeutics• Identifying and building capabilities

•Stakeholder Challenges• Lilly’s Vision and Way Forward

PATIENTS• Patient compliance is the biggest challenge• Task of patient compliance falls on shoulders of

pharmaceuticals, providers , payers etc• Educate patients on benefits & risks of medicines • Win patient’s trust• Privacy of patient info to be addressed• Legal assurances to be needed• Other complex hurdles to overcome was in

determining the boundary b/w what Lily does in clinical trials and what was necessary across the board capability building

PROVIDERS• Providers should be educated on targeted

therapies• Ensure the clinical information system to

accommodate increased data and networking demands

• Point of care testing PAYERS• Significant roadblock for development and use of

targeted medicines• inadequate reimbursements was key reason why

companies weren’t developing diagnostic products• Incase of reimbursements, payers have to identify

as to which patient, which diagnostic tests etc• Tailoring drugs based on market dynamics – to

create value• Payers pertain to the patient data• Create greatest benefit for the greatest number

REGULATORY BODY• Improving the drug pipeline and increasing the safety of

new drugs• FDA’s roles need to be more formalized for encouraging &

supporting the development of therapies.• FDA needed to develop clear guidelines about the kind of

evidence required for the approval of targeted therapies. DIAGNOSTIC FIRMS• Emergence of targeted medicine will creates some tension

between diagnostic and pharmaceutical firms.• Diagnostic firms put themselves at financial risk.• Development cycle times and cost of drugs and diagnostics

are completely different.• Risk in failure of drug.

PHARMACEUTICAL FIRMS• Competitors also play a role in Lilly's ability to move

its tailored therapeutics strategy forward.• Greater collaboration and sharing of information• Growing transparency• In 2004 Lilly became a first company to disclose the

results of clinical trials on the internet.• Majority of the competitors were experimenting with a

tailored therapeutics strategy.

• Case Overview and Company History• Shift in Strategy by Project Resilience• Targeted therapeutics and Tailored

therapeutics• Identifying and building capabilities• Stakeholder Challenges

•Lilly’s Vision and Way Forward

Lilly’s Vision

• Sidney Taurel described Lilly’s vision in the following terms:– It has many Facets ( innovative,

responsible, collaborative and focusing on individual patient outcomes)

– It mandates changes (not replace values, brand or other foundational elements)

– We all own this vision’s implementation

We will lead the industry by......

Lilly’s Way Forward

• Followed a tailored therapeutics strategy, considered whether implementation was fast enough.

• Hire and develop leaders who are motivated to make a difference.

• Execute better than competitors• Create an agile organization and culture of

inclusion• Deliver quality and innovative medicines• Create and integrate external networks• Combine relationships with all key constituents.