Despite a years-long dry run, Lilly keeps the faith in its pipeline

Eli Lilly CEO John Lechleiter

Eli Lilly ($LLY) has won just one new drug approval since 2009, running up an innovation debt that is rapidly catching up to its revenue. But there's nothing wrong with the company that can't be fixed by what's right with the company, CEO John Lechleiter said, and the global giant believes its late-stage pipeline can change what has become a tired narrative.

As it stands, Lilly is in the midst of a free fall off the patent cliff, with Cymbalta contending with generic competition and Evista lined up for the same fate in March, dimming the company's outlook as it prepares for some major blows to sales. Facing similar headwinds, contemporaries like Merck ($MRK), GlaxoSmithKline ($GSK) and others have hit the reset button on their R&D operations, cutting payrolls, embracing partnerships and honing their focuses on therapeutic areas with the best odds of success.

But not Lilly. Instead, the Indiana drugmaker has stuck to the old way of doing things, spending $5.5 billion on R&D last year while enduring late-stage failures for once-promising treatments. Now, Lilly is heading into 2014 with potential winners in dulaglutide, which could lead the GLP-1 diabetes market, and ramucirumab, which the company believes can score approval for stomach cancer.

"It's time to go back on offense," Lechleiter told Reuters. "We're on the cusp of launching products in cancer and diabetes, two therapeutic areas where we're well-established and where we have built out the infrastructure we need. And we believe that's going to be the beginning of our return to growth."

But each of Lilly's late-stage hopefuls comes with a major caveat. Dulaglutide will have to contend with Novo Nordisk's ($NVO) Victoza and AstraZeneca's ($AZN) Byetta and Bydureon in the crowded GLP-1 field, and things will only get tougher if GlaxoSmithKline and Sanofi ($SNY) succeed in making their ways into the market. Ramucirumab is certainly well-positioned for approval, but the drug failed a pivotal study on the more lucrative indication for breast cancer, dragging down its sales potential. And necitumumab, a lung cancer treatment designed to succeed Erbitux, has been dogged by safety concerns, which may have spurred ex-partner Bristol-Myers Squibb ($BMY) to walk away from the drug last year.

- read the Reuters story