Lilly, By Any Other Name...
This has not been Lilly's month.
I got on CEO John Lechleiter's case last month, over the miserably bad PR strategy behind having a pharma exec try to stir up support for more H-1B visas. But I certainly understand his desperation to do something quickly about the fortunes of Indianapolis's favorite son.
The company already faces the steepest patent cliff in the industry, losing key patents on its antidepressant/pain drug Cymbalta in 2013 and its top-selling antipsychotic Zyprexa in 2011. These two drugs together are by themselves responsible for over a third of Lilly's revenue.
The situation has gotten substantially worse over the past month. For starters, two court decisions just made the company's patent cliff even steeper. Lilly hoped to have exclusivity on its ADHD drug Strattera until 2017, but a key method-of-use patent was just invalidated, opening the drug up to immediate generic competition. The company did at least win a temporary ban on generic Strattera sales while an appeal is considered, but a number of tentatively approved generics are waiting in the wings.
Another patent on the cancer drug Gemzar suffered a similar fate. Lilly hoped this product, its sixth biggest seller, would have exclusivity through 2013. But a lower court decision that found a pivotal method patent invalid was affirmed at the end of July. That leaves Lilly with only a disputed composition of matter patent, which expires in November of this year in any case. Teva, among others, already has tentative approval for a generic that could launch by year-end.
Lilly has a relatively weak pipeline and has not had much success in getting new products on the market--just one in the last five years, the blood thinner Effient, which has had lackluster sales. This month, one of its more promising pipeline candidates, semagacestat, failed miserably in a phase 3 Alzheimer's trial. Really failed--as in, the patients who took it actually got worse. The results may have doomed an entire class of gamma secretase inhibitors, which looked like one of the most promising strategies for treating this terrible illness.
But at least the company has had better luck with label expansions, having turning Cymbalta from a mere antidepressant into a treatment for diabetic pain and fibromyalgia. Part of this continuing strategy is to add labels for treating osteoarthritis and lower back pain.
An FDA panel did narrowly back a label expansion for chronic low back pain this month, but said there wasn't enough evidence to support the osteoarthritis claim. And given the 8-6 vote on back pain--born out of concern over liver toxicity--I wouldn't necessarily count on the FDA going along with that new label either. Even if it does, the $300 million in additional sales some analysts have projected looks optimistic to me.
Lilly has long resisted the kind of large-scale mergers that have made for such unwieldy company names in the rest of the industry (GlaxoSmithKlineFrenchBeckmanBeechamBurroughsWellcome, anyone?). That's to its credit, in my opinion. Lechleiter has said that he doesn't think these large mergers create lasting shareholder value, and the available evidence would suggest he's right. But the company may not have much choice, as mounting pressure to remain competitive may mean that a large pharma company is going to have "Lilly" tacked to the end of its name in the next few years.
- Karl Thiel
Read the BioPharm Executive online newsletter August 2010.
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