Description
ELI LILY Company Case Study
ELI LILY Company Case Study
(Manufacturing Strategy)
Company Introduction
? Founded in 1876 ? Second largest Pharmaceutical concern in the US and 8th
largest in the world ? Serves in Pharmaceutical products, medical services and diagnostic and animal products ? Manufacture and distribute its products in 25 countries ? Sell products in 120 countries ? Main Competitor1. American Firms- Bristol Myers-Squibb, American Home Products, Johnson and Johnson, and Pfizer. 2. Non American Firms-Ciba-Geigy, Hoechst, Glaxo, Bayer, and SmithKline-Beecham
Industry Trends(in the 1980’s)
? Globalization
?Difference
in the national healthcare market
diminished ?Increasing complexity in Government approval and testing procedure ? Slower rates of innovation ? Government involvement ?More Government intervention ?Higher standards of environmental and product safety ? Shorter product life cycle ?Intense competition
Existing Product Development Cycle
CREATION OF PHARMACEUTICAL PRODUCTS
? Discovery of chemical compound. ? Analysis of chemicals required ? Experimental tests conducted on animals ? 3 phase of clinical trials on humans: ? Phase1 : Trials tested whether the drug was safe for
humans at recommended dosages levels ? Phase 2: Demonstration of whether the drug actually worked for the application claimed for it. ? Phase 3: Simultaneous testing of safety and efficacy of the drug in larger patient populations than the first two phases ? Filing of NDA with the United States FDA
PROCESS DEVELOPMENT & RESEARCH
? Determination of the sequence of chemical
reactions required to synthesize the particular compound ? Clinical trials in laboratories ? Clinical trial in Pilot plant ? Refining of process and yield for large scale commercial manufacturing environment ? Transfer to one of the company’s bulk chemical manufacturing sites
ANALYSIS OF ELI LILY THREEFOLD FRAMEWWORK
? The Manufacturing strategy has been analyzed using
threefold framework
? 1. What is the current scenario of Eli Lily?
? 2. Where does Eli Lily want to be? ? 3. How will Eli Lily proceed from where it is today?
Stage 1: Analysis of current state of Eli Lily
SWOT Analysi s
Strength Strong Research Careful Management Second-largest pharmaceutical concern in US Opportunity Affluent and aging populations-New Customers No differences in Health care market Government coordinating evaluation Weakness Manufacturing strategy is reactive and lacks coordination and contribute little to corporate strategy Threats
Rising development costs Slower Rates of Innovation Shorter Product Lifecycle Interventionist government
Stage 2 : Where does Eli Lily want to be in the coming years?
? Competitive analysis
? Lilly’s
major competitors in North America included Merck, Bristol Myers-Squibb, American Home Products, Johnson and Johnson, and Pfizer. ? Worldwide, the largest non-American firms were European, including Ciba-Geigy, Hoechst, Glaxo, Bayer, and SmithKline-Beecham. ? Most of these had enjoyed growth rates comparable to or better than Lilly’s. United States-based firms accounted for 42% of world sales in 1990.
Stage 3: How will Eli Lily proceed from where it is today?
? By revamping current manufacturing strategy and
implementing new one.
? Strategy & Manufacturing Competency
? Make Manufacturing strategy a part of corporate
strategy ? Focal Point- Process Development and Improvement so as to:
• • Shorten entire FDA approval Produce Product required for clinical test more quickly
Implementation Plan (Strategy Development)
? Plan 1: Increase the investment to improve the
manufacturing processes for successful products that are already on the market. ? Plan 2: Commit to process improvement for a product (or products) that is not yet on the market, but which appears overwhelmingly likely to succeed. ? Plan 3: Commit substantial resources to a selected basket of products, very early in their development lifecycles.
Methodology
? The three strategies are evaluated through AHP
(Analytical Hierarchy Process)
? The criteria for evaluation are ? Cost ? Potential risks
? Potential market share
Scale used for AHP
AHP Matrix
? After Alternative v/s Criteria and Criteria v/s Goal
following AHP matrix was obtained
Synthesizing Final Priorities:
Making the Decision:
? As per AHP results,
? Release before 2nd phase with a priority of
0.7276, is by far the most suitable candidate. ? Release after 3rd phase, with a priority of 0.615, is second, and ? After 2nd phase/before 3rd phase, at 0.2126, is third. ? The Board should choose Release before 2nd phase as a new strategy.
Product Phases
100 Products
Phase 1&2
Phase 3
25Products
75Products
Fail in Phase 3
5 Products
Fail in Phase 1& 2 20 Products In market
Analysis using EXCEL Calculation
Analysis –Plan 1
? Regular process cost=
$.58Mn
? After launch process cost= $1.16Mn
(As process improvement is done after product is successful in the market)
? Only 20% of the product that enter are launched in the
market.
Analysis –Plan 2
? Cost of Process Improvement in Phase 3= ? After launch Process Cost=
$1.16Mn $.58Mn
? 20% of the products that enter Phase 3 are launched in
the market.
