Eli Lilly

R&D chief Jan Lundberg

Strike 2 - Eli Lilly

2012 R&D spending: $5.3 billion
2011: $5.0 billion
Change: Up 5%
As a percentage of spending: 23.4%
R&D chief: Jan Lundberg

Of all the Big Pharma companies, Eli Lilly ($LLY) has had the biggest problems with its numbers. A growing R&D budget now gobbles up close to a quarter of the company's sales revenue. It's had one of the most woeful rates of new drug approvals in the industry. And its top-line revenue number has been eaten up by new generic competition to Zyprexa, its one-time cash cow, as fresh patent losses loom.

The next big number for Lilly to reckon with: Two. That's how many new drug approvals top Eli Lilly executives promised to deliver every year, beginning in 2013. It's also how many more blockbuster patents Lilly will lose over the course of this year, with the antidepressant Cymbalta--the company's new top earner--losing protection in December and the insulin Humalog going naked in May.

Lilly claimed only two new therapeutic approvals in the past two years, and they piggybacked on Boehringer Ingelheim's research team to get them. Tradjenta (linagliptin), another DPP-4 inhibitor, was approved for diabetes in the spring of 2011. The Jentadueto combo (linagliptin + metformin hydrochloride) followed in 2012. Linagliptin came out of Boehringer's pipeline and was under regulatory review when Lilly stepped up to sign the partnership deal. Lilly's partnership with Boehringer created such a ruckus with Amylin ($AMLN) that the biotech eventually bought out Lilly's share of Bydureon and Byetta, shutting the door on a 10-year collaboration. (Amylin was later acquired by Bristol-Myers Squibb.) The FDA also approved Amyvid, Lilly's imaging agent, which is classified as a drug and has limited use in diagnosing Alzheimer's. Amyvid was also under FDA review when Lilly acquired Avid Radiopharmaceuticals, which developed it.

Lilly's failures are legendary. Despite implying that the company may have had enough positive data drawn from a secondary analysis of solanezumab to win an FDA OK for the Alzheimer's drug, Lilly was forced to march back into Phase III to prove that the drug can make a difference for early-stage patients. Last summer it wrote off pomaglumetad for schizophrenia after the Phase III flunked out. Its setbacks also include the failure of the Phase III tabalumab program for rheumatoid arthritis. By September, when a combination of Lilly's Alimta and Avastin failed for lung cancer, the company had racked up five straight clinical setbacks.

But there was more. Bristol-Myers ($BMY) dumped its Phase III pact on necitumumab for non-small cell lung cancer. And around the same time even Boehringer joined the exodus, handing over its share of the rights to the once-partnered LY2605541, a basal insulin analogue.

Even success can come with an asterisk at Lilly these days. The giant trumpeted late-stage results for the stomach cancer drug ramucirumab, even though it provided only a weak 1.4 months of added survival in the study, falling shy of analysts' expectations.

While Lilly claims to have 12 hot prospects in Phase III, it's the diabetes drugs that bear the most promise. Empagliflozin, another drug from Boehringer, produced positive results in a slate of late-stage studies. The SGLT-2 inhibitor, part of a new class of drugs that flushes glucose in urine, is headed for a regulatory filing but is in a foot race with BMS and AstraZeneca's ($AZN) Forxiga and Johnson and Johnson's ($JNJ) canagliflozin.

One of Lilly's untarnished diabetes shots with good prospects is LY2963016, a lookalike of Sanofi's ($SNY) megablockbuster Lantus that is another contender for a chunk of that heavyweight market. Dulaglutide, another GLP-1 drug for diabetes, also has a solid shot at a regulatory approval, although once again once-weekly therapies are crowding into the market. Last fall, Lilly presented positive comparison data from three late-stage studies of dulaglutide, which it hopes can compete against Bydureon/Byetta.

Lilly also posted some impressive mid-stage data for its RA drug baricitinib--partnered with Incyte--last fall.

With a full set of late-stage assets, no one is counting Lilly out of the game yet. But the clock is ticking at the pharma giant, which has to start celebrating some novel drug approvals if it ever expects to counter the punishing losses inflicted by generic competition.

For more:
Lilly reports lackluster PhIII results on cancer drug
Boehringer tosses back rights to one of Lilly's key PhIII diabetes programs
Eli Lilly ditches FDA filing for Alzheimer's hope solanezumab
Lilly takes aim at blockbuster Lantus with promising PhII diabetes drug data
Lilly gains FDA approval for its controversial brain plaque test

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