Eli Lilly - $LLY.US

What’s Eli Lilly Business Model?

Eli Lilly and Company discovers, develops, manufactures, and sells pharmaceutical products for humans and animals. The Company products are sold in countries around the world. Eli Lilly products include neuroscience, endocrine, anti-infectives, cardiovascular agents, oncology, and animal health products.

What Eli Lilly is doing in more details?

Eli Lilly is a leading pharmaceutical company that develops diabetes, oncology, immunology, and neuroscience medicines.

Its top-selling drugs include Trulicity (treatment of type 2 diabetes and reducing the risk of adverse cardiovascular events in patients with type 2 diabetes and cardiovascular risk factors); Humalog (an injectable human insulin analog); Alimta (treatment for various cancers); Taltz (treatment for moderated-to-severe plaque psoriasis); Humulin (injectable human insulin); and Jardiance (treatment for type 2 diabetes and reducing the risk of cardiovascular death with patients with type 2 diabetes and heart diseases) among others.

The company generates most of its revenue in the US.

Where Eli Lilly is Operating?

Lilly has been around for more than 140 years, discovering, developing, manufacturing, and marketing pharmaceutical products. The company operates in a single business segment, Human pharmaceutical products. Lilly’s revenue is generated from its products.

Its largest product is Trucility, which accounts for over 20% of total revenue, followed by Humalog for nearly 15%. Both products are treatment for diabetes.

Alimta, a treatment for non-small lung cancer, accounts for almost 10% of total revenue. The remaining revenues are generated from: Forteo, Taltz, Humulin, Basaglar, Jardiance, Cyramza, Cialis, Cymbalta, Traienta, Verzenio, Erbitux, Olumniant, Zyprexa, Strattera, Emgality and other products.

Where is the geographical reach of Eli Lilly?

Lilly, based in Indianapolis, Indiana, sells its products in approximately 120 countries, with the US market accounting for over 55% of sales. Europe accounts for more than 15% of sales, Japan accounts for over 10%, and China accounts for roughly 5% The remaining sales are generated from other foreign countries (about 10%).

The company operates research, manufacturing, and distribution facilities in the US, Europe, Asia, Australia, and the Americas. It owns nine production and distribution sites in the US and Puerto Rico; major production sites are in Indianapolis, Indiana; Branchburg, New Jersey; and Carolina, Puerto Rico.

Lilly’s major international production sites are in Ireland, France, Italy, Spain, and China. In addition, Lily owns a small R&D facility in Spain and leases a small site in Singapore.

What is Eli Lilly’s Sales and Marketing Strategy?

In the US, Lilly’s products are promoted to physicians, hospitals, 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 15% and 20% of sales. Internationally, the company promotes its products through sales representatives and online health care channels. It also partners with other pharmaceuticals to market its products.

Lilly’s advertising expenses totaled $1.1 billion, $1.1 billion, and $900 million for the years 2020, 2019, and 2018, respectively.

What is Eli Lilly Financial Performance?

Lilly has reported higher revenue for five straight years by rolling out a steady stream of new drugs.

In 2020, the company’s revenue reached $24.5 billion compared to $22.3 billion in 2019.

The revenue increase in the US was driven primarily by increased volume for Trulicity, bamlanivimab, and Taltz; while outside the US, the revenue increase was driven by the increased volume for Tyvyt, Trulicity, Alimta, and Olumiant.

However, its net income dipped to $6.2 billion from $8.3 billion in 2019. The decreases in net income were driven primarily by the approximately $3.7 billion gain recognized on the disposition of Elanco in 2019, partially offset by higher gross margin and higher other income in 2020.

Lilly held $3.7 billion in cash and cash equivalents at the end of 2020, including $677 million of discontinued operations.

In 2020, operations produced $6.5 billion, but investing activities used $2.3 billion for acquisitions and purchase of property and equipment. Financing activities used another $3.1 billion.

What is Eli Lilly Future Strategy?

Eli Lilly strategically invests in external research and technologies that the company believes to complement and strengthen its own efforts. These investments can take many forms, including licensing arrangements, strategic alliances, collaborations, and acquisitions.

The company views its business development activity as an important way to achieve its strategies, as the company seeks to bolster its pipeline and enhance shareholder value. The company continues to evaluate business development transactions that have the potential to strengthen its business.

