Lilly Works to Improve Drug Pipeline

One of my Buy List stocks, Eli Lilly (LLY), has often been criticized for its dwindling pipeline of new drugs. That’s probably one of the reasons the stock goes for less than eight times next year’s earnings and it carries a dividend yield of 5.5%.
Lilly, however, has been working hard to fix the problem. The WSJ focuses today on the company’s use of outside research firms:

Eli Lilly & Co., like many other pharmaceutical companies, is seeking to make its drug-development efforts more productive as it copes with thin new-product pipelines. Its approach: hiring outside contractors to run tests on its drug candidates.
Pharmaceutical companies have traditionally kept a tight lid on drugs under development, conducting key work in-house. But early this year, the Indianapolis drug maker will decide whether to move a promising molecule to treat rheumatoid arthritis into late-stage testing, based on mid-stage data developed by scientists outside of its own research team. If the drug eventually wins regulatory approval, it will compete in a $16 billion annual market.
By outsourcing human tests of such a potentially important drug, Lilly is among a crowd of pharmaceutical giants adopting out-of-the-box strategies to revive fallow research-and-development organizations.

Posted by on January 5th, 2010 at 9:59 am


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