C580 – Operations Management
Eli Lilly: The Evista Project Case Study
- Krishna Tavvala
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.
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.
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 price of their drugs. However, the cost of bringing a new therapeutic drug has been increasing dramatically since the 1980’s and well into 1990’s due to the increased time required to conduct the pre-clinical trials per new dug application.
All these changes have resulted in reduced profits, increased costs, increased competition and higher risks for the pharmaceutical companies. Under these conditions, Eli Lilly had to improve its abilities to develop and introduce novel drugs to the market efficiently and effectively. The traditional functional-based teams at Eli Lilly adopted slow and cautious approach for product development with no proper tracking of resources, accountability or focus. With the introduction of “heavyweight” teams the product development at Eli Lilly was sped up by developing innovative methods to gather information, develop large clinical trials to answer many questions, anticipate regulatory concerns and meet them, and provide regulatory agencies with the best possible application and accurate and definitive information as observed with Zyprexa.
The heavy weight teams headed by project manager’s, who also had a strong management profile, were able to improve the product development process also by improving the communication between the project members, commitment to the project and focus on cross-functional problem solving. The market oriented focus of heavyweight teams also helped the company become innovative as demonstrated by labeling of Evista as a preventative medicine instead of a treatment medicine.
The flip-side of adopting the heavy-weight team approach at Eli Lilly was alienation of the employees in functional teams who were not part of the heavyweight projects. The other projects/products got side-lined as the resources and personnel got diverted and the heavyweight teams wielded excessive influence. Exacerbating the problem is the shortage of skilled personnel. The acute shortage is reflected by the fact that Eli...
Please join StudyMode to read the full document