Eli Lilly is taking aim at people’s biggest health challenges

David Ricks, who has spent 28 years at Eli Lilly and the last seven as CEO, says he “stumbled” into his first job there. He soon realized, however, that the company’s mission would make for a rewarding career. “[I] thought it was a good way to spend a life, trying to make medicines,” he says. 

During Ricks’ tenure, Lilly has brought to market tirzepatide, one of the new class of drugs for weight loss and diabetes that has changed how we think about treating those conditions. During a Goldman Sachs Talks session in New York, Ricks discusses that drug, what comes next in its category, and how he strives to make Lilly’s entire business more efficient. He speaks with Goldman Sachs President and Chief Operating Officer John Waldron.

The drug development process inherently produces more failures than successes. How do you manage that, and what does it teach you?

It’s a lot of asymmetric risk. The difference between companies that are really doing well and doing poorly is probably one or two [successful] drug calls very early. So, having the right people around those decisions is critical. Being disciplined on the success criteria as you develop drugs is very important, too. The interesting thing to me — something that’s changing in the company, and that I want to change more — is applying that same thinking to other investments.

Is there something about your R&D or drug development process that differentiates Lilly?

Everyone knows drug development is slow, and I think most of us took that as a given. In 2015, we were one of the slowest. It took almost five years to go from idea to the clinic, and 11 years to go from the clinic to market. We’ve essentially cut both those timelines in half. Most of it’s just engineering out waste.

And you think other companies haven’t really been able to do that?

We know they haven’t, because we measure their timelines, and we benchmark ourselves against [other companies]. If you map the process of drug development, there are like 800 steps. And each one of those has a timeline. We have a “follow-the-sun model” on a lot of drug development activities and regulatory submissions with a big Indian site, a European site, and a US site. We do a lot of the work 24 hours every day of the year.

Decision-making is a big thing — making sure you know what the triggers are before you start the experiment. So that, when you get the results, you don’t just sit in a room and debate what’s happened. You set the thresholds in advance, and if you hit them, you just go.

We haven’t really sped up the enrollment time for clinical trials. That’s a vexing thing. If you’re going to do a one-year study in diabetes, it still takes six months to fill up this study, and that seems ridiculous. If Ticketmaster can sell out a Taylor Swift concert in a minute, why can’t we sell out a tirzepatide clinical trial like that?

Can you talk about intellectual property? What challenges do you see there?

I mean, we don’t exist without intellectual property (IP). We need that exclusive period, that monopoly to get a return. Otherwise, no one would invest in new medicines — it’s too hard, too risky. So, we have policy arguments, and we’re not in a good moment there. I think for the first time in my career, I think this country is regressing on IP.

There’s a feeling, I think, that the winners are too successful — and that’s not just in our sector. So, people want to tear down the structures that allow you to win, without thinking about the consequences.

Along with scientific innovation, what other aspects of your company culture are fundamental?

Make sure you’re working on things that will matter. What’s Eli Lilly for? If you look at the last 15 years in the [biotech] sector, a lot of value has been created by making really impactful drugs that work for a few people, for small narrow diseases. If you’re a smart investor, you could buy a bunch of those companies and create a lot of value. But that’s not really what Eli Lilly is for.

We have to go after big markets with big effect sizes. We’ve had drugs that have a small effect on a lot of people. They don’t sell very much. You have to start with the big ideas, where there are huge human health gaps, and go after them. When you explain that to the scientific team, they get super excited. They work harder. They think differently. The mission matters.

When did you first get excited about tirzepatide, which you market as Zepbound and Mounjaro?

I remember vividly in 2016, right as I was named as the CEO but not in the job yet. Our current head of science, who was temporarily running the diabetes research group, called me, and he said, “This is going to be special.” That was eight years ago, but that was the first human experiment. We had 12 people in a small study in Singapore who lost so much body weight they dropped out of the study because they needed to eat.

But we started working on our first GLP-1 in 2003. We launched it in 2005, in partnership with a biotech company. We improved on it with a drug called Trulicity, and we improved on that with a drug called tirzepatide.

Here we have found a pathway, a biologic pathway, [that] we can keep iterating on. And I say that with some confidence, because we are on our third one already. The first one was okay, the second one was our biggest-selling drug ever, and it will be passed, if it hasn’t already, any day now by Mounjaro. We have two phase-three assets that also, I think, may exceed tirzepatide, and then we have seven others in clinical development. So now we have kind of a repeatable motion.

All trying to do the same things better?

Adding to each other perhaps. Obesity causes probably 200 adult diseases. You’re going to see these drugs being targeted at diseases, priced, and marketed to them, not just as a generalized obesity care drug but with different niches based on their properties and go-to-market strategies. So, I think it is really creating an industry of obesity management for everything from cardiovascular risk to brain health to addiction — that’s an interesting one — to all kinds of joint diseases.

When will supply of these drugs, which are made by your company and by Novo Nordisk, catch up with demand?

Literally every unit we make, we ship. It’s mostly managed demand messaging. When will it end? It’s going to be a few years. In 2022, the year we launched Mounjaro, between Eli Lilly and Novo Nordisk we made enough for about 12 million people on the planet. I think we need to get to more in the range of hundreds of millions of people versus the tens of millions of people.

How is Eli Lilly using AI, and how is that impacting drug development?

I mean, what an exciting moment. I’m kind of an AI nerd, so I’m spending a lot of time on this topic. There are a lot of applications in our sector. In our French plant, they’ve got an AI that observes micro-delays that occur in feeding the machines to make the product. These are less than a second long, and humans get bored watching them and figuring out what to do about them, but the machine doesn’t. So, it’s making 5-7% yield improvements.

I think the winners, like in a lot of industries with AI, are going to be not who has the best model, but who has the best data. Here we have a huge incumbent advantage because we’ve made drugs for 120 years. We’ve tagged them all. We’ve digitized them. We can teach the machine what organic chemistry looks like, and how to think about that for a new target.
 

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