As the CEO of a company that has been changing people’s lives for over 100 years, you have quite a fair amount of responsibility on your shoulders. What motivates you to rise to the task?
Eli Lilly has been doing what it is doing for 146 years. Typically, companies get into success after slow and sustained progress, and they also get out of success after slow and sustained deterioration. I took over the company in a time of demonstrated resilience and when we were really poised to perform. So, I am standing on the shoulders of thousands of people, and on their contribution to the company through the years, which makes my job somewhat ‘easier’. For a good leader, history and its inertia are not a source of pressure, but a source of confidence and momentum - all we have to do is make good decisions each day that build on that legacy.
You have been working in Eli Lilly for 25 years; these are very particular years because the industry experienced dramatic changes and exponential growth. What has been the biggest change?
The biggest change regards R&D and drug discovery. In the ‘90s, drug discovery was very empirical; we had a notion of where to look, but then it was all about testing a big volume of ideas until finding that one thing that would work.
The industry has experienced a shift in this sense; with biotechnology, one could create a protein or antibody that was actually hitting the target from the get-go.
Companies like Regeneron and Genentech were formed out of this revolution, and big pharma absorbed this change too, making things like protein therapeutics routine. Since then, discovery is no longer empirical, but design-formed, having greater certainty on whether you could get a solution.
Of course, this had a financial impact too, as investing under this dynamic is much more satisfying than sifting through sand as we did in the past. And yet, this is now changing again in two important ways; one is small molecules and the other genetic medicine. Both are getting much closer to the way you think of product design in other sectors, where you define a target profile, and you design a molecule that can actually hit the target. For example, we are now doing this with small molecules through breakthroughs in microscopic visualization in a way that you have a much higher probability to create a drug successfully, which is a huge breakthrough in the field.
How can Donanemab change the way we treat Alzheimer’s?
We have been studying Alzheimer’s for 30+ years and have spent over $4 billion in its research - we have mostly failed. This serves as a useful reminder of the way this industry works; most of the breakthroughs everyone talks about are rare and are built on countless failures. A failure is an opportunity to learn, to get better, and to do things differently; and that is the essence of our industry. With Alzheimer’s, we are now on our fourth phase 3 program looking at beta amyloid reproduction, after having tried and failed with many different methods, different study populations and different ways to measure success.
Donanemab is a super high affinity molecule that gets rid of plaque in the human brain at a very rapid rate, which we think is the negative agent causing the trouble. Through our series of failures, and by understanding the clinical area of Alzheimer’s, we have pioneered in the way the study is designed, using diagnostics and objective measures Vs. subjective measures. When we bear all of that in mind, we are convinced that this study is particularly promising.
The U.S. is accountable for 50% of the global costs of medicine - while there are other actors such as PBMs involved, what can the industry do from within to reduce costs?
There is one peculiarity in the U.S, which is that unlike with every other category of medical good or service, drugs insurance sets patients’ out-of-pocket price based on list price, not on net price. This creates a surplus, leading to a kind of ‘reverse insurance’ when it comes to medicine. People who use expensive drugs subsidize the cost of insurance for people who do not use expensive drugs. We need to unwind that, but it is not easy because it would entail creating an increased cost somewhere else - namely in premiums.
Another potential solution for pricing would be to reduce utilization of low value drugs and to increase utilization of high value drugs. That would be a great reward for investors to spend time and energy looking for high value drugs. By and large we, the industry, need to do better as well, as there have definitely been companies that have taken advantage of the system in the past. It is important to do the math, and never price drugs as a higher cost than the value they bring society.
Cost is one of the reasons why the life sciences industry is often criticized by the public - how do you respond to this problem of public perception?
I think the prejudice against the pharma industry is driven by several things. Firstly, the work we do is incredibly complex. It is an easy narrative to claim that all drugs are discovered in some government laboratory and companies just make them in a factory and sell them. This is a trope that has no grounding - and yet we hear it often. Also, it costs US $2 to 3 billion per new drug, which I think is largely unknown by the public.
Companies have periods of big losses followed by big profitability and only the largest pharma companies have a running business model. What people do not understand is that sales of today finance the cures of tomorrow: in our case, US$ 1 out of US$ 4 people pay for in their medicines goes into researching a disease they do not have - but it will go into a disease they might one day have.
