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EDITORIAL: Lilly picks wisely at tough juncture: Lechleiter well-groomed for top job

December 24, 2007

Lilly picks wisely at tough juncture Lechleiter well-groomed for top job

Indianapolis' business and civic leaders are rightfully worried about Eli Lilly and Co. these days.

The entire pharmaceutical industry is under extraordinary pressure, in part because the blockbusters that have been its lifeblood aren't gushing out of development pipelines anymore.

Lilly faces the monstrous task of finding successors to its antipsychotic Zyprexa, whose U.S. and European patents expire in 2011-a milestone that's expected to send the drug's sales into a free fall.

Zyprexa's $4.4 billion in sales last year represented 28 percent of the company's revenue, but close to 50 percent of its profit, according to IBJ estimates.

With so much uncertainty brewing, we're thrilled that the company meticulously groomed an insider, John Lechleiter, to succeed Sidney Taurel after he retires as CEO next March. A leadership crisis would have been the last thing the company needed at this critical juncture.

It's hard to imagine Lilly could have carried out succession planning more gracefully. Lechleiter joined Lilly in 1979 as a senior organic chemist and swiftly rose through the ranks, gaining international experience along the way.

Taurel, who's been Lilly's CEO since 1998, announced in 2005 that he was giving up the president's title and passing it to Lechleiter, a move that sent a resounding message that he was grooming his protégé to be CEO.

And to further smooth the transition, Taurel is staying aboard as chairman through the end of next year, at which time he will fully retire.

Nailing down Taurel's departure date now limits the potential for problems later. One factor that did in former Lilly CEO Vaughn Bryson in the early 1990s was that his predecessor, Richard D. Wood, stuck around as chairman and, as time went on, increasingly secondguessed his hand-picked successor.

Typically, one of the risks of choosing an insider in a CEO search is that the new boss will embrace the status quo, rather than seeking out new ideas. We don't see that happening with Lechleiter, 54.

Like the 58-year-old Taurel, Lechleiter recognizes that mind-set would be disastrous. Taurel put it best in a recent interview with The Wall Street Journal: "I think the industry is doomed if we don't change."

Strong leaders are optimists but not pollyannas. Lechleiter struck just the right tone in the press release announcing his appointment, calling this "a time of profound challenge and unprecedented opportunity."

There's no telling how this tumultuous era in the pharmaceutical industry will shake out. But we're comforted by the fact that Indianapolis' largest private employer has the right man leading the charge.



To comment on this editorial, write to ibjedit@ibj.com.
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