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Lilly CEO says cost-cutting won’t solve sales losses

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Eli Lilly and Co., facing generic competition to two of its top drugs, needs to rely on new medicines rather than cost-cutting to overcome the revenue loss, CEO John Lechleiter said Thursday in Boston at the annual meeting of the Pharmaceutical Research and Manufacturers of America.

Lechleiter becomes chairman of the powerful industry trade group Friday.

Pfizer Inc., the world’s largest drugmaker is wrestling with sales losses after its cholesterol pill Lipitor began facing generic versions and has pledged to trim $1 billion from operations in 2012.

A similar focus on costs won’t be enough for Lilly, Lechleiter said. Medicines accounting for about half the Indianapolis-based drugmaker’s 2011 revenue will face copycats by June 2013.

“I don’t think we can save our way out of the enormous challenge we face,” Lechleiter said. “The best course is to maintain our focus on advancing our pipeline.”

Lilly’s leading experimental product is solanezumab, a treatment for Alzheimer’s disease that is in the last of three rounds of testing usually needed to gain regulatory approval. Clearance for the drug could be a “lottery ticket” worth as much as $9 billion in 2020, Tim Anderson, an analyst with Sanford C. Bernstein & Co., said in December.

“Lilly’s future does not depend on solanezumab,” Lechleiter said. “While we hope the molecules that we take into Phase 3 will be successful, we’ve said all along this is a high-risk program,” he said.

As many as 5 million Americans have Alzheimer’s disease, according to the U.S. Centers for Disease Control and Prevention in Atlanta. Alzheimer’s is a degenerative neurological condition with no approved treatment to slow brain cell death.

Nor would a failure for solanezumab end the company’s efforts to fight the disease. “We have other approaches and other molecules in our pipeline that we will continue to move forward,” Lechleiter said.

Lilly’s antipsychotic Zyprexa lost patent protection last year, while exclusivity for the depression treatment Cymbalta will end in 2013.

Lilly shares rose nearly 1 percent Thursday to close at $39.58 each. The company's stock has gained 10 percent in the past 12 months.

Lechleiter reiterated that company will maintain its dividend of 49 cents a share.

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  1. With Pence running the ship good luck with a new government building on the site. He does everything on the cheap except unnecessary roads line a new beltway( like we need that). Things like state of the art office buildings and light rail will never be seen as an asset to these types. They don't get that these are the things that help a city prosper.

  2. Does the $100,000,000,000 include salaries for members of Congress?

  3. "But that doesn't change how the piece plays to most of the people who will see it." If it stands out so little during the day as you seem to suggest maybe most of the people who actually see it will be those present when it is dark enough to experience its full effects.

  4. That's the mentality of most retail marketers. In this case Leo was asked to build the brand. HHG then had a bad sales quarter and rather than stay the course, now want to go back to the schlock that Zimmerman provides (at a considerable cut in price.) And while HHG salesmen are, by far, the pushiest salesmen I have ever experienced, I believe they are NOT paid on commission. But that doesn't mean they aren't trained to be aggressive.

  5. The reason HHG's sales team hits you from the moment you walk through the door is the same reason car salesmen do the same thing: Commission. HHG's folks are paid by commission they and need to hit sales targets or get cut, while BB does not. The sales figures are aggressive, so turnover rate is high. Electronics are the largest commission earners along with non-needed warranties, service plans etc, known in the industry as 'cheese'. The wholesale base price is listed on the cryptic price tag in the string of numbers near the bar code. Know how to decipher it and you get things at cost, with little to no commission to the sales persons. Whether or not this is fair, is more of a moral question than a financial one.

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