In this morning's WSJ, Lilly CEO, John Lechleiter explains some of the company's strategy as it faces 8 major drugs coming off patent in 8 years - representing 75% of its current revenues.
Lechleiter states that Lilly won't be pursuing any type of mega-merger like rivals such as Pfizer and Merck have recently completed. He believes there is little evidence that these larger companies are any more innovative than Lilly can be by itself.
Lechleiter is very bullish on the Lilly pipeline - 65 drugs in some stage of clinical development. The pipeline is heavily focused on finding cures for big, difficult diseases like Alzheimer's, diabetes and cancers.
Nevertheless, Lilly is also slashing costs (reducing 5500 heads) to keep pace with the expected loss of revenue when as it arrives at the patent cliff. Zyprexa being the first drug to reach the precipice in October 2011.
In addition to its pipeline of 65 drugs, Lilly will also pursue more external partnerships - particularly in the area of diagnostics but with no intention of acquiring such a company.
So it looks like Lilly will resist merger mania, will cut costs, will emphasize the innovative portions of its pipeline and will try to boost its external collaboratons to cushion the patent cliff drop.
Posted by Bruce Lehr July 6th 2010.