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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. to mention the rest of Molly's experience- she served as Communications Director for the Indianapolis Department of Public Works and also did communications for the state. She's incredibly qualified for this role and has a real love for Indianapolis and Indiana. Best of luck to her!

  2. Shall we not demand the same scrutiny for law schools, med schools, heaven forbid, business schools, etc.? How many law school grads are servers? How many business start ups fail and how many business grads get low paying jobs because there are so few high paying positions available? Why does our legislature continue to demean public schools and give taxpayer dollars to charters and private schools, ($171 million last year), rather than investing in our community schools? We are on a course of disaster regarding our public school attitudes unless we change our thinking in a short time.

  3. I agree with the other reader's comment about the chunky tomato soup. I found myself wanting a breadstick to dip into it. It tasted more like a marinara sauce; I couldn't eat it as a soup. In general, I liked the place... but doubt that I'll frequent it once the novelty wears off.

  4. The Indiana toll road used to have some of the cleanest bathrooms you could find on the road. After the lease they went downhill quickly. While not the grossest you'll see, they hover a bit below average. Am not sure if this is indicative of the entire deal or merely a portion of it. But the goals of anyone taking over the lease will always be at odds. The fewer repairs they make, the more money they earn since they have a virtual monopoly on travel from Cleveland to Chicago. So they only comply to satisfy the rules. It's hard to hand public works over to private enterprise. The incentives are misaligned. In true competition, you'd have multiple roads, each build by different companies motivated to make theirs more attractive. Working to attract customers is very different than working to maximize profit on people who have no choice but to choose your road. Of course, we all know two roads would be even more ridiculous.

  5. The State is in a perfect position. The consortium overpaid for leasing the toll road. Good for the State. The money they paid is being used across the State to upgrade roads and bridges and employ people at at time most of the country is scrambling to fund basic repairs. Good for the State. Indiana taxpayers are no longer subsidizing the toll roads to the tune of millions a year as we had for the last 20 years because the legislature did not have the guts to raise tolls. Good for the State. If the consortium fails, they either find another operator, acceptable to the State, to buy them out or the road gets turned back over to the State and we keep the Billions. Good for the State. Pat Bauer is no longer the Majority or Minority Leader of the House. Good for the State. Anyway you look at this, the State received billions of dollars for an assett the taxpayers were subsidizing, the State does not have to pay to maintain the road for 70 years. I am having trouble seeing the downside.

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