Leading Lilly Forward

John Lechleiter, newly appointed CEO of Eli Lilly, addresses Lilly’s stance in the industry and reveals the directions in which he’ll be taking the company after stepping into the leadership role on April 1.

Having begun his career at Eli Lilly in 1979 as an organic chemist, John Lechleiter has had his hands in nearly every aspect of the business involved in moving a drug from the lab to the market, with an impressive track record that will serve him well as he steps into the Chief Executive Officer position.

Lechleiter will be following on the heels of Sidney Taurel, whose 10-year stretch as CEO followed a similar trajectory after he joined the company in 1971 as a marketing associate and spent the next 27 years working his way through the ranks until he reached the top.

Under Taurel’s watch, Lilly has become a consistent leader in the industry, achieving accolades in the areas of transparency, philanthropy and building a reputation as one of leading providers of psychiatric drugs.

As he hands off the CEO title to Lechleiter effective April 1, Lilly is in the best shape it has been for in years. In recently released fourth quarter results, the company put up impressive numbers with revenue up 22 percent. The surge in quarterly profits can be attributed to Lilly’s biggest seller, Zyprexa, which recorded approximately 10 percent increase in sales; its antidepressant Cymbalta, which experienced a 48 percent increase in sales; and revenue boosts from Cialis and its diabetes drug Byetta, whose worldwide sales rose 34 percent.

Looking ahead to 2008, Lilly expects continued sales growth, with projections that seven of its products will reach $1 billion or more in sales. “I don’t think it’s any surprise that the next CEO of Lilly is a person who came out of R&D, and is going to continue to be a strong supporter of R&D,” Lechleiter says. “It’s been the lifeblood of this industry, and we’re going to continue to make sure that we make not only the right investments inside the company but that we extend our reach and become much more networked within the broad global community of resources and ideas.”

Lechleiter will be moving the company forward with the vision shared by both himself and Taurel – providing ‘the right drug for the right patient at the right time’. “We talk about a future state where Lilly is focused like never before on helping to ensure the best possible outcomes for individual patients who use our medicines,” he says. The renewed focus on patient outcomes will involve more activity devoted to the discovery and application of tailored therapeutics along with engaging more in the collective set of activities of individuals who are using Lilly medicines to help them achieved their desired health outcomes.

While Lechleiter will be taking over the reins in the midst of a company upswing, backed by a solid year of growth, a healthy pipeline and numbers more than pleasing shareholders, Lilly will still have its fair share of challenges ahead, namely in the form of generic competition as its lead drug Zyprexa is slated to lose patent protection in 2011.

Aside from generic competition, Lilly will also be facing other challenges plaguing the rest of the industry. Lechleiter details the three biggest challenges he sees impacting the industry as a whole.

Restoring confidence
The first major challenge is refurbishing the industry’s image in the eyes of the public and restoring confidence in the industry. In light of drug recalls, lawsuits and accusations around suppressing benefit-risk information, the industry has been cast in an undue negative light, and gaining back the trust of the public won’t be quick or easy.

One of the key elements critical to turning around public opinion is something that Eli Lilly is very familiar with: transparency. While most of the industry has embraced increased transparency initiatives such as the clinical trials database, Lilly has gone the extra mile to proactively promote transparency throughout their organization.

Lilly was the first to voluntarily publish its clinical trials by creating a clinical trials database in 2004 back when it was still considered taboo for pharma companies to fully disclose clinical trial findings.

Lilly has since continued down the path of transparency by recently committing to the publication and full disclosure of its non-clinical grants as well. Launched May 1, 2007, its grant registry includes all information related to educational grant funding and other monetary contributions provided by Lilly to US-based organizations, enabling the public to see how grants are being provided and used.

According to Lechleiter, transparency will always be an ingrained part of how Lilly operates, and the company will continue to look for opportunities to build upon its existing transparency initiatives. “We’re going to continue to look for ways to open up our business for the public in such a way that we can provide the assurance that the way we’re operating and the way we run our business is entirely consistent, not only with our own principles, but with the principles that anyone as a patient or as a healthcare provider would expect a pharmaceutical company to adhere to.” Lilly will be looking at everything from how it carries out research to how it conducts clinical trials to even the manner in which it promotes its products for ways to further enhance transparency.

