As recounted in Pharmalot blog, Lilly has established a new "research metric" that will be one factor in calculating bonuses. It is intended to measure progress of its products through the development pipeline as an indicator of "output and sustainability" for the company.
The research metric will be in addition to usual measures around EPS and sales growth. Lilly of course has had several celebrated failures (most notably its Alzheimer's drug) in late stages this year and is facing one of the industry's steepest patent cliffs. It remains to be seen how directly most employees can affect this development goal - especially in the near term.
I will be interested to see how this metric resonates within the company as it rolls out. Also, I don't know the weight of the "research metric" versus the usual sales, profitability, etc type goals that companies usually follow. Hopefully, we'l hear some feedback on how this is perceived and how it works in practice.
Concommitant with this new metric announcment, Lilly Executive managers did take some paycuts for 2011 - albeit from a position of considerable altitude. We'll see how that affects perceptions as well.
Posted by Bruce Lehr Feb 7th 2011.