Eli Lilly And Company Case Analysis

1600 words - 6 pages

Eli Lilly and Company Case Analysis

The case under analysis, Eli Lilly & Company, will be covering the positives and negatives with regards to the business situation and strategy of Eli Lilly. One of the major pharmaceutical and health care companies in its industry, Lilly focused its efforts on the areas of "drug research, development, and marketed to the following areas: neuroscience, endocrinology, oncology, cardiovascular disease, and women's health." Having made a strong comeback in the 1990's due to its remarkably successful antidepressant Prozac, was now facing a potential loss in profits with its patent soon to expire. The problem was not only the soon to expire patent on Prozac, but the fact that Prozac accounted for as much as 30% of total revenue was the reality Eli Lilly now faced. (Pearce & Robinson, 34-1)
Summary of Key Strategic Issues
In choosing to narrow its focus on its core pharma business in the 1990s, Lilly appears to have either deliberately or inadvertently made a choice to funnel their efforts into the category of neuroscience with the patented products Prozac and Zyprexa, Lilly's top sellers. Its imbalanced portfolio and lagging international sales was the consequence of its dependence on just a few key products. This type of a strategy with a focus on neuroscience was not well suited to the more cost conscious international regions whose focus was treatment of disease. Other factors that played against them were the regulations in non-US developed countries on pricing and payment programs for pharmaceutical drugs through national health insurance programs. Due to this fact, Lilly wouldn't have earned as high of a profit margin on its blockbuster drugs, Prozac and Zyprexa, in Europe and Japan as it did in the less price-conscious U.S. market.
Eli Lilly's recent decline in market capitalization was brought on through the rapidly changing market conditions, intensifying pressures of competition, rising R&D expenditures and the erosion of prices on leading products. Additional issues that seem to have hampered performance were their failure to meet international sales expectations, expiration of key patents, and its poor performance against competitors. On some measures this can be attributed to the fact that Lilly's rigid, centrally controlled operating structure did not fit well with today's rapidly changing pharmaceutical market environment. Although a culture change may be evident to boost company performance, "the leadership would without out a dought face resistance in any effort to lead organizational change at Lilly, especially change of organizational culture. "
(Greenberg, Jerald p 132-133)
External global conditions
The firm's external environment consists of three main sectors: the Remote Environment, the Industry Environment, and the Operating Environment. All of these environmental sectors affect the firm's operations both on an international and domestic level.
In comparing these conditions...

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