Lilly Cures Inefficiency With IT

In the biotechnology and pharmaceutical industry, a patent expiration can put years of research and hundreds of millions of dollars in development up for grabs. And the loss of sales to generic drugs is no longer gradual--look at Eli Lilly and Co., which has seen sales of its blockbuster Prozac fall by almost a quarter since its patent expired last year. But rather than pine away over lost exclusivity, the company is focusing on streamlining processes that will lead to the next blockbuster drug.

Not an easy task, considering the volume and complexity of data that a drugmaker must manage, the regulatory demands of the Food and Drug Administration, and the tougher competition from generic-drug makers. Eli Lilly is using technology that includes XML-based applications, intranet portals, and online data libraries to increase revenue and efficiency.

Lilly managed to increase sales 6% last year to $11.54 billion, but its profit slipped about 9% to $2.78 billion. Much of the lost income can be attributed to slowing sales of the antidepressant Prozac. Last year, the Indianapolis company lost a six-year court battle to maintain an exclusive patent on the drug, opening the door for lower-priced generic rivals. Retaining the patent until December 2003 would have meant an estimated $4 billion in sales.

It's so expensive to develop a new drug that companies are mostly looking to develop formulas that will reach blockbuster status, those with at least $400 million in annual sales. Cutting product-development costs and streamlining regulatory processes let drug companies put more money into development and get more products to market sooner. Roddy Martin, AMR Research's service director for life science, says that in 2000, the FDA approved seven drugs that reached blockbuster status. He estimates 22 drugs approved by the FDA last year became blockbusters, and he predicts the number will remain high, with 18 more this year.

In 1997, the FDA began to require pharmaceutical companies to be able to accept, secure, and store digital signatures and electronic records, but it's only now getting serious about enforcing the rule. XML is key to complying with the FDA's electronic-submission requirements, says Roy Dunbar, Lilly's CIO and VP of IT. Lilly is developing applications that will allow it to submit formulas electronically for approval by the FDA as well as international regulatory agencies.

Lilly is also using storage systems and knowledge-management software to better understand the data created through clinical trials. Lilly last year launched an intranet site to organize and distribute data to about 19,000 employees. The site was built using tools from Plumtree Software Inc., with catalog and search capabilities from Semio Corp., and lets Lilly researchers, sales managers, IT professionals, and human-resources staff share and access company data regardless of their locations. Sales managers can use customer data to better research and manage sales leads, for example, and scientists can use the portal to access clinical data supplied by Lilly labs worldwide.

The payoff from electronic libraries adds up fast. Lilly estimates its Molecule Library, a database that cost $2 million to build, will save $27 million over 10 years in reduced research time because of easier searching for information.

Next, Lilly plans to implement Lotus Sametime software to let employees conduct real-time discussions online. The drugmaker also is considering WebEx Communications Inc.'s Web-conferencing services to enable collaboration with customers and business partners. "As we grow, we need to collaborate much faster, without the need for someone to get on an airplane," Dunbar says.

Lilly also saved about $100,000 last year by using technology to open the clinical-trial process to the company's clinical physicians across a wide range of specialties. A drug faces numerous rounds of clinical trials before approval. Lilly physicians from a variety of disciplines, such as neurosciences and vascular science, look at the clinical procedures and make suggestions via a chat room with threaded discussion. One physician's critique of the clinical-trial process led to a more efficient way of enrolling patients, which, in turn, led to the cost savings, Dunbar says.

Looking ahead, Dunbar expects secure application integration and online conferencing will mean more collaboration. He envisions two or more companies sharing clinical resources to develop a drug faster, a process that would require common data standards and tight security. Says Dunbar, "We think of a clever cell that knows what to keep out and what to let in, and we're looking to apply that model to our business."