Desperate for new drugs to fill Lilly's pipeline, Lechleiter outbid Cornelius, CEO of New York Bristol-Myers Squibb Co., to acquire ImClone Systems Inc. for $6.5 billion.
New York-based ImClone is most well-known as the company at the center of the insider trading allegations that ensnared decorating maven Martha Stewart. She spent five months in jail for lying to federal investigators about her sale of the company's stock ahead of bad news.
But to Lilly, ImClone is a biotech company with five promising cancer drugs in development. Lilly doesn't expect these drugs to replace all the revenue it stands to lose when its top seller, Zyprexa, faces cheaper generic competition in 2011. But it does hope one or two blunt the impact when five other Lilly blockbusters face generic competition, from 2012 to 2016.
The combined company has three cancer drugs for sale and 18 more in clinical testing. That creates "an oncology powerhouse," said Lilly CEO John Lechleiterright as worldwide rates of cancer are set to double in the next two decades.
Even now, cancer drugs are the best-selling class of drugs in the world. According to research firm IMS Health, global sales of cancer drugs grew 16 percent in 2007 to more than $41 billion.
But analysts aren't thrilled with the deal. The big purchase price$70 a sharealready wiped out Lilly's entire profit for 2008. And it will dent Lilly's 2009 profits more than analysts expected.
To make the deal work, analysts say, Lilly will need to bring at least one, maybe two, of ImClone's experimental drugs to market. The most promising candidate, however, is shrouded in legal uncertainty.
Bristol-Myers claims it has exclusive American and Canadian marketing rights to a drug called IMC-11F8. ImClone disagrees.
So it looks likes Lechleiter and Cornelius might wind up in another stare down.