Analysis –Plan 3
? Process Improvement Cost in Phase 1= $1.60Mn ? Process Improvement Cost in Phase 2= ? Process Improvement Cost in Phase 3= ? After launch process cost=
$1.60Mn $1.16Mn $.58Mn
Per unit costs decreases by implementing any of the three plans
THANK YOU !!
doc_114331389.pptx
ELI LILY Company Case Study
ELI LILY Company Case Study
(Manufacturing Strategy)
Company Introduction
? Founded in 1876 ? Second largest Pharmaceutical concern in the US and 8th
largest in the world ? Serves in Pharmaceutical products, medical services and diagnostic and animal products ? Manufacture and distribute its products in 25 countries ? Sell products in 120 countries ? Main Competitor1. American Firms- Bristol Myers-Squibb, American Home Products, Johnson and Johnson, and Pfizer. 2. Non American Firms-Ciba-Geigy, Hoechst, Glaxo, Bayer, and SmithKline-Beecham
Industry Trends(in the 1980’s)
? Globalization
?Difference
in the national healthcare market
diminished ?Increasing complexity in Government approval and testing procedure ? Slower rates of innovation ? Government involvement ?More Government intervention ?Higher standards of environmental and product safety ? Shorter product life cycle ?Intense competition
Existing Product Development Cycle
CREATION OF PHARMACEUTICAL PRODUCTS
? Discovery of chemical compound. ? Analysis of chemicals required ? Experimental tests conducted on animals ? 3 phase of clinical trials on humans: ? Phase1 : Trials tested whether the drug was safe for
humans at recommended dosages levels ? Phase 2: Demonstration of whether the drug actually worked for the application claimed for it. ? Phase 3: Simultaneous testing of safety and efficacy of the drug in larger patient populations than the first two phases ? Filing of NDA with the United States FDA
PROCESS DEVELOPMENT & RESEARCH
? Determination of the sequence of chemical
reactions required to synthesize the particular compound ? Clinical trials in laboratories ? Clinical trial in Pilot plant ? Refining of process and yield for large scale commercial manufacturing environment ? Transfer to one of the company’s bulk chemical manufacturing sites
ANALYSIS OF ELI LILY THREEFOLD FRAMEWWORK
? The Manufacturing strategy has been analyzed using
threefold framework
? 1. What is the current scenario of Eli Lily?
? 2. Where does Eli Lily want to be? ? 3. How will Eli Lily proceed from where it is today?
Stage 1: Analysis of current state of Eli Lily
SWOT Analysi s
Strength Strong Research Careful Management Second-largest pharmaceutical concern in US Opportunity Affluent and aging populations-New Customers No differences in Health care market Government coordinating evaluation Weakness Manufacturing strategy is reactive and lacks coordination and contribute little to corporate strategy Threats
Rising development costs Slower Rates of Innovation Shorter Product Lifecycle Interventionist government
Stage 2 : Where does Eli Lily want to be in the coming years?
? Competitive analysis
? Lilly’s
major competitors in North America included Merck, Bristol Myers-Squibb, American Home Products, Johnson and Johnson, and Pfizer. ? Worldwide, the largest non-American firms were European, including Ciba-Geigy, Hoechst, Glaxo, Bayer, and SmithKline-Beecham. ? Most of these had enjoyed growth rates comparable to or better than Lilly’s. United States-based firms accounted for 42% of world sales in 1990.
Stage 3: How will Eli Lily proceed from where it is today?
? By revamping current manufacturing strategy and
implementing new one.
? Strategy & Manufacturing Competency
? Make Manufacturing strategy a part of corporate
strategy ? Focal Point- Process Development and Improvement so as to:
• • Shorten entire FDA approval Produce Product required for clinical test more quickly
Implementation Plan (Strategy Development)
? Plan 1: Increase the investment to improve the
manufacturing processes for successful products that are already on the market. ? Plan 2: Commit to process improvement for a product (or products) that is not yet on the market, but which appears overwhelmingly likely to succeed. ? Plan 3: Commit substantial resources to a selected basket of products, very early in their development lifecycles.
Methodology
? The three strategies are evaluated through AHP
(Analytical Hierarchy Process)
? The criteria for evaluation are ? Cost ? Potential risks
? Potential market share
Scale used for AHP
AHP Matrix
? After Alternative v/s Criteria and Criteria v/s Goal
following AHP matrix was obtained
Synthesizing Final Priorities:
Making the Decision:
? As per AHP results,
? Release before 2nd phase with a priority of
0.7276, is by far the most suitable candidate. ? Release after 3rd phase, with a priority of 0.615, is second, and ? After 2nd phase/before 3rd phase, at 0.2126, is third. ? The Board should choose Release before 2nd phase as a new strategy.
Product Phases
100 Products
Phase 1&2
Phase 3
25Products
75Products
Fail in Phase 3
5 Products
Fail in Phase 1& 2 20 Products In market
Analysis using EXCEL Calculation
Analysis –Plan 1
? Regular process cost=
$.58Mn
? After launch process cost= $1.16Mn
(As process improvement is done after product is successful in the market)
? Only 20% of the product that enter are launched in the
market.
Analysis –Plan 2
? Cost of Process Improvement in Phase 3= ? After launch Process Cost=
$1.16Mn $.58Mn
? 20% of the products that enter Phase 3 are launched in
the market.
Analysis –Plan 3
? Process Improvement Cost in Phase 1= $1.60Mn ? Process Improvement Cost in Phase 2= ? Process Improvement Cost in Phase 3= ? After launch process cost=
$1.60Mn $1.16Mn $.58Mn
Per unit costs decreases by implementing any of the three plans
THANK YOU !!
doc_114331389.pptx