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Why Eli Lilly and Company's Business Model is so successful?

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Eli Lilly and Company’s Company Overview


Eli Lilly and Company is a global healthcare leader that unites caring with discovery to create medicines that improve lives worldwide. Founded in 1876 by Colonel Eli Lilly, the company is headquartered in Indianapolis, Indiana. Eli Lilly's mission is to discover, develop, manufacture, and deliver innovative pharmaceutical therapies that will help improve global healthcare standards. They are committed to creating high-quality medicines that meet real needs in oncology, cardiovascular, diabetes, critical care, neuroscience, and more. Their research and development strategy focuses on key therapeutic areas and leveraging scientific advancements to address unmet medical needs.

Eli Lilly and Company's business model revolves around pharmaceutical product research, development, and commercialization. The company invests heavily in R&D to create a pipeline of innovative drugs that address critical healthcare needs. Once a drug is developed, it is marketed and sold to healthcare providers, pharmacies, and hospitals. Eli Lilly also collaborates with other organizations to enhance their product portfolio and reach.

In terms of the revenue model, the company generates its revenue primarily from selling its pharmaceutical products. This includes patented drugs, which command higher prices, and generic drugs, which have a larger market. Other sources of revenue include licensing agreements with other pharmaceutical companies and income from collaborations and partnerships. The company also benefits financially from various government programs and policies that support the healthcare industry.

https://www.lilly.com/

Headquater: Indianapolis, Indiana, US

Foundations date: 1876

Company Type: Public

Sector: Healthcare

Category: Pharmaceuticals

Digital Maturity: Conservative


Eli Lilly and Company’s Related Competitors



Eli Lilly and Company’s Business Model Canvas


Eli Lilly and Company’s Key Partners
  • The Business Research Unit BRU is a close partner of the company
  • Other teams at the University of British Columbia including the Centre for Drug Research and Development and the University-Industry Liaison Office have worked with the company
  • It is a member of the European Federation of Pharmaceutical Industries and Associations (EFPIA)
  • Subsidiaries
  • Manufacturers
  • Packaging sector companies
  • Distributors
  • Catamaran
  • PBM service providers
  • Health insurance companies
  • Non-profit foundations (The Lilly Foundation)
  • Industry associations
  • Academic and research institutions
  • Non-profit organizations
  • Others
Eli Lilly and Company’s Key Activities
  • R&D
  • Marketing and sales of pharmaceutical drugs
  • Manufacturing and distribution
  • The production and sale of human pharmaceutical and animal health products
  • Development of diagnostic products and information about diseases and market conditions
Eli Lilly and Company’s Key Resources
  • Chemical process R&D
  • Data sciences capabilities
  • Research & development capabilities
  • Teamwork
  • Employees know-how
  • 3.000 scientists
  • Network of partnerships and collaborations
  • Highly automated drug discovery and screening
  • More than 2.000 patents
  • IT infrastructure
  • API manufacturing facilities
  • Supply chain management
  • Invention
  • Entire operation of the company required adjustment
  • Manufacturing capabilities
  • Distribution facilities
  • Marketing resources
  • High performance
  • Effectiveness
  • Emotional intelligence
  • Humans' values
  • Ethics
  • Impeccable quality
  • Tradition + Technology
  • More than 24.000 employees worldwide
  • Location
  • Artificial intelligence capabilities
  • Computing power
  • Big Data
  • Scientific methodology
Eli Lilly and Company’s Value Propositions
  • A leading innovation-driven pharmaceutical corporation
  • The company operates through two segments: Human Pharmaceutical products and Animal health products
  • Delivers powerful and vital medicines that help patients live longer healthier lives
  • It specializes in psychiatry
  • Oncology
  • Neurology
  • Endocrinology products
  • The company also researches and develops therapies for patients with Diabetes
  • Obesity
  • Muscle-wasting Alzheimer's and Pulmonary diseases
  • It provides products in several dosage forms
  • It pioneered the commercialization of mass-produced Penicillin the Salk polio vaccine sterile cephalosporin antibiotics
  • One of the 100 largest corporations in the United States
Eli Lilly and Company’s Customer Relationships
  • Private consultations with doctors
  • Sales promoting visits
  • Telephone
  • Social media
  • Email
  • Customer service
  • Special promotions
  • Events
  • Biopharmaceutical research
Eli Lilly and Company’s Customer Segments
  • Patients
  • Healthcare professionals
  • Hospitals
  • Governments
  • Partners
Eli Lilly and Company’s Channels
  • Hospitals
  • Diagnostic labs
  • Physicians
  • Partnerships and collaborations
Eli Lilly and Company’s Cost Structure
  • R&D
  • Staff
  • Employees
  • Events
  • Facilities
  • Cost of Goods Sold
  • Production
  • Manufacturing
  • Quality Assurance
  • Quality Control
  • Production Planning-Coordination
  • Product Development
  • Materia Medica
  • Clinical development
  • Marketing
  • Production
  • Packaging
  • Merchandising
  • Shipping
  • Taxes
  • Insurance
  • Legal
  • IT services and Operations
  • Finance
Eli Lilly and Company’s Revenue Streams
  • Sale of drugs and medications
  • Medical treatments
  • Biotechnological medications
  • Research income

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Eli Lilly and Company’s Revenue Model


Eli Lilly and Company makes money by combining different business models. Below, you will find the list of the different monetization strategies identified for this company:

  • Licensing
  • Biopharma
  • Healthcare
  • Corporate innovation
  • Digital transformation
  • Customer data
  • Market research
  • Product innovation
  • Customer relationship
  • Customer loyalty
  • Data as a Service (DaaS)
  • Cross-selling
Analytics


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Eli Lilly and Company’s Case Study


Eli Lilly and Company's CASE STUDY

Understanding the depth and scope of a pioneering company like Eli Lilly and Company requires delving into its rich history and innovative strategies. With roots dating back to 1876, Eli Lilly stands as a testament to enduring commitment and perpetual innovation in the pharmaceutical industry.

