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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowEli Lilly and Co. CEO John Lechleiter visited Japan last week—three days before the massive earthquake—to deliver his tried-and-true message: Drug companies need to reinvent invention, governments needs to support innovation, and Lilly will be just fine after it has sustained the damage of the next three years.
Lechleiter told the Wall Street Journal, in an interview in Japan, that Lilly expects to see significant growth possibilities after 2013, when its second-best-selling drug, the antidepressant Cymbalta, sees its patent expire and loses sales to cheaper generic copies.
Of course, Lilly’s best-seller, the antipsychotic Zyprexa, faces that same fate later this year.
"After the patent expiration of Cymbalta in 2013, we expect to be back on a growth trajectory," Lechleiter said March 8 after delivering remarks to the U.S./Japan Business Council in Tokyo.
Over the past two years, Lechleiter has given a series of speeches emphasizing the need for pharmaceutical companies to overhaul the way they approach research and development, mainly by networking with lots of other companies.
Lechleiter has made such transformation the center of Lilly’s strategy—to the consternation of analysts and investors who say it has failed to produce new blockbuster drugs, leaving Lilly with no viable way to replace the roughly $10 billion in revenue it stands to lose from patent expirations over the next three years.
That’s a big reason why only two out of 22 Wall Street analysts who follow Lilly recommend buying its stock right now. Most predict Lilly's revenue will dip and its profits will fall sharply in 2014 and 2015.
Lilly shares have fallen nearly 3 percent so far this year, even as the Standard & Poor’s 500 Index has risen 3 percent. Lilly’s stock closed Tuesday at $34.10.
Also, Lechleiter has called on governments to support innovation with investments in research, tax breaks, solid patent protections and other public policies favorable to research-based companies.
"We believe that wise investments in health care innovation will be among society's most productive investments in the years ahead, and that medicines represent the most cost-effective approach to preventing and treating disease," Lechleiter said in his speech, according to a press release from Lilly.
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