Acquisitions are one key way in which Lilly boosts its development pipeline

Lilly acquired Prevail Therapeutics, a biotechnology company developing potentially disease-modifying AAV9-based gene therapies for patients with neurodegenerative diseases; and Dermira, a biopharmaceutical company dedicated to developing new therapies for chronic skin conditions.

What are Eli Lilly’s Mergers and Acquisitions?

In 2021, Lilly completed the acquisition of Prevail Therepeutics Inc, for approximately $880 million.

New York- based, Prevail is a gene therapy company leveraging breakthroughs in human genetics with the goal of developing and commercializing disease-modifying AAV-based gene therapies for patients with neurodegenerative diseases.

The acquisition establishes a new modality for drug discovery and development at Lilly, extending the company’s research efforts through the creation of gene therapy program supported by Prevail’s portfolio of clinical-stage and preclinical neuroscience assets.

In early 2020, Lilly acquired all shared of Dermira, Inc., a biopharmaceutical company dedicated to developing new therapies for chronic skin conditions, for a purchase price of nearly $850 million, net of cash acquired.

The acquisition expands Lilly’s immunology pipeline with the addition of lebrikizumab, a novel, investigational, monoclonal antibody designed to bind IL-13 with high affinity that is being evaluated in a Phase 3 clinical development program for the treatment of moderate-to-severe atopic dermatitis in adolescent and adult patients, ages 12 years and older.

The acquisition of Dermira also expands Lilly’s portfolio of marketed dermatology medicines with the addition of QBREXZA (glycopyrronium), a medicated cloth approved by the FDA for the topical treatment of primary axillary hyperhidrosis (uncontrolled excessive underarm sweating).

What is Eli Lilly’s Background?

Lilly was founded in 1876 by Colonel Eli Lilly, who was committed to creating high-quality medicines that met real needs in an era of unreliable elixirs.

Over 140 years later, the company remains committed to his vision through every aspect of its business and the people it serves starting with those who take its medicines, and extending to health care professionals, employees and the communities in which we live.

What is Eli Lilly’s History?

Colonel Eli Lilly, pharmacist and Union officer in the Civil War, started Eli Lilly and Company in 1876 with $1,300. His process of gelatin-coating pills led to sales of nearly $82,000 in 1881.

Later, the company made gelatin capsules, which it still sells. Lilly died in 1898, and his son and two grandsons ran the business until 1953.

Eli Lilly began extracting insulin from the pancreases of hogs and cattle in 1923; 6,000 cattle glands or 24,000 hog glands made one ounce of the substance.

Other products created in the 1920s and 1930s included antiseptic Merthiolate, sedative Seconal, and treatments for pernicious anemia and heart disease. In 1947 the company began selling diethylstilbestrol (DES), a drug to prevent miscarriages.

Eli Lilly researchers isolated the antibiotic erythromycin from a species of mold found in the Philippines in 1952. Lilly was also the major supplier of Salk polio vaccine.

The company enjoyed a 70% share of the DES market by 1971, when researchers noticed that a rare form of cervical cancer afflicted many of the daughters of women who had taken the drug.

The FDA restricted the drug’s use and Lilly found itself on the receiving (and frequently losing) end of a number of trailblazing product-liability suits that stretched into the 1990s.

The firm diversified in the 1970s, buying Elizabeth Arden (cosmetics, 1971; sold 1987) and IVAC (medical instruments, 1977). It launched such products as analgesic Darvon and antibiotic Ceclor.

Lilly’s 1982 launch of Humulin, a synthetic insulin developed by Genentech, made it the first company to market a genetically engineered product. In 1986 the company introduced Prozac; that year it also bought biotech firm Hybritech for $300 million (sold in 1995 for less than $10 million).

In 1988 Lilly introduced anti-ulcerative Axid. It founded pesticides and herbicides maker DowElanco with Dow Chemical in 1989.

Trying to find a new product outlet, the firm bought pharmacy benefit management company PCS Health Systems from what is now McKesson in 1994.

But an FTC mandate to offer rival drugs and a lack of mail-order sales contributed to poor results, which ultimately led Lilly to sell PCS to Rite Aid and exit this arena completely in 1998.

