Lilly's bet on R&D pipeline over mega mergers faces hurdles

Eli Lilly ($LLY) has drawn some fresh criticism for the risk in its strategy to rely on its own pipeline to bolster its future product portfolio rather than seek mega mergers like those that some of its pharma counterparts have jumped on.

As Lilly grapples with one of the industry's largest attacks from generic drug competition, the company says on its website that it now has 9 drugs in late-stage development and three under review at the FDA. Some of those late-stage contenders include solanezumab for Alzheimer's disease and a long-acting diabetes drug called LY2189265. Lilly is also weighing potential acquisitions to boost its revenue, Reuters reports. Yet the firm has banked more heavily on its pipeline than an analyst who follows the firm's stock would like.

"The whole dynamic of this company now is how much you buy into their pipeline, but I think it's high-risk," Atlantic Equities analyst Richard Purkiss told Reuters. While the firm's lead Alzheimer's drug could be a big seller if it passes through trials and regulatory review, he said, the compound and other late-stage drugs are no sure things.

Lilly has already stumbled over the past year with some of its late stage drugs. Digestion aid liprotamase failed to garner FDA approval this spring, and semagacestat, an experimental Alzheimer's drug, went down in flames last year after early data from a Phase III trial showed a worsening of cognition among patients on the drug. The company more recently grabbed wins with partner Amylin Pharmaceuticals in the development of diabetes treatment Bydureon, which passed a key heart safety study requested by U.S. regulators and garnered an EU market green light.

- see the Reuters piece