Eli Lilly and
Company
:Drug Development Strategy (A)
Introduction to
the Pharmaceutical Industry
In the mid 1990s
By the mid 1990s, annual worldwide pharmaceutical
sales were around $250 billion, with roughly 80 percent
originating in t...
U.S. Pharmaceutical Market
by Therapeutic Category (1994)
Drug Category 1994 (US$ billions) 2000 Estimates (US$
billion)
% Change of Market
Share
Cardiology 15.4(18%) 13.1(13%) (27...
Summary of Drug Development
in the USA
Under current law, a patent’s term expired
20 years from the time the patent application
was field (prior to 1995, patent ...
Top 20 Prescription Drugs by
Worldwide Sales (1994)
(dollar in millions)
Rank
1994
Rank
1993
Product Name Product Type Marketer World
Sales
% Change
from 1993
U.S.
Sales
1 1 Zantac Ulcer therapy ...
Top 20 Firms Active in the
Pharmaceutical Industry (1994)
(dollars in millions)
Company Total
Sales
R&D
Expense
EBIT Net
Income
Return on
Equity (%)
Return on
Asset (%)
Employees
(000s)
1 Bayer, A. G. 2...
Eli Lilly and Company
Eli Lilly and Company was
found In Indianapolis, Indiana
in 1876 by Colonel Eli Lilly.
In the mid 1990s, Lilly,
operating ...
Eli Lilly and Company
- Organization Chart
A. M. Watanabe, MD
Executive VP Science &
Technology
Chairman and CEO
R. L. Tobias
VP, Human
Resources
Executive VP,
Finan...
Eli Lilly and Company
-1994 Financial Highlights
(dollars in million)
1994 1993 % Change
Net sales 5,712 5,199 10
R&D expenses 839 755 11
Income from continuing operations 1,185 465 155
Net in...
Eli Lilly and Company
-Major Product Sales
(dollars in million)
Drug
Category
1994 Sales
1994
Sales
% of Total
Lilly sales
Lunch
Year
Prozac Antidepressant 1,665 29 1988
Ceclor Antibioti...
Innovation in the new Drug
Development Process
Synthetic Chemistry
Made possible the development of
compounds never before seen in nature,
including more powerful and po...
Combinatorial Chemistry
At Lilly
Combinatorial chemistry is an emerging
technology for generating a large collection
or “library” of related chemical compo...
Combinatorial Chemistry
(the “Split-and-Mix” Method)
Round Vessel 1 Vessel 2 Vessel 3 Number of
Compounds
1 A B C 3(=31)
2...
Central Nervous System
(CNS) Diseases
CNS Diseases accounted for roughly
10 percent of all lifetime years lost to disease.
E.g. clinical depression, severe inso...
Lilly’s Migraine Project
“Migraine”
• was characterized by unilateral pulsating
headaches often severe enough to restrict
physical and mental activ...
Imitrex,
• launched in 1992
• was a mildly effective drug that act by
constricting blood vessels
• had an adverse effect o...
By March 1994, out of over 1,000
previously synthesized serotonin-like
compounds one particularly good “lead”
had been fou...
Timeline
Difficult choices:
The Project Team Advisory
Committee(PTAC) Meeting
The three key business
issues for PTAC Presentation
Member of the group
วริษฐา ภิรมย์รัตน์ 4902680521
ณัฐกานต์ มีสัตย์ 4902682055
อัจฉรา บัญชากร 5002686094
หฤษฎ์ พรรณพานิช 50...
BA401_Eli Lilly and Company_Drug Developmet Strategy(A)
BA401_Eli Lilly and Company_Drug Developmet Strategy(A)
BA401_Eli Lilly and Company_Drug Developmet Strategy(A)
BA401_Eli Lilly and Company_Drug Developmet Strategy(A)
BA401_Eli Lilly and Company_Drug Developmet Strategy(A)
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BA401_Eli Lilly and Company_Drug Developmet Strategy(A)

  1. 1. Eli Lilly and Company :Drug Development Strategy (A)
  2. 2. Introduction to the Pharmaceutical Industry In the mid 1990s
  3. 3. By the mid 1990s, annual worldwide pharmaceutical sales were around $250 billion, with roughly 80 percent originating in the industrialized G7 nations. Top Blockbuster drugs targeted diseases of particular concern to industrialized nations.
