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Lilly chief outlines plan to boost stock, image

September 24, 2008

Eli Lilly and Co. can restore its image and improve its stock price by doing a better job of touting benefits of the drugs it sells and turning research into new products faster.

That's the strategy CEO John Lechleiter planned to lay out today during a lunchtime speech to the Economic Club of Indiana. IBJ received a copy of his prepared remarks in advance.

Lechleiter, who replaced Sidney Taurel in April and this month was named chairman beginning next year, said Lilly, along with the pharmaceutical industry in general, is suffering from a severe image problem.

The industry "can barely win a beauty contest against tobacco or Big Oil - and that's saying something!" Lechleiter said.

Contrary to headlines and political rhetoric, the industry is not to blame for high health costs, he said. Drugs rather amount to only about 10 percent of health care spending and actually help save health care costs.

The image problem can be tackled by making medicines easier to take and tailoring existing medicines to work better in individual patients, he said.

"The result will be fewer treatments that are costly and futile, fewer patients with dashed hopes, and the flip-flop: more unmistakable benefit," he said.

Tying improved treatment to faster research and development ultimately will result in an improvement in Lilly's stock price, which is in the $40s, compared to the $100s eight years ago, Lechleiter said.

Lilly plans to begin testing 15 molecules this year in addition to the 16 molecules it began testing last year. The figure last year was a record for Lilly.

"We're flat-out rejecting the conventional wisdom that says it must take 10 to 15 years, and $1 billion-plus, to bring a single new molecule to patients, Lechleiter said.

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