Demonstrating value
The second major challenge facing the industry is related to access and freedom around pricing. The high cost of health care has put added pressure on pharma to demonstrate the value of products as stakeholders oftentimes direct blame for restricted access or high pricing on the pharma industry.

Thus pharma’s call to action is to make the value of its medicines more pronounced. “In many cases, pharmaceuticals represent one of the most cost-effective approaches to treating disease and maintaining health, often because they avoid much more expensive interventions,” Lechleiter says. “The key here is to continue to demonstrate the value of our products in ways that are meaningful to the various constituencies that we might call in totality our customer base around the world.”

Property protection
The third major challenge Lechleiter cites is intellectual property. As many ongoing activities in the industry already threaten to undermine intellectual property protection, strengthening and maintaining a strong intellectual property framework should be an essential priority for pharma.

“This business, with the risks that we take and the long timelines that are still very much part of our fabric, absolutely depends on strong, transparent and enforceable intellectual property measures that must be shared broadly within the global community,” Lechleiter points out. “Without intellectual property protection, there can be no innovation.”

Of course, it goes without saying that drug safety is always the major overriding challenge at the forefront of pharma. Much attention as of late has been placed on the all-important ratio of benefit-risk and identifying ways to better measure and make visible the complete benefits and risks associated with each medicine.

Lilly has already devoted much focus to the area of benefit-risk and plans to continue to show leadership in this area to help more clearly put into perspective the risks of medicines in relation to benefits. The company is working on developing more sophisticated post-marketing surveillance networks, paying more attention to single detection, and continually assessing the benefit-risk equation for its products as they’re being used by patients.

“We’re using ever more sophisticated tools, including large public and private databases, to proactively anticipate issues and problems that could develop with our drug and also to put efficacy into perspective,” Lechleiter acknowledges. “In other words, the benefit-risk is a ratio, and while we can oftentimes begin to pinpoint and diagnose new risks, the magnitude of those risks have to be put in perspective with the benefit of the drug.”

Lilly moving up
Despite the challenges that lie ahead, Lilly has one major force on its side – a healthy, lucrative pipeline and one that’s been pumping out strong selling drugs, particularly in the diabetes and psychotherapy arenas.

Lechleiter has great optimism for the current pipeline, which he calls one of the most exciting mid-stage pipelines in Lilly’s history. Last year alone, Lilly brought 16 new molecules into human testing and hopes to bring in another 14 this year, while many mid-stage molecules in phase II will be starting to move to phase III this year as well.

Lilly has also capitalized on its acquisition of Applied Molecular Evolution (AME), a company dedicated to discovering, optimizing and developing human biotherapeutics with a unique technology platform that’s enabled Lilly to integrate more biotherapeutic candidates within its drug discovery process.

Of the 44 new molecular entities currently in human testing, Lechleiter estimates approximately one third of those are biotech products that have been catalyzed by the acquisition. “This technology has enabled us to develop a whole series of therapeutic proteins and antibodies that, in many cases, can be customized; that is, they can be chemically modified to be more specific, to be more potent, to be better drugs at the end of the day, or potentially better drugs by virtue of properties that we can test and measure again.”

With nearly every molecule coming forward for clinical testing already assigned at least biomarker, Lilly is laying the foundation for a greater entrance into biotherapeutics and personalized medicine. “Going back to the earliest stages of discovery, our scientists from the very outset are attempting to ensure that insofar as possible, we’re trying to understand better how to approach the question of which patients are right for this drug,” Lechleiter says.

Personalized medicines
The mindset of a personally tailored approach to medicine has been instilled across the company, with a renewed focus on helping stakeholders understand which patients stand to benefit the most from which medicines and then positioning the product for that patient. Lilly will be looking for how to apply that approach to some of its leading products – such as Cymbalta for depression, Xigris for severe sepsis, Byetta for type 2 diabetes – and is currently partnering with a number of diagnostic companies to develop companion tools for tailored medicines.

