About Eli Lilly and Company

Best known for its neuroscience products, pharmaceutical firm Eli Lilly also makes endocrinology, oncology, and cardiovascular care medicines. Its top-selling drugs include Cymbalta for depression and pain, Alimta for lung cancer, Humalog and Humulin insulin for diabetes, and Cialis for erectile dysfunction. Lilly also makes medications to treat schizophrenia and bipolar disorder (Zyprexa), osteoporosis (Evista and Forteo), heart conditions (Effient), ADHD (Strattera), gastric and lung cancer (Cyramza), and diabetes (Jardiance and Trulicity), as well as anti-infective agents and a growing line of animal health products.

Operations

Lilly has been around for more than 140 years and, unlike many other drug companies, has kept its operations focused almost exclusively on the task of pharmaceutical manufacturing. The company operates in two business segments: Human Pharmaceutical Products and Animal Health.

Pharmaceuticals for human consumption account for about 85% of annual revenues, while medicines for livestock and companion animals (including Rumensin, Posilac, Tylan, and Optaflexx, produced through its Elanco animal health unit) make up the rest of sales. The company co-promotes Cymbalta in Japan with Shionogi & Co.; Erbitux is marketed in the US and Canada by Lilly and elsewhere by Merck. Additionally, the company has a diabetes collaboration with Boehringer Ingelheim through which they jointly develop and commercialize Trajenta, Jardiance, Jentadueto, Glyxambi, Synjardy, and Basalgar.

The company's steady operational performance places it on firm ground even as Lilly enters a challenging time of significant patent expirations. For example, it lost patent exclusivity for Zyprexa for the treatment of schizophrenia and bipolar mania in Japan in 2015 and 2016. Its pipeline is progressing with new drug approvals and launches helping to offset the impact of generic competition on sales of aging products (such as Cymbalta and Evista). In 2015 the company launched Jardiance and Trulicity for type 2 diabetes and Basalgar for type 1 and type 2 diabetes.

Geographic Reach

Lilly sells its products in some 125 countries, with the US market accounting for more than half of the company's sales. Europe accounts for about 20% of sales while Japan accounts for more than 10%.

The company operates research, manufacturing, and distribution facilities in the US and 14 other countries in Europe, Asia, Australia, and the Americas. It owns 13 production and distribution sites in the US and Puerto Rico; major production sites are located in Indianapolis and Clinton, Indiana; Branchburg, New Jersey; and Carolina, Puerto Rico. Lilly's major international production sites are located in Ireland, the UK, France, Italy, Spain, and China.

Altogether, Lilly conducts R&D in about five countries, clinical trials in about 50 countries, and has manufacturing facilities in more than a dozen countries.

Sales and Marketing

In the US, Lilly's products are promoted to physicians, hospitals, veterinarians, and pharmacies through direct sales representatives and contract sales organizations. Products are distributed through independent wholesalers, primarily AmerisourceBergen, Cardinal Health, and McKesson. These three distributors each account for between around 10% and 20% of annual sales. Internationally, the company uses a direct sales force in most markets, though it occasionally markets products through independent distributors. It also partners with other pharmaceuticals to market its products.

Lilly advertises in medical journals and markets its products at medical conferences.

Financial Performance

After years of steady revenue growth, patent expirations and a lack of new blockbusters have taken their toll on Lilly. Revenue fell in 2014 and has been slowly recovering since. In 2016 revenue increased 6% to $21.2 billion as sales of endocrinology, oncology, and cardiovascular products rose. Among the fastest-rising products were Trulicity, Cyramza, and Strattera. However, these gains were partially offset by declines in sales of neuroscience and animal health products. Geographically, sales in the US and Japan increased while sales in Europe took a bit of a hit.

Net income has followed revenue's suit; in 2016 it grew 14% to $2.7 billion. Cash flow from operations dropped in 2014 and again in 2015, but rose 75% to $4.9 billion in 2016. Reductions in foreign currency translation losses and provisions for income taxes related to other income loss items were among the factors contributing to that improvement.