  4. 4. U.S. Pharmaceutical Market by Therapeutic Category (1994)
  5. 5. Drug Category 1994 (US$ billions) 2000 Estimates (US$ billion) % Change of Market Share Cardiology 15.4(18%) 13.1(13%) (27) Antibiotics 12.0(14%) 8.1(8%) (42) Gastrointestinal 11.1(13%) 10.1(10%) (23) Central Nervous System 6.8(8%) 13.1(13%) 62 Respiratory 5.1(6%) 8.1(8%) 33 Lipid Lowering 4.3(5%) 5.0(5%) 0 Cancer 4.3(5%) 7.1(7%) 40 Diabetes 3.4(4%) 4.0(4%) 0 Arthritic 3.4(4%) 2.0(2%) (50) Hematology 3.4(4%) 7.1(7%) 75 Imaging 2.6(3%) 2.0(2%) (50) Anti-viral 2.6(3%) 3.0(3%) 100 Thrombotic 2.6(3%) 2.0(2%) 0 Immunology .86(1%) 2.0(2%) 100 Osteoporosis .86(1%) 4.0(4%) 300 Other 8.6(10%) 10.1(10%) 0 Total $85.6 billion (100%) $100.9 billon (100%)
  6. 6. Summary of Drug Development in the USA
  7. 7. Under current law, a patent’s term expired 20 years from the time the patent application was field (prior to 1995, patent protection extended 17 years after the patent was issued.) Sales of only a few products could provide exceptional returns. In the mid 1990s, 14 products had annual sale over $1 billion, enabling profit margins of 15-20 percent.
  8. 8. Top 20 Prescription Drugs by Worldwide Sales (1994) (dollar in millions)
  9. 9. Rank 1994 Rank 1993 Product Name Product Type Marketer World Sales % Change from 1993 U.S. Sales 1 1 Zantac Ulcer therapy Glaxo-Wellcome 3,663 12 2,280 2 2 Vasotec/Renitec Hypertension treatment Merck 2,185 6 975 3 4 Prilosec/Losec Ulcer therapy Astra & Merck 1,904 40 850 4 10 Zovirax Herpes therapy Glaxo-Wellcome 1,729 49 444 5 6 Prozac Antidepressant Eli Lilly 1,665 38 1,180 6 3 Capoten Hypertension treatment Bristol-Myers Squibb 1,500 2 581 7 5 Mevacor Cholesterol reducer Merck 1,345 3 1,115 8 8 Adalat line Hypertension/Angina Bayer 1,300 8 120 9 9 Cipro/Ciproxin Anti-inflective Bayer 1,300 8 712 10 16 Zocor Cholesterol reducer Merck 1,255 39 400 11 11 Voltaren Anti-arthritic Ciba 1,192 5 269 12 7 Procardia line Hypertension/Angina Pfizer 1,177 (3) 1,177 13 12 Augmentin Anti-inflective SmithKline Beecham 1,126 (3) 491 14 17 Sandimmune Immunosuppressive Sandoz 1,038 7 500 15 14 Cardizem line Hypertension/Angina Hoechst Marion 933 2 812 16 18 Rocephin Anti-inflective Hoffman-La Roche 930 4 413 17 20 Premarin Estrogen replacement Wyeth-Ayerst 853 14 723 18 23 Neupogen Bioresponse modifier Amgen 829 15 617 19 22 Pepcid/Pepcidine Ulcer therapy Merck 820 12 625 20 15 Ceclor Anti-inflective Eli Lilly 812 (11) 394
  10. 10. Top 20 Firms Active in the Pharmaceutical Industry (1994) (dollars in millions)
  11. 11. Company Total Sales R&D Expense EBIT Net Income Return on Equity (%) Return on Asset (%) Employees (000s) 1 Bayer, A. G. 28,023 2,050 2,430 1,271 11.9 4.7 146.7 2 Ciba-Geigy 16,171 1,578 2,232 1,403 12.0 6.1 84.0 3 Johnson & Johnson 15,734 1,278 2,867 2,006 28.2 12.8 81.5 4 Merck & Co. 14,970 1,231 4,633 2,997 26.9 13.7 47.5 5 Bristol-Myers Squibb 11,984 1,108 2,638 1,842 32.3 14.3 47.7 6 Sandoz 11,639 1,199 N/A 1,272 20.7 8.9 60.3 7 Hoffman-La Roche 10,816 1,710 3,110 2,098 17.0 8.6 61.4 8 SmithKline Beecham Plc 9,933 976 1,213 110 12.4 0.9 55.4 9 Abbott Laboratories 9,156 964 2,228 1,517 37.5 17.8 49.5 10 American Home Product Corp. 8,966 817 2,145 1,528 35.9 7.1 74.0 11 Glaxo 8,484 1,287 2,826 1,955 25.2 16.1 47.4 12 Pfizer Inc. 8,281 1,139 2,003 1,298 30.0 11.7 40.8 13 Hoechst Celanese Corp. 7,794 313 (55) 186 5.9 2.3 29.2 14 Tekeda Chemical Industries 7,778 677 1,124 518 7.7 4.5 11.0 15 Eli Lilly and Company 5,712 897 1,828 1,286 22.1 8.2 24.9 16 Sankyo Co. Ltd. 5,575 477 887 395 11.3 5.8 N/A 17 Schering-Plough 4,657 620 1,281 922 58.6 21.3 21.2 18 Rhone-Poulenc Rorer 4,175 611 547 341 21.0 7.6 22.1 19 Wellcome Plc—ADS 3,096 542 1,098 632 22.1 14.4 17.6 20 Marion Merrell Dow Inc 3,060 462 632 438 20.5 10.6 9.4
  12. 12. Eli Lilly and Company
  13. 13. Eli Lilly and Company was found In Indianapolis, Indiana in 1876 by Colonel Eli Lilly. In the mid 1990s, Lilly, operating in 150 countries, was one of the world’s largest pharmaceutical company, with over 25,000 employees and 1994 sales of $5.7 billion.
