Lilly CEO John Lechleiter again spoke out in favor of continued R&D spending to position Lilly for growth by 2014. In marked contrast to many of his peer CEOs in Pharma, Lechleiter vigorously has resisted cutting R&D and termed it "nuts" to reduce R&D spending in an industry that is "development-based" and meant to look to "long term investment".
Lilly says it is well positioned to recover (It is expected to see net income go down next year) by 2014 as it has grown the number of mid- to late-stage projects in its pipeline to 33 from 6 only six years ago. Lilly plans to take 10 new drugs into late phase by the end of 2011.
"Our progress in R&D....has built an R&D engine with global reach that can deliver new medicines accepted by regulators, reimbursed by payers, and benefiting patients, while generating a positive return for shareholders over the long term," said Lilly's Jan Lundberg, executive vice president, science and technology. See Fierce Biotech.
Well, Lechleiter has remained consistent. He clearly is backing a position that is not shared universally among his peers -- though Merck has similarly maintained R&D spending. It's a position counter to many/most shareholders lobbying efforts -- twhich is to cut. Lilly has at least two tough years to negotiate before this program can kick in with increased revenues. We'll see how it goes. It should be a bumpy ride but Lilly may emerge looking really good. Or it may be acquired sometime during the next couple years when it is down.
Posted by Bruce Lehr June 30th 2011.