The Story of Eli Lilly

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NPD Trends and Practices

Part 1 of 2

The story of Eli Lilly’s open innovation journey—how one company developed a mature model Kevin Schwartz Bret Huff

Kevin Schwartz, Director, PrTM (, and Bret huff, VP of Chemical Products r&D, Eli Lilly and Company, (

Over the last decade, the giant pharmaceutical companies have moved away from their reliance on “blockbuster” drugs as a basis of earnings and toward other models. Part of the shift has required going outside the “just invented here” Research & Development model that these corporations embraced in the past. In this article, the first of a two-part series, the authors describe how Eli Lilly moved into “open innovation”—using partnerships and alliances to find new products—and how the process has evolved to one of “mature” open innovation. In the second part of the series, the authors will explain how to apply these techniques to other companies and industries and where leading companies may be going next with the open innovation concept.

ver the past 15 years, Eli Lilly and Company has embraced  a culture of open innovation—moving from the traditional  thinking  in  the  pharmaceutical  industry  (“just  invented  here”) to a new model that has paid big dividends and today could  be considered Level 3 in the maturity model in Exhibit 1 on page  20. Like other leaders in open innovation practices, the company  has evolved an extensive and powerful network of Research &  Development  partnerships  that  adds  to  its  internal  capabilities  and  helps  it  drive  new  revenues and more rapEli Lilly’s senior management idly bring new products  to market (see Exhibit 2  team made a conscious decision on page 21). However, open innoto invest in building a worldvation  can  mean  many  class capability for collaborative things to different people  and  even  leading  product development.” companies vary in how  they pursue the concept.  As the open innovation paradigm has become more and more  firmly established, a variety of models have started to evolve for  describing the levels of maturity that companies move through  as  they  adopt  practices.  In  this  article,  we’ll  use  the  model  shown in Exhibit 1, which presents three main levels of open  innovation maturity:  •  Level 1: Externally Aware •  Level 2: Fully Integrated •  Level 3: Ecosystem Orchestration In Part 2 of this series, we’ll discuss in detail how this model for  open innovation maturity can be applied to different companies as  a guide for moving forward, what hurdles must be overcome along  the way, and even where leading companies are starting to push  the envelope beyond Level 3 maturity. But in this article, we will  focus on using the example of Eli Lilly and Company to bring this  maturity model to life—exploring why Eli Lilly embraced open  innovation, how it built its open innovation model, the stages it  moved through, and the successes it has gained from it.  PDMa Visions Magazine


The growth of Eli Lilly and company Eli Lilly and Company was founded in 1876. Since then, the  company has grown to be the 10th largest pharmaceutical in the  world. Today, it has approximately 40,000 employees around the  globe and its medicines are marketed in 143 countries. Lilly has  major Research & Development facilities (R&D) in eight countries  and conducts clinical trials in more than 50 countries For over 130  years, the company has created medicines that improve the health  of people around the world. Lilly was the first company to mass  produce penicillin and offer a number of other important medicines,  such as Prozac and Zyprexa. Like most other companies in the early  and  mid-1900s,  internal  R&D  was  the  primary  driver  of  Lilly’s  production of new medicines. The company turns to collaborative product development However, in the early 1990s, the company’s thinking changed. ...
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