Lilly scientist Steve Paul hopes successor can finish what he started

The top scientist at Eli Lilly and Co. will have to trust a company outsider to see if his aggressive transformation of
Lilly’s research and development arm pays off.

Dr. Steve Paul, executive vice president of science and
technology at the Indianapolis-based drugmaker, will retire in February. He will receive $2 million in cash and a small pension.
He will be replaced by Jan M. Lundberg, who is executive vice president of global discovery research at London-based drugmaker
AstraZeneca plc.

Paul

Paul, 59, took over Lilly’s R&D operations in 2003. His early years were marked by a flurry
of drug launches, including Cymbalta, Strattera, Forteo and Byetta.

But by then the Lilly pipeline was tapped
out. Paul’s team wouldn’t claim another new launch until the blood thinner Effient hit the market in August of
this year.

Paul worked feverishly to replenish Lilly’s stable of experimental drugs. From 2006 to 2008,
he doubled the number of molecules in clinical testing to 60.

Paul oversaw various Lilly efforts to speed up
the processes for getting new drugs into human testing as well as efforts to lower the cost. Two years ago, Lilly was spending
$1.2 billion for each new drug; Paul has been pushing to get that down to $800 million.

Wall Street analysts
have not been moved by all this effort, saying they can’t give Lilly credit for its pipeline until more drugs are in
the late stages of testing. They say Lilly’s pipeline has nothing in it that can come close to replacing the revenue
it will lose when cheaper generics take away more than half of Lilly’s current sales by 2014.

So Paul now
has to count on Lundberg to shepherd a few of those 60 molecules through testing and to the market. So, too, do Lilly investors.