Posted: December 8th, 2014

E11 Lilly: Developing Cymbalta

E11 Lilly: Developing Cymbalta

At 3:55 p.m. on a Thursday afternoon in April 2000, John Kaiser, marketing director at Eli Lilly
and Company, spotted the clock in the lower right-hand corner of his computer screen and decided
to make one last edit to the PowerPoint presentation he was to give at a 4 p.m. meeting. After editing
and sending the slide deck to the color printer, Kaiser quickly reached for his cell phone. The
meeting was scheduled to run for two hours, but given the topic-developing a successor to the now-
legendary antidepressant Prozac-Kaiser wanted to call home and advise that he might be
unavailable until 6:30 or 7:00 p.m. As a former global marketing director for Prozac, Kaiser knew
firsthand of its success and that, though certainly possible, replacing it would not be easy. Following
his call home, Kaiser quickly walked over to the color printer, picked up copies of the presentation
which he had titled ”No Pain, No Gain” and headed off to the meeting.

Prozac had only a few years left of patent protection before generic versions of the same molecule,
fluoxetine, could be sold in the U.S. Historically, competition by generic manufacturers dramatically
reduced the sales of the brand medication that they aimed to replace (Prozac, in this case). Though
officially Prozac’s patent would expire in December of 2003, no one could be sure exactly how much
time Prozac had left. Although a ruling of a U.S. District Court judge in 1999 upheld the patent for
Prozac, Barr Laboratories, a manufacturer of generic drugs that hoped to sell its own version of
generic fluoxetine, had already filed an appeal with a federal court in Washington, D.C., and a ruling
was expected as soon as the summer of 2000.

To management at Lilly, patent expirations were usually just part of the business of
pharmaceuticals. However, Prozac was Lilly’s flagship product and the market leader in the most
popular class of medications used to treat depression-the selective serotonin reuptake inhibitors
(SSRIS). Its annual sales of more than $2 billion would create an enormous revenue gap to fill. And
although many at Lilly were actively engaged in planning for life after Prozac, pharmaceutical
research and development was universally well-known for being an extremely long and risky
process. According to one source, experimental drugs took an average of 12 years to travel from the
lab to one’s medicine cabinet. On average, only one in 1,000 compounds to enter preclinical testing
made it to human testing, and only one in five of those tested in humans was ultimately approved by
the Food and Drug Administration (FDA) for use in the U.S.1
1 D. Wierenga and C. R. Eaton, ”Phases of Product Development,” Alliance Pharmaceutical Corp, http://www.allp.com/
drug_dev.htm, accessed December 3, 2005.

Professor Elie Ofek and Dr. Ron Laufer prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not
intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.

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