Strategy

Lilly has sailed steadily through a number of ups and downs without making drastic changes to its business model or its growth strategy of conducting focused R&D (it spends about $5 billion per year on research), forming joint ventures and collaborations, and making selective acquisitions. It has some 50 drug candidates in clinical development stages, as well as additional preclinical candidates. Its R&D programs for human pharmaceutical products focus on five therapeutic categories -- neuroscience, endocrinology, oncology, cardiovascular, and other -- and include potential treatments for cancer, diabetes, rheumatoid arthritis, depression, vascular disease, and Alzheimer's disease.

The company is also pursuing additional indications for existing drugs. Biotechnology has become an increasingly important area of R&D, with more than half of the drugs in Lilly's pipeline coming from biotech molecules (derived from proteins). Its programs are conducted both independently and through collaborations and licensing agreements.

Partnerships and acquisitions are also used to boost the company's pipeline. In 2016, the company entered a collaboration agreement with Boehringer Ingelheim to study the combination of Lilly's cyclin-dependent CDK 4/6 inhibitors and Boehringer's IGF 1/2 antibody for patients with breast cancer. The following year Lilly acquired CoLucid, gaining the pain management candidate Lasmiditan in the process.

To help offset any declines in its human pharmaceutical products segment, Lilly has also been expanding its animal health segment, primarily through acquisitions. After acquiring Novartis Animal Health in early 2015, Lilly became the second-largest animal health company in the world. It plans to continue investing in the segment to maintain its leading position in the market.

Mergers and Acquisitions

Acquisitions are one key way in which Lilly boosts its development pipeline In early 2017, the company bought CoLucid Pharmaceuticals for some $960 million. CoLucid is developing Lasmiditan, an oral medication for the management of pain caused by migraine headaches. That addition boosted Lilly's pain management pipeline.

Lilly has also been expanding its animal health division, primarily through acquisitions, to help offset potential future losses in the core pharmaceuticals segment. In 2015, Lilly picked up Novartis Animal Health and its nine manufacturing plants, six R&D facilities, 600 products, and global distribution infrastructure for $5.4 billion. The move created the second-largest animal health company in the world. In early 2017 Elanco bought the US feline, canine, and rabies vaccine portfolio of Boehringer Inghelheim's Vetmedica unit for $885 million.

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Eli Lilly and Company

Lilly Corporate Center
Indianapolis, IN 46285-0001
Phone: 1 (317) 276-2000
Fax: 1 (317) 276-2000

Stats

  • Employer Type: Public
  • Stock Symbol: LLY
  • Stock Exchange: NYSE
  • President and CEO: David A. Ricks
  • EVP Global Services and CFO: Derica W. Rice
  • President and CEO: David A. Ricks
  • 2016 Employees: 41,975

Major Office Locations

  • Indianapolis, IN

Other Locations

  • Little Rock, AR
  • Fresno, CA
  • Newbury Park, CA
  • San Diego, CA
  • Castle Rock, CO
  • Washington, DC
  • Miami, FL
  • Augusta, GA
  • Larchwood, IA
  • Orland Park, IL
  • Clinton, IN
  • Fishers, IN
  • Greenfield, IN
  • Plainfield, IN
  • Terre Haute, IN
  • Hutchinson, KS
  • Lenexa, KS
  • Overland Park, KS
  • Hopkinton, MA
  • Henning, MN
  • Saint Paul, MN
  • Billings, MT
  • Branchburg, NJ
  • New Hyde Park, NY
  • Germantown, OH
  • Broken Arrow, OK
  • Tulsa, OK
  • Mechanicsburg, PA
  • Spartanburg, SC
  • Knoxville, TN
  • Bruxelles, Belgium
  • Aracoiaba Da Serra, Brazil
  • Barueri, Brazil
  • Cosmopolis, Brazil
  • Calgary, Canada
  • Etobicoke, Canada
  • Guelph, Canada
  • Mississauga, Canada
  • Saint-Laurent, Canada
  • Victoria, Canada
  • Hangzhou, China
  • Shanghai, China
  • Bogota, Colombia
  • Windlesham, England
  • Moscow, Russia
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