Lilly CEO: Indiana must improve education, reduce health care costs to stay competitive

David Ricks (Photo courtesy of Eli Lilly and Co.)

When it comes to competing for jobs, Indiana needs to do more than boast about its low cost of living, business-friendly climate and transportation network.

That’s because the state is far behind the curve in other critical ways, David Ricks, chairman and CEO of Indianapolis-based drugmaker Eli Lilly and Co., told a lunch crowd Wednesday at the Economic Club of Indiana.

Indiana falls short in educational skills, the affordability of health care, robust green-energy policies, workforce development, and inclusion of minorities and immigrants—areas where other states are far ahead and more competitive, Ricks said.

He made his comments in the wake of Lilly’s announcements in recent months to invest more than $3 billion in new factories and research laboratories outside of Indiana.

Ricks, who has led Lilly since 2017, said the state has a good track record of working to solve problems, and he gave no indication that the 145-year-old pharmaceutical giant was thinking about pulling up stakes in Indianapolis.

But he said the fortunes of Lilly and Indiana are intertwined, and he urged the audience to spread the message to policymakers that more work needs to be done.

“It’s long been said that when Lilly does well, Indiana is going to do pretty well,” Ricks said. “But I want to point out that the reverse is also true: When Indiana is thriving, Lilly can also thrive.”

One area Indiana in which is not thriving, he said, is education—both in the performance in test scores of students and the educational attainment of the workforce. Only 37% of Indiana’s elementary and middle school students tested proficient in math in the 2019 statewide proficiency tests, even before the pandemic helped pushed scores even lower.

“That’s a very difficult statistic to look at,” Ricks said. “If you look at what our economy is based on … it’s projected that about 30% of the current [traditional] jobs will be lost in the next decade, replaced by math- and science-heavy positions.”

He also pointed to Indiana’s high cost of health care, an expense that falls heavily on employers, who pay a huge share of the price for health care plans. On top of that, Indiana’s high rate of people with chronic disease and the state’s high mortality rate for heart disease, diabetes and other maladies can make some companies leery about investing here, due to the possibility of high rates of absenteeism, Ricks said.

He also warned that Indiana needs to move quicker to offer energy options that are greener, rather than traditional coal-based electricity. Other states are moving faster on this score, he said.

“If we cannot offer energy that has a sustainability mix to it, we won’t land the next big employer here in the state,” Ricks said.

Lilly’s own record in investing in Indiana is mixed. The company, with a sprawling headquarters campus downtown and a technical center just south of downtown, is one of Indiana’s largest and oldest companies, with about 11,000 workers across the state.

It has invested more than $2.6 billion in the past five years in Indiana, with over half of that going to manufacturing jobs.

But Lilly has announced plans to spend even more elsewhere. Ricks said it makes site selection decisions for many reasons: because it wants to diversify its talent base, meet the needs of customers across the world, and find places where the economics make sense.

In February, Lilly announced plans to invest $700 million to launch the Lilly Institute for Genetic Medicine in Boston that eventually would employ more than 200 scientists.

In January, the drugmaker announced plans to invest more than $1 billion in a new manufacturing plant in North Carolina, creating nearly 600 jobs there. It also announced plans to invest $500 million in a new biopharmaceutical plant in Limerick, Ireland.

And two years ago, Lilly announced it would build a $470 million pharmaceutical plant in Durham, North Carolina, creating more than 460 jobs.

“We get calls from lots of policymakers [in Indiana] about each one of these right after they happen,” Ricks said. “And I give them this speech that I gave you today.”

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24 thoughts on “Lilly CEO: Indiana must improve education, reduce health care costs to stay competitive

  1. Since when did Lilly start hiring high school students? So, Rose Hulman, Purdue engineering, and Kelley in Bloomington are not good? Purdue and IU are large successful universities. If Lilly fails to invest and asks for tax benefits from Indiana, the state will not improve.

    1. I think you miss the point Ricks is trying to make…we aren’t keeping those science and technology grads in Indiana; they don’t all grow up here, and for some reason(s) they don’t stay after getting degrees.

      I’d suggest they go elsewhere for: better money (despite our “lower cost of living”, we also have fewer amenities and lower levels of government services and spending); better K-12 education for their kids; more career opportunities; and a host of other reasons.

      Giving corporate subsidies and creating shovel-ready sites isn’t enough.

