Seeking to operate like traditional venture firms, Lilly Ventures has spun out from Eli Lilly with $200 million in capital financing. Managing Director S. Edward Torres told VentureWire that the spin-out, which was completed May 1, will allow Lilly Ventures to compensate its staff more like other VC firms, which will in turn help the outfit attract the best talent. Prior to this, the venture arm couldn't give its employees a percent of its profit from investments. That's standard for VC firms, but at odds with Eli Lilly's compensation policies.
Other drugmakers with venture outfits may follow Lilly's lead to keep up with their competitors. Venture capital arms have become a vital way for Big Pharma to stay abreast of new technologies at small start-ups. They fund development of groundbreaking sciences at its earliest stages--and grab a chunk of promising companies in the process. GlaxoSmithKline, Novartis, and Roche, which all have investment arms, will be facing similar issues as they strive to make their VC activities successful.
- here's the WSJ report