Eli Lilly Faces Challenges With Patent Expirations

By Joseph Mandour on January 5, 2012

Patent ChallengeSan Diego – Eli Lilly and Co., the 10th largest pharmaceutical company in the world, will need to overcome several key patent expirations as several of its products have come off patent or will in the future.

In November 2010, Gemzar, a drug used for treating lung cancer, had its method of use claims invalidated by the US Court of Appeals for the Federal Circuit and its matter of composition claims expired that same month. Gemzar previously yielded $750 million in annual revenues for Eli Lilly. The biggest blow to Eli Lilly’s portfolio, however, is their best selling product. Zyprexa, a $5 billion a year drug used for treating schizophrenia, came off patent in October of this year and will now have to compete against cheaper generics. In the coming years, Cymbalta, an anti-depressant drug, comes off patent in 2013 and Evista, an osteoporosis drug, comes off patent in 2014. Further, Alimta, Strattera and Cialis, also come off patent in 2017. Thesedrugs represent more than half of Eli Lilly’s total revenues.

Needless to say, Eli Lilly’s Chief Executive John Lechleiter, recognizes the challenges in front of them. “It may be one of our most challenging periods in our history because, as the way fate would have it, we lose patent protection on a number of products between now and 2014,” said Lechleiter.

At present, Eli Lilly has no plans for a merger with another company or acquiring a smaller company’s products. Lechleiter commented on the potential of future acquisitions, “You can’t just order up a new menu item like it’s McDonald’s. It’s a longer-term cycle. Investors understand that.”

The effects of these patent expirations, however, are already being felt. Eli Lilly was forced to cut thousands of staff worldwide and its stock price has stagnated the past three years. However, Eli Lilly remains optimistic that their product pipeline will help them ride through the coming lean years. Lechleiter notes that they have 66 molecules in human testing in their pipeline. Another potential area of area of optimism for Eli Lilly may be in diabetes treatment. Earlier this year, they sold their rights to Bydueon, a diabetes drug, to Amylin for $1.5 billion. By ending their partnership with Amylin, Eli Lilly freed up its obligations so they could pursue all types of diabetes products. Eli Lilly expects to be competitive in insulin and oral diabetes medicines as well as drugs that stimulate insulin release when glucose levels are too high.

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