    2. Born and bred local, went to Purdue for Engineering – and almost none of my friends are still in state.

      Lilly nailed it – this state needs to try harder. It’s not about paying companies to be here – it’s about building a healthy and sustainable place that people want to live and work.

    3. The state of Indiana gave up around the Great Recession. They don’t fund those Indiana colleges, they don’t fund K-12 education. We simply don’t care about the future.

      We get what we pay for.

    4. I wondered how long it would take for someone to shoot the messenger for the message. It didn’t take long. The message is absolutely correct. Those in denial are only making things worse.

  2. Mr. Ricks is correct. Indiana has got to do better. Even though we spend more than one half of our budget on K-12 education, we are falling behind. Recently a local business where I live wanted to hire some folks for their business. Out of 34 applicants only 2 were qualified. Many could not do simple math. I am not talking about the high tech stuff of the pharmaceutical industry. I am talking about simple math. So, I don’t know what the cause is, but I think we need to do better. The same is true of our sustainability efforts. In 2022, who builds a building with a black metal roof? We miss even the simple fixes.

  3. If Indiana doesn’t invest in the future it will get left behind – and is beginning to. So what do we do? Give everyone a $115 tax refund? Cheap housing is great and all that – but with no cool geographical features, we had better have something more than under invested public education, poor infrastructure , book shaming and RIFRA. Geeze – we only just recently could buy a beer in Sunday. There’s a reason Lilly is investing elsewhere.

  4. Embracing green energy, encouraging immigrants and minorities, funding public education, supporting its economic powerhouse cities, building passenger rail and transit …

    These aren’t things just being passively ignored in Indiana. The Republican Legislature in Indiana is actively working against them. The GOP State government embraces policies that reject green energy, that do everything to make minorities feel unwelcome, that undercut education, that tie the hands of big cities, and that doubles down on freeways and cars.

    Ricks is right. Indiana is in a race to the bottom. It need to change, and change quickly.

    1. Couldn’t agree more,our legislation seems proud to fight the things Ricks suggests, sad and at same time embarrassing….

    2. Spot on, Walter. The GOP and the corporations that fund them are actively against 21st century policies that could make the state a more attractive place to live and work.

  5. Mr. Ricks is like the Sport’s team owners. They say: Here is what is wrong with this city. Here is what we need ( vailed, unspoken threat or we will move). They pick and choose what is wrong. I’m sure a state like California has more of what he is looking for, but people and companies there are moving out because of the the business climate and the tax rate.
    It would be a tremendous blow if Lilly left, but let’s be real he, like the team owners, wants all the positive and none of the not so much.
    We all want Lilly to be successful. They get a lot of grief about staving off generics. Forgetting all the R and D and failed Rand D that goes into approvals. Nothing is perfect in this world. So let’s all try to improve what we can.

    1. You nailed it, Paul A; a fair and reasonable assessment without denigrating our fine sate as liberals are want to do. And I say that as a Lilly stockholder of 58 years whose stock is presently generating about $300/month retirement income.

  6. The Republican party has been in control of the legislature and governor’s office for so long that it suffers from a lack of ideas. What Ricks complains about are real problems that are sending Lilly money and jobs out of state. How many more losses are needed before the comatose party wakes up and does something useful? Pounding 2d Amendment rights may get you elected in some districts but it does nothing to address the education, environmental and general failures to make things better in Indiana.

  7. It’s because the people in charge are stupid ideological morons. The republican controlled legislature gave $500M back in taxes to everyone. They should made the refund targeted to income level. Then use the surplus to fix structural problems the Lilly CEO is talking about. Look at Indiana’s republican senators…they have done nothing for the state except pound sand about social issues. These people need to get stuff done, focus on education, infrastructure, healthcare, the economy and leave people alone.

  8. I recruit nationally for professionals in my organization and face the same challenges in recruitment that he identifies. It pains me to say this as I cherish this state and I speak as an individual not as a leader of an organization. However, the points he makes though around competitiveness for talent are spot on in my experience.

  9. Irony – leader of a company that jacks up drug prices annually – frequently by more than 10% on an annual basis – is complaining about high healthcare costs….

  10. If you read between the lines this is a notice. Maybe a 10 year notice but if they’re serious, closer to 5.

    Lilly will have a presence in Indy, but shift what’s important for its future to the southeast. Plenty of brainpower in the triangle, easier to poach east coast pharma talent to relocate them south, better weather, still in a red state.

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