Lilly overhaul spawns new execs, new analysis

Eli Lilly is fleshing out its organization chart in the wake of its recent restructuring into five business units. Today's news: Lilly's G.M. in China will climb the company ladder to president of U.S. operations. David Ricks will replace Enrique Conterno in that slot, left vacant when Conterno was tapped to take on one of those five new units, the Diabetes Business Unit.

Ricks and Lilly's other top managers will have their work cut out for them. Or so posits Catherine Arnold, the Credit Suisse pharma analyst. In a new note to investors, Arnold says Lilly needs to make an acquisition or some other big move fairly quickly. The company is "on the precipice of a steep and prolonged earnings downturn," Arnold wrote (as quoted by the Indianapolis Star). Like all of Big Pharma, Lilly will lose some blockbuster products to patent expiration over the next several years--but Lilly's patent trouble is the worst in U.S. pharma, Arnold said.

Indeed, the IndyStar's John Russell spoke to company executives and analysts about the restructuring--and some Lilly-watchers worry that it might be too late. "I'm skeptical that what Lilly is doing will make a big difference," Les Funtleyder, a drug analyst with Miller Tabak & Co. told the paper. "... But I wish them luck." Company types, however, say that Lilly has made great strides recently, particularly in computer modeling, and those strides will pay off, and so will the restructuring.

Arnold, however, is agitating for a deal. Playing matchmaker, she suggested a couple of companies for Lilly to pursue, particularly Alexion Pharmaceuticals, a biotech whose lead product Soliris has been on the market in the U.S. and Europe since 2007, but hasn't yet realized its "blockbuster potential," she said. Arnold also suggested a perennial favorite among Lilly-deal speculators, its Byetta partner Amylin Pharmaceuticals. But, she said, that's a riskier proposition.

- get the Lilly release
- read the article in the IndyStar
- see the IndyStar blog post
- check out the AP news