Last week, Lilly announced a major restructuring plan focused around the creation of one Developmental Center of Excellence and several individual business units. The media (Pharm Exec included) focused on the news that 5,500 jobs were being cut as part of the plan. This week, we’re talking to Lilly to find out what the company’s R&D structure will look like beyond the elimination of positions.
Steven Paul, president of Lilly Research Laboratories and executive vice president of science and technology, filled Pharm Exec in on the details.
Could you clarify the role of the new Developmental Center of Excellence? Is it simply a coordination vehicle?
Its main purpose is to speed innovation to patients and to the market. Yes, it is a coordinating vehicle—we have put there the key functions for clinical development, including all the key elements such as process research development, regulatory, safety, and project management. There is going to be a single operating model at Lilly, which we piloted for the past 12 to 18 months, and that’s something we call critical chain, which is a way of seamlessly developing drugs.
Why the change?
The reason we are doing this is because we have a terrific Phase I and II pipeline—we have 64 individual molecules in development, 21 in oncology, and our goal is to get those molecules into Phase III and into the marketplace and to patients.
There are three key pillars from a technology and methodology perspective. One is critical chain methodology—a project management tool that we piloted. One hundred percent of the projects using critical chain methodology are on track, either at or ahead of their milestones, as compared to about 60 percent of our traditional development projects. We will expand this to all of our projects by the end of this year.
The other pillar is something we call advanced analytics. This is the use of clinical trial modeling and simulation, as well as adaptive, seamless design. In other words, moving from Phase I to II and from Phase II to III without stopping.
We piloted this on four projects. We literally determined the dose in Phase II—in a multi-arm study—moved the two doses that were optimal into Phase III without stopping, and continued on with the commercial development of the molecule.
This can save enormous amount of time, and you can do it on the front end. For a few molecules you could probably do it for Phase I, II, and III. Not all molecules will meet the criteria for this. It obviously requires that you have enough clinical trial material. But when you have a validated target and the molecule is behaving very well in Phase I through proof-of-concept, at that point, these kinds of trials can literally cut years off the development time of a molecule.
The third pillar of this Center of Excellence is the idea of tailored therapies. Lilly has been very successful with tailoring, but we now believe that it needs to be applied across the portfolio in a much more robust way, beginning in Phase I and not after a drug is in Phase III or on the market. Tailoring the right patient, right dose—these are essential for determining whether a drug works.
Are you altering the end points in a trial as a molecule is moving through the trial?
Not necessarily the end points. For example, because the purpose of Phase II is to pick the dose of a molecule—and to confirm efficacy and safety—you usually stop at the end of it. You look at the data, look at the best two or three doses, and move into Phase III. This way you can stop the doses that you don’t want and enroll patients into the programs that you do want.
You can also do this on the basis of tumor response. Let’s say you are in Phase II for an oncology drug that works in breast cancer. Now we know that virtually no oncology drug works for all people that have breast cancer. But let’s say you have a marker—logical or molecular—now you can determine which type of breast cancer is responding to your drug and without stopping. You literally keep enrolling patients that have that type of breast cancer.
CNS doesn’t seem to have its own business units, yet it has been a major Lilly franchise.
I think this was misinterpreted in the press release and something we are trying to clarify with the public. We are very interested in CNS, and the biggest products we have right now are CNS drugs—Zyprexa, Cymbalta, etc. But they are mature products that will lose patent protection over the next few years, beginning in 2011, so they were put into the developed markets business unit. But we have a very robust science pipeline. In fact, we have two Phase III molecules for Alzheimer’s disease. So we have not, by any means, lost interest or enthusiasm for CNS.
How are your business units different from similar models in other companies, such as J&J and Pfizer?
When we make a commercial decision on a molecule—traditionally after Phase II—at that point the molecule will move into the business unit with two exceptions. In oncology we will move all Phase I molecules into the business unit, because we often do Phase I trials for cancer in cancer patients. The other business units will pick up the molecules at the commercial decision time.
What about benchmarks? Is it all about speed to market or the number of new compounds being commercialized?
We have an unprecedented amount of molecules in early stages and mid stages, so our success as company as we transverse the patent cliffs is going to require that we speed innovation to patients. If you didn’t have enough good stuff to speed to patients, none of this will be effective. We feel we’ve got the quality molecules we need to make this work.
Is there a deadline for the restructuring plan?
This is all going to occur by January 1, 2010. We are well on our way for the Development Center of Excellence because we’ve been piloting critical chain, adaptive designs, and tailored therapies for some time. We are ready to go, and this will be rolled out at our analyst meeting in December.
Have you substantiated the number of people being laid off as opposed to positions being eliminated?
No. Frankly, we don’t have the answer to that question. We’ve done very well over the years with attrition. We’ve already reduced by 7,000 people by attrition over the last few years. We hope this predominately occurs by attrition, but obviously it might not. We don’t know the percentages, but that will all be worked out in the next few months.