Eli Lili Project Analysis
Eli Lilly’s project: Eli Lilly is one of the biggest pharmaceutical companies is US. And Its main mission is to maintain its leadership in the industry. to do so the project team selected R&D Output and Rx Purchase and prescribing Decisions as the two main driving forces to indentify most important possibilities of the future in pharmaceutical industry. For this, four possible scenarios have been described and for each, we try to make business model considering abilities, performances and capabilities. Scenario 1: “Haves and Haves –not”
In this scenario R&D output is high and Rx. purchase and prescribing decisions will be done by individuals (patients or prescribers). In this situation, the firm spend a lot for R/D, in order to compete with other companies. For this scenario the cost of the drugs is high and paid by patients. So we can see that model 1;”disintegrated model’’ could be matched with this one. Scenario 2:”Price sensitive patients” The cost is mostly paid by employees, individuals so price-sensitivity is high. In this model R/D output is incremental . mall share of population is ready to purchase branded products so it seems that model 5;”services firm (this is management)” suites better this scenario. Because it’s focused on reducing the overall healthcare costs of the central buyers. Scenario 3:”Payers rule” Here Rx prices are regulated by government and FDA focuses on safety, consequently it increases cost of clinical trials. Also R/D output is low and it relies on existing products. Thus, the model 2;”low cost innovative FIPCO could be the possible choice. In this model cost is put at every decision made by the firm.
By reducing marketing expenses and sales the company can invest more in discovery and development. Scenario 4: “Rationing innovation” In this scenario prices are not regulated by government, but government and insurances use market dominance to control Rx using decisions of prescribers. They make pressures to obtain discounts and rebates . R/D output is high in this scenario, Hence, the suitable model is 3;’’Niche, high value FIPCO” In this model companies try to discover, develop and commercialize drugs with the best income. It needs more concentrated and complex sales and marketing section.
