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The Dose - JK Wall

Welcome to The Dose, which tackles the finances behind local health care and life sciences and points to the most interesting national analysis. Your host is J.K. Wall.

Health Care & Life Sciences / Life Science & Biotech

Lilly expands R&D outside Indy—again

July 27, 2015

State and city leaders spend millions each year to entice companies to move here and add jobs here. But Eli Lilly and Co. has shown, twice in three months, that the biggest attraction to a company is talented workers.

The Indianapolis-based drugmaker announced on July 23 that it will add 130 jobs to its biotech research center in San Diego, which already employs 200 workers.

In May, Lilly announced plans to open an R&D center in Cambridge, Massachusetts—the home of Harvard and MIT—that would employ about 30 workers focused on delivery devices for medicines. For example, Lilly has made its convenient KwikPens a key part of its competitive strategy in the crowded insulin market.

“Locating in Cambridge is an important strategic move for achieving this goal, as it provides us access to a concentration of high-caliber academic institutions, cutting-edge life science and technology companies, and some of the world's leading talent,” Lilly CEO John Lechleiter said at the time.

Those kinds of decisions are nothing new.

Lilly helped launch the San Diego biotech cluster in the 1980s after it acquired Hybritech, and many of that company’s employees left to start other firms.

Lilly sold Hybritech in the 1990s. Its current San Diego biotech center opened after its 2004 acquisition of Applied Molecular Evolution Inc. Lilly sent longtime scientist Tom Bumol from Indianapolis to San Diego to oversee that team, which is close to winning approval for one of its first products, the psoriasis drug ixekizumab.

"San Diego has been an important location for Lilly laboratories for more than a decade,” Bumol said in a prepared statement last week. “The city is a global hub for biomedical research and talent, where collaboration between academic institutions and biotechnology thrives.”

After Lilly’s 2008 acquisition of the cancer drug company ImClone Inc., Lilly opened an R&D facility in New York City with 125 scientists.

Around the same time, Lilly started bulking up its team of scientists in China.

Lilly still employs 4,400 R&D workers in Indianapolis, the biggest chunk of its 7,000 R&D employees worldwide.

And those workers are still producing great work, including the Alzheimer’s drug solanezumab that could be the world’s first drug that actually slows down that disease. Also, Lilly scientists in Indianapolis are responsible for the experimental basal insulin peglispro, which is the first once-a-day drug to show itself more effective than the $7-billion-a-year blockbuster Lantus.

But as pharmaceutical research and development relies increasingly on partnerships with academic institutions and outside companies, Indianapolis has less of that activity than other hubs.

Data released in June on where drug companies spend their R&D funds showed that Indiana attracts only one fourth the money that its companies—mainly Lilly—spend to do R&D work with outside researchers.

Indiana’s life sciences and civic leaders have tacitly acknowledged the issue, which is why they have committed more than $50 million to launch the Indiana Biosciences Research Institute. It hopes to attract 150 research scientists to work with both Indiana’s major universities and its major life sciences companies.

“We have a lot of that talent here today, but we just don't have enough of it and we need to be able to attract that for our industry base,” said David Johnson, CEO of the BioCrossroads life sciences business development group, when talking about the Biosciences Research Institute during the IBJ Power Breakfast on April 24.

Dr. Steve Paul, who was head of Lilly’s R&D from 2003 to 2010, said the biosciences research institute is a good effort—but faces some headwinds.

“I wish them well as I fear Indianapolis may be losing ground to other biotech centers of excellence,” he wrote in an email. He added that it’s a “good thing for Lilly and the other partners [in the biosciences research institute] to try to stimulate academic R&D, which should in turn help to stimulate the local biopharma ecosystem … but [it's] very hard to compete with the likes of Boston, San Francisco, San Diego and several other emerging cities where there is a huge critical mass of scientists comparatively speaking.”

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