Eli Lilly Case Study

AGBE OLATUNJI BOLADE

Eli Lilly and Company

Case Briefs 

Introduction: 

Colonel Eli Lilly, a Union Officer and a pharmacist, started a small pharmaceutical company in Indianapolis, Indiana, USA with the aim of producing high quality prescription drugs. After Colonel Lilly's death, his son Josiah K. Lilly Sr., and eventually his two grandsons, Eli Lilly and Josiah K. Lilly Jr., each served as president of the company. It was his grandson who led the company into the industrialized era by stressing upon the need of biomedical research and installing modern equipments to make the research successful. His interest in research paid off and since its inception the company has grown to be one of the largest and most influential pharmaceutical companies in the world.

Summary of Key Strategic Issues 

In choosing to narrow its focus on its core pharmaceutical business in the 1990s, Lilly appears to have either deliberately or inadvertently made a choice to funnel their efforts into the category of neuroscience with the patented products Prozac and Zyprexa, Lilly's top sellers. Its imbalanced portfolio and lagging international sales was the consequence of its dependence on just a few key products. This type of a strategy with a focus on neuroscience was not well suited to the more cost conscious international regions whose focus was treatment of disease. Other factors that played against them were the regulations in non-US developed countries on pricing and payment programs for pharmaceutical drugs through national health insurance programs. Due to this fact, Lilly wouldn't have earned as high of a profit margin on its blockbuster drugs, Prozac and Zyprexa, in Europe and Japan as it did in the less price-conscious U.S. market. 

Eli Lilly's recent decline in market capitalization was brought on through the rapidly changing market conditions, intensifying pressures of competition, rising R&D expenditures and the erosion of prices on leading products. Additional...