A Historical Spirit of Innovation

Eli Lilly and Company's journey began in the late 19th century when Colonel Eli Lilly, a chemist and a veteran of the American Civil War, laid its foundation. The goal was clear from the start: to create high-quality medicines that met real needs. Today, we carry forward that legacy, blending tradition with technology to push the boundaries of medical science. Our growth over the decades has been nothing short of monumental. As of 2022, Eli Lilly employs over 35,000 people worldwide and operates in more than 125 countries (Eli Lilly, 2023). We have nurtured a culture that merges scientific rigor with compassionate care, ensuring that our medicines don't just heal but also enhance the quality of life for patients across the globe.

Focus on Research and Development (R&D)

Central to our success is our strategic investment in research and development. We channel nearly 25% of our annual revenue, approximately $7 billion, into R&D efforts each year (Lilly Financial Report, 2022). This commitment underpins our ability to create a robust pipeline of innovative drugs designed to address critical healthcare needs. Our R&D strategy is particularly focused on key therapeutic areas such as oncology, cardiovascular diseases, diabetes, and neuroscience. For instance, in the field of oncology alone, we have 29 ongoing clinical trials, signaling our commitment to fighting cancer from multiple angles (ClinicalTrials.gov, 2023).

Leveraging Partnerships for Greater Impact

Eli Lilly has forged numerous strategic partnerships to bolster our research initiatives. A notable collaboration is with the University of British Columbia’s Centre for Drug Research and Development, which has yielded significant advancements in drug discovery processes. Our partnership with the European Federation of Pharmaceutical Industries and Associations (EFPIA) also exemplifies our proactive stance in bolstering global healthcare standards. Moreover, through alliances with Catamaran and PBM service providers, we ensure that our drugs not only reach the market efficiently but also remain accessible and affordable for patients. Such collaborative ventures extend our reach and enhance our capability to innovate continually.

A Dynamic Business Model

Our business model is anchored in pharmaceutical product research, development, and commercialization. The journey from discovery to delivery is meticulously planned, ensuring that each stage adds value. The revenue streams are primarily generated from the sale of patented drugs, which command premium prices, and generic medications that capture a broader market segment. Complementing this, licensing agreements with other pharmaceutical companies, and income from collaborations, further diversify our revenue model. For example, our licensing agreement with Boehringer Ingelheim to co-develop and commercialize diabetes medications has been immensely successful, generating billions in revenue (Pharmaceutical Executive, 2022).

Revenue Streams and Financial Strength

Financially, Eli Lilly is formidable. In 2022, we reported annual revenue of $28.3 billion, demonstrating a consistent upward trajectory (Lilly Financial Report, 2022). Revenue from human pharmaceuticals accounted for a significant portion, driven by the strong performance of drugs like Trulicity for diabetes and Verzenio for breast cancer. Our diversified revenue streams ensure that we are not overly reliant on any single product or market. The animal health segment, handled through Elanco, generated $4.2 billion in revenues before Elanco was spun-off into an independent company (Elanco Financial Report, 2022). This strategic move allowed us to sharpen our focus on human health and development.

Customer-Centric Approach

What truly sets Eli Lilly apart is our unwavering commitment to our customers. We consider patients, healthcare professionals, and hospitals as our primary segments and tailor our strategies accordingly. Life-changing therapeutic value and emotional wellness form the cornerstone of our value propositions. To foster strong customer relationships, we engage in various touchpoints—be it private consultations with doctors, regular check-ins through our customer service channels, or interactions at industry events. This multi-faceted approach ensures that we remain responsive to the evolving needs of those we serve.

Adapting to a Digital Future

While traditionally conservative in digital adoption, we recognize the transformative potential of digital technologies. As a result, we have initiated digital transformation projects aimed at enhancing our operational efficiency and customer engagement. Investments in artificial intelligence and big data have already started to pay dividends by streamlining our R&D processes. Moreover, by leveraging digital channels, we have expanded our reach. Telehealth services, digital marketing strategies, and online consultations have become integral parts of our operations, especially amid the COVID-19 pandemic.

Future Outlook

Looking ahead, Eli Lilly remains committed to pushing the boundaries of medical science. With over 2,000 patents to our name and a robust pipeline of upcoming drugs, we are poised for continued growth and innovation (Lilly Intellectual Property, 2022). Our dedication to improving global healthcare standards, coupled with our strategic investments in R&D, ensures that we remain at the forefront of the pharmaceutical industry. As we navigate the complexities of modern healthcare, one thing remains constant—our mission to make life better for people around the world. Eli Lilly and Company is not just a business; it is a beacon of hope and innovation. It is this unique blend of tradition, science, and compassionate care that makes us special, and we are excited about what the future holds. In conclusion, the Eli Lilly case study is a compelling narrative of historical legacy, relentless innovation, and strategic foresight. It serves as an exemplary model for how a company can evolve to meet the ever-changing demands of the healthcare sector while remaining true to its core values.


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