The move into personalized medicine is just one of the many transformation measures for 2008 put forth by Taurel at the end of the year. On the heels of a particularly strong year and with a promising pipeline in tow, Lilly is not letting up – in fact, Lechleiter’s two words to sum up his growth and productivity initiatives for 2008 are ‘achieve’ and ‘transform’. “We know that we cannot continue to operate in this business the way we’re operating today and be successful in 10 years’ time, so I’m going to continue to call attention to and emphasize the transformation measures that Sidney and I have put in place within the company.”

Along with the ambitious transformation measures, Lilly will also continue to work on improving productivity, utilizing one of the biggest Six Sigma applications within pharma. In addition, the company is looking at moving to a more networked enterprise or FIPNet to leverage collaborations and work more effectively with partners to capitalize on globally shared knowledge and resources.

Lastly, Lilly will be focused on areas of unmet medical needs, particularly in the arena of diabetes and Alzheimer’s. With today’s advanced scientific knowledge and technological tools at its disposal, Lilly is excited to make progress in such areas that haven’t seen much significant advancement in recent years.

Thus it’s a particularly exciting time of change and opportunity for Lechleiter to lead the company forward. “For me personally, it’s a chance to realize the wonderful potential of the science that we have at our feet,” Lechleiter admits. “The fire that burns within me is one that says I’ve been given an opportunity now to marry up this exciting science and meet some of these important needs that really do come home to me today and resonate with me more than ever before.”

Dr. John C. Lechleiter was named President and COO of Eli Lilly and Company and joined the company’s board of directors in 2005. Since January 2004, he had served as EVP Pharmaceutical Operations and he had been EVP for pharmaceutical products and corporate development since 2001. Lechleiter is a member of the company’s policy and strategy committee and he also chairs the company’s operations committee. On April 1, 2008, he will become Lilly’s President and CEO.

Eli Lilly’s pipeline progress and outlook

• Six late stage opportunities to launch by 2011
• Five NILEX approved with five, more submitted in 2007
• Unprecedented number of NMEs entering the clinic
• Acceleration of promising phase I and II assets
• At least 10 additional phase III NMEs by 2011
• Launch an average of two products per year beginning in 2011; three per year beginning in 2014

Lilly’s top growth products

Cymbalta – In the US, Cymbalta is outgrowing all branded competitors in total prescription share in the primary care, psychiatry and long-term care segments. The strong performance reflects the drug’s ability to address important unmet needs, strong formulary access, quality sales force interactions and effective advertising campaigns. In 2008, Lilly expects Cymbalta to become its top-selling product in the US, overtaking Zyprexa.

Zyprexa – In the near term, Zyprexa is expected to remain Lilly’s top product, as measured by worldwide sales. However, given the overall growth trends of the company’s product portfolio, the dependence on Zyprexa will continue to diminish gradually. More than half of Zyprexa’s revenue is now derived from international markets, and the company will continue to invest in the product in those areas where it maintains patent exclusivity.

Byetta – Byetta continues to gain new prescription share in the US, with over four million total prescriptions written since launch. Byetta’s favorable US formulary placement continues to improve in managed care, as well as Medicare Part D and Medicaid. International launch plans for Byetta include up to 60 international markets by the end of 2008.

Cialis – Cialis continues to show strong growth in the US and internationally, and will exceed $1 billion in annual sales in 2007. In the US, Cialis achieved 12 percent volume growth in the first nine months of 2007, compared with a one percent growth in the overall erectile dysfunction market. Outside the US, Cialis is now available in more than 100 countries, and is now the market leader in more than 20 of them.

Forteo – Forteo continues to generate robust sales growth, both in the US and internationally. The company is focusing on initiatives in the US targeted at improving patient outcomes through better adherence to Forteo treatment regimes. Forteo is also currently under review in the US and European Union for a new indication for glucocorticod-induced osteoporosis, or GIOP.

Alimta – Alimta has achieved the most successful launch in history for any cytotoxic agent. It is now approved in 86 countries and is the worldwide market leader in second-line treatment of non-small cell lung cancer (NSCLC). In the US and Europe, the company has submitted Alimta, with cisplatin, for the first-line treatment of non-small cell lung cancer.