Eli Lilly and

Company: Drug
Development
Strategy
Rutvik R. Malekar- 19/083
Pratyush Chandra- 19/090
Sourabh Kannoje- 19/107
Vanshika P- 19/116
Shambhavi Agrawal- FPM/09/09

Environmental Factors in Pharma Industry

Entrants of new players due to patent expiration
The expiration of patents led to increased
competition
Innovation and cost benefits at the heart of
production design and development
There was pressure to reduce the drug development
cycle

Pharmaceutical Industry in USA

The drug development in the 1990s involved huge costs and
had high failure rates
The firms spent around $230 million which involved expenses,
costs of failed projects and opportunity costs
The drug development process involves various processes as
follows:

Basic
Research

FDA
Review

Clinical
Screening

Human
Clinical
Trials

Drug Development
in the USA
Basic Research
(About two
years)
Pre-Clinical
Screening
(About Three
years)
Human Clinical
Trials
(About six years)
FDA Review
(About two
three years)

The initial screening of plants ,microorganisms and

other naturally occurring substances to find a lead
compound
The costs involved in this stage typically involve $30$50 million
Only a few compounds might make it to the next
stage
This phase involves animal testing to assess drug
safety and to gather data on biological
effects(absorption, metabolism etc.)
Generally only in in four drugs makes it through this
stage for human clinical testing as investigational
drugs
This phase is very stringent and time consuming as the drug
has to pass FDA hurdles
The three phases in this case are
Phase I-Testing of clinical safety
Phase II-The drug efficacy is checked in this stage
Phase III-This stage tested the adverse effects from long tem
use

The FDA committee took up to three years to review

the NDA
Even after approval ,post marketing surveillance
continued
About one tenth of all drugs candidates entering
clinical trials ultimately reach the market

Eli Lilly
Compa
ny

The company was founded in Indianapolis ,Indiana in 1876 by

Colonel Eli Lilly
By 1994 it expanded in over 150 countries with sales close to $5.7
billion with 25000 employees
The company came into limelight by introducing insulin in 1980 and
they also came up with an innovative depressant Floxetine(Prozac)
The company maintained a major research divisions across a variety
of treatment areas including central nervous system
The company expanded into allied businesses such as diagnostics
and animal products
The new CEO sold its medical device and diagnostic unit in order to
focus on the integrating drug discovery, development ,production
and distribution
The new management slashed its workforce by 10% and acquired
many key businesses and technologies which strengthened it core
pharmaceutical business
The company also planned to restructure its research efforts to refill
the product pipeline which helped the companys stock price to rise

Innovation in the drug development

process
High-throughput
screening
Was aimed at solving problem. Using
this technology high-speed robots
would perform a series of biological
tests or assay on all member of a
chemical library virtually
simultaneously.

Combinatorial chemistry

Enabled a large collection or

library of related chemical
compounds to be quickly generated
simultaneously

Synthetic Chemistry
Made possible the development of
compounds never before seen in
nature, including more powerful
and potent variations of naturally
occurring compounds

Project Migraine Development

Process
Lilys collaborator found a new serotonin receptor subtype 1f
receptor
Lead Identification
Research team started out screening 20-30 serotonin like compounds weekly
Found one lead out of over 1000 previously synthesized compounds
Lab animals administration experiments showed further promise without needing
vasoconstriction
LY329511 a better compound and current lead, was found using creative
derivatives
Combinatorial
Chemistry
Trial agreements with Kaldor to make 30-40 compounds and further iterations
Second batch of combichem compounds assured significant finding
LY334370- improvement over LY329511; lacked adverse vasoconstricting effects

Advantages

Disadvantages

Integration of new technology

Inclusion of new arena to increase success chances from
serendipity
Faster results with inclusion of combinatorial chemistry
Possibility of support from Sphinx
Voodoo science collaboration could divert screening
capacity
Combinatorial chemistry generated compounds were only
80-90% pure
The technology was yet unproven and could mislead efforts
of scientists

Human Factor issues creating

resistance
Colleagues felt that Schaus was engaging in
voodoo science and attention would be
diverted from the valuable screening capacity.
High throughput screening was met with
skepticism as screening time would be
reduced manifold thus showcasing that
stopping something is easy when people dont
believe in it.
Traditional chemists saw combinatorial
chemistry as a threat to their jobs.

Directly to the market

PROS
Early mover advantage, as only around 30% of the market share was there to capture.
Patent of Prozac, their best selling drug was expiring in 2003.
Increase in net income of the company and combatting the decrease in net income

CONS
A more competitive market would result in opportunity loss as Lily would be the third or
fourth to come up with this product.
As they were early movers, chosen compound may not be the best one.

Refinement of the Product

PROS
Higher chances of passing clinical trials as they were refining the product.
A better product with significant improvement in the market than LY334370.
28% of the total users felt cost reduction was important.

CONS
First three drugs captured 80% of the market share.
Delay in time will incur heavy losses as market competition will increase.

Redesign on a new Migraine drug platform

PROS
As there were many unresolved problems in the previous products a new platform
could correct them.
Knowledge gained after significant research will lead to a better products than
CONS
already in the market.
A lot of time, money and effort required to create a whole new product.
Profit margin would reduce considerably due to existing large firms already in the
market.

Recommendation
Scenario 2 is the best way to go because
of the following reasons: Refined product is better to launch in the market instead
of launching a drug that hasnt been fully tested.
Rather than creating a new product from scratch it is
better to improve the already created drug.
Second fast-follower has a better success rate than the
early movers.
A lot of time, money and effort will be wasted if the whole
product is redesigned instead of just refining it.
Chances of passing the clinical trials and the time taken
in months delayed are best optimized for the scenario 2.

Thank
you