Eli Lilly in 1995 bought medical communications network developer Integrated Medical Systems. That year the firm and developer Centocor introduced ReoPro, a blood-clot inhibitor used in angioplasties.

The next year it launched antipsychotic Zyprexa, Humalog, and Gemzar, and Prozac was approved to treat bulimia nervosa.

In 1997 the firm sold its DowElanco stake to Dow. In 1998 the Lilly Endowment passed the Ford Foundation as the US’s largest charity, largely due to Prozac (it has since been passed by the Bill & Melinda Gates Foundation).

That year Lilly began trying to stop Chinese drugmakers from infringing on its patents for Prozac’s active ingredient.

In 1999 a US federal judge found the firm illegally promoted osteoporosis drug Evista as a breast cancer preventative similar to AstraZeneca’s Nolvadex. Lilly halted tests on its variation of heart drug Moxonidine after 53 patients died. Also that year Zyprexa was approved to treat bipolar disorder.

In 2000 the firm began marketing Prozac under the Sarafem name for severe premenstrual syndrome.

A federal appeals court knocked more than two years off Prozac’s patent, reducing the expected 2003 expiration date to 2001, creating a negative impact on Lilly’s annual sales (Prozac had accounted for 30% of revenues).

Lilly suffered another blow when a potential successor to Prozac failed in clinical trials and became embroiled in legal maneuverings with generics maker Barr Pharmaceuticals.

While the firm fretted over Prozac and its patents, it continued work to find its next blockbuster.

In 2000 Lilly and partner ICOS announced favorable results from a study of erectile dysfunction treatment Cialis, which was approved in Europe in 2002 and in the US in 2004. (Several years later, Lilly acquired ICOS and, with it, full ownership of the Cialis franchise.)

In 2001 Lilly bought a minority stake in Isis Pharmaceuticals, a developer of antisense drugs, and licensed from it an antisense lung cancer drug. Also that year the firm launched Lilly BioVentures, a venture fund aimed at private biotech startup companies.

In 2002 the company settled with eight states in an infringement-of-privacy case involving the company’s accidental disclosure of e-mail addresses for more than 600 Prozac patients.

In late 2004 the druggernaut was one of several pharmas hit by bad news about drug side effects. Lilly announced its attention-deficit disorder drug Strattera had been linked to rare liver problems.

The company agreed to add warning labels about the potential side effects to the drug’s packaging and advertisements. The company also began facing trouble over Zyprexa, as consumer lawsuits claiming diabetes and high blood pressure began pouring in.

The majority of suits were settled in 2005 and 2007 for some $1.2 billion.

Generalized anxiety disorder drug Cymbalta was approved by the FDA and released in 2006, and osteoporosis drug Evista was approved for an expanded indication as a breast cancer preventative for postmenopausal women in 2007.

Also in 2007 the company acquired and absorbed development partner ICOS for $2.1 billion; the deal gave Lilly full ownership of Viagra-competitor Cialis. Lilly dropped a joint-development effort with another partner, Alkermes, for an inhaled insulin device in 2008.

The company gradually reduced its workforce by more than 10% between 2003 and 2008 to fight off the effects of generic competition and other challenges.

Other restructuring measures included an employee attrition plan announced in 2007, a management restructuring in 2008, and a manufacturing consolidation program launched in 2008.

After a lengthy lawsuit regarding its patents for its top seller, Zyprexa, a federal judge ruled in Lilly’s favor in 2008 against generic manufacturers IVAX, Dr. Reddy’s Laboratories, and Teva Pharmaceutical Industries. Federal courts ruled that the drug’s patents would remain valid until October 2011.

To fuel growth in the biopharmaceuticals market, the firm completed a $1 billion biotech research facility in Indianapolis in 2008.

It further expanded through the 2008 acquisition of biotech firm ImClone for about $6.5 billion; ImClone began operating as a research subsidiary of Lilly following the transaction.

ImClone already had one approved blockbuster therapy, Erbitux for colorectal and head/neck cancers, and was developing numerous other cancer therapy candidates.

Lilly also expanded its biotech oncology program earlier that year by purchasing development partner SGX Pharmaceuticals for $64 million. SGX was absorbed into Lilly’s research operations.

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