Will Moody's downgrade spur Lilly ($LLY) to rethink its strategy?

On the same day Eli Lilly ($LLY) announced it is committing up to $800 million to buy Avid Radiopharmaceuticals, CEO John Lechleiter (photo) was earning poor marks from Moody's Investors Service on several key criteria on the company's performance.

Noting big delays for Lilly's application on Bydureon and other fresh pipeline "setbacks," Moody's looked askance at the big pharma's looming loss of patent protection and the "erosion in Lilly's global competitive position as peers have merged." And then the service downgraded Lilly to an A2, halfway between Aaa and junk.

Dow Jones notes that Standard & Poor's downgraded Lilly last summer, observing that the company has "halted development of promising products, launched new products to disappointing market acceptance and lost challenges to some product patents."

Unlike most other big pharma companies, Lilly has insisted that it won't pursue any big M&A plans, with Lechleiter vowing to deliver the goods already in the company's pipelines while adding smaller bolt-on acquisitions. But without a big advance in the clinic sometime soon, that strategy will come under increasing pressure as Lilly draws ever closer to generic competition that will chop into its considerable revenue stream.

- here's the story from Dow Jones