Eli Lilly: Recreating Drug Discovery for the 21st Century

Group 4 Members

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

Contents
Case Overview and Company History
Shift in Strategy by Project Resilience Targeted therapeutics and Tailored therapeutics Identifying and building capabilities Stakeholder Challenges Lillys 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, Lilys vision and their plan forward.

About the company

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

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 Lilys 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 Targeted therapeutics and Tailored therapeutics Identifying and building capabilities Stakeholder Challenges Lillys Vision and Way Forward

Shift in Strategy by Project Resilience

Strategic shift from blockbuster model to targeted model

Project Resilience
Aided in the transition from old strategy to the targeted strategy

Strategy: Niche high value business model

Primary focus- specific subpopulations of patients Greater market share

Premium pricing
Relationship with diagnostic firm-Utilize biomarkers Identifying the right person

Resilience Teams view point

Capitalize on its traditional strength Giving competitive insulation from increasing costs More success rates for patients

Resistance to change
Internal reactions
Mixed Marketing teams view Focusing smaller markets- selling less

Little relevance to other therapeutic areas

 Case Overview and Company History Shift in Strategy by Project Resilience

Targeted therapeutics and Tailored therapeutics

Identifying and building capabilities Stakeholder Challenges Lillys 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

Large patient populations
One size fits all the products Few, large products generate majority of revenue Mid-sized R&D portfolio Dedicated manufacturing focused on few , high volume products Primary care, large sales force One size fits all marketing Higher development costs involved

Targeted Therapeutic Model

Targeted patient populations
customized treatment Many, equally sized products generate most revenue Large R&D portfolio Highly flexible manufacturing capability Specialty, technical, smaller sales force Targeted marketing positioning and messages 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 The model was not solely about drug development
Analogy of a tailor; different from buying one size fits all and tailored choices

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 For responders; benefits outweigh risks Optimizing according to patients Intervening therapies, completion or alteration Biomarkers, specific questions etc.

Patient Dose

Time

Information/ Tools

Why Tailored Therapies

Inversion in the age pyramid
Too few younger working people to pay for medical services used by older generation Less resource wastage and cost sustenance

Can reduce trial and error health care.

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 Stakeholder Challenges Lillys Vision and Way Forward

Identifying and building capabilities

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 informatics Diagnostics

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 spectrumincluding 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 companys 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

Lillys 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 patients 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 werent 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 FDAs 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

Lillys Vision and Way Forward

Lillys Vision
Sidney Taurel described Lillys 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 visions implementation

Understanding unmet patient needs

Delivering superior financial performance

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

Creating meaningful innovations

Significantly improving a patients health

Lillys 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.