Eli Lilly: the Evista Project

Powerful Essays
C580 – Operations Management
Eli Lilly: The Evista Project Case Study
- Krishna Tavvala
Background:

Eli Lilly is a leading pharmaceutical company specializing in treatment of diseases like the depression, schizophrenia, diabetes, infections, osteoporosis among others. Evista, a newly developed drug by Eli Lilly, is an estrogen replacement therapy medicine for prevention of post-menopausal osteoporosis which also appeared to lower the incidence of breast cancer in women. This FDA approved drug is expected to be a potential blockbuster and generate revenue of 1 billion US dollars per year for the company.

Problem Statement:

In a highly competitive and dynamically changing market it has become imperative for the leading pharmaceutical companies to recuperate their development costs and generate returns for stockholders as well as funding for R&D of new drugs as soon as possible. With the profitable lifetime for drugs, in United States, being significantly shortened since the 1980’s, Lilly Research Laboratories (LRL) under the leadership of Gus Wantabe was able to develop Evista in shorter duration by adopting a Matrix-Based product development approach and utilizing heavyweight teams instead of their traditional function-based product development approach. In the face of internal resistance to the heavyweight teams and shortage of resources, Wantabe now has to make a decision about adopting this new successful heavyweight team approach for commercialization of Evista as well.

Analysis:

In the past several years some critical changes have been taking place in the pharmaceutical industry which included encouragement of generic prescriptions by the formularies, the exclusive listing of a single drug for a particular therapeutic prescription, enablement of bulk discount rate negotiation by health care insurers, and the minimization of the number of drugs to be put in the formularies. These changes pressured the pharmaceutical manufacturers to reduce the

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