  14. 14. Eli Lilly and Company - Organization Chart
  15. 15. A. M. Watanabe, MD Executive VP Science & Technology Chairman and CEO R. L. Tobias VP, Human Resources Executive VP, Finance & CFO VP & General Counsel President & COO VP, Cardiovascular VP, Endocrinology VP, Cancer VP, Central Nervous System J. Schaus, PhD, Senior Research Scientist VP, Regulatory Affairs VP, Development VP, Medical (Phases II & III) CNS Business Unit Bianca Sharma, Project Manager Eisenstein, MD VP Technology Core & Infectious Disease M. Haslanger, PhD Executive Director, Research Technology And Proteins, President, Sphinx Pharmadeuticals S. Kaldor, PhD, Head of Combinatorial Chemistry
  16. 16. Eli Lilly and Company -1994 Financial Highlights (dollars in million)
  17. 17. 1994 1993 % Change Net sales 5,712 5,199 10 R&D expenses 839 755 11 Income from continuing operations 1,185 465 155 Net income 1,286 480 168 Earnings per share Income from continuing operations 4.10 1.58 159 Net income 4.45 1.63 173 As adjusted Net income 1,398 1,336 5 Net income per share 4.84 4.54 7 Dividends paid per share 2.5 2.42 3 Capital expenditures 577 634 (9) Income from continuing operation as a percent of shares 20.7% 8.9% Return on assets 11.8% 5.2% Return on shareholders’ equity 25.9% 10.2%
  18. 18. Eli Lilly and Company -Major Product Sales (dollars in million)
  19. 19. Drug Category 1994 Sales 1994 Sales % of Total Lilly sales Lunch Year Prozac Antidepressant 1,665 29 1988 Ceclor Antibiotic 812 14 1979 Humulin Diabetes 665 12 1980 Axid Gastrointestinal 487 9 1988 Vancocin Antibiotic 249 4 1958 Humatrope Growth Hormone 226 4 1987 Keflex Antibiotic 140 2 1971 Lorabid Antibiotic 129 2 1992
  20. 20. Innovation in the new Drug Development Process
  21. 21. Synthetic Chemistry Made possible the development of compounds never before seen in nature, including more powerful and potent variations of naturally occurring compounds Combinatorial chemistry Enabled a large collection or “library” of related chemical compounds to be quickly generated simultaneously 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.
  22. 22. Combinatorial Chemistry At Lilly
  23. 23. Combinatorial chemistry is an emerging technology for generating a large collection or “library” of related chemical compounds rapidly, instead of having to make one compound at a time. This allows for creating variations around the backbone of a basic molecular structure.
  24. 24. Combinatorial Chemistry (the “Split-and-Mix” Method) Round Vessel 1 Vessel 2 Vessel 3 Number of Compounds 1 A B C 3(=31) 2 AD, BD, CD ADG, BDG, CDG AEG, BEG, CEG AE, BE, CE ADH, BDH, CDH AEH, BEH, CEH AF, BF, CF ADI, BDI, CDI AEI, BEI, CEI 9(=32) 3 AFG, BFG, CFG AFH, BFH, CFH AFI, BFI, CFI 27(=33) … … … … … K … … … (=3K)
  25. 25. Central Nervous System (CNS) Diseases
  26. 26. CNS Diseases accounted for roughly 10 percent of all lifetime years lost to disease. E.g. clinical depression, severe insomnia (sleeplessness), and migraine Each of which affected over 10 percent of the population – could take a severe toll on society. For instance, depression might predispose people to suicide
  27. 27. Lilly’s Migraine Project
  28. 28. “Migraine” • was characterized by unilateral pulsating headaches often severe enough to restrict physical and mental activity • afflicted 12 percent of population, with a 3:1 preponderance in women
  29. 29. Imitrex, • launched in 1992 • was a mildly effective drug that act by constricting blood vessels • had an adverse effect on the heart’s vessels Many scientists felt that the makers of Imitrex had followed the wrong path by trying to find a compound that constricted blood vessels(known as “vasoconstriction”).
  30. 30. By March 1994, out of over 1,000 previously synthesized serotonin-like compounds one particularly good “lead” had been found. In addition, Lilly’s experiments in which lab animals were administered these lead compounds further promise of the “1f” serotonin receptors as treatment targets for migraine without the need for inducing vasoconstriction.
  31. 31. Timeline
  32. 32. Difficult choices: The Project Team Advisory Committee(PTAC) Meeting
  33. 33. The three key business issues for PTAC Presentation
  34. 34. Member of the group วริษฐา ภิรมย์รัตน์ 4902680521 ณัฐกานต์ มีสัตย์ 4902682055 อัจฉรา บัญชากร 5002686094 หฤษฎ์ พรรณพานิช 5002686185

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