In France

By Thiébaut KELLER, Céline LEBLANC, Antoine LEPRETRE

Best in France Case study September 2006 – December

2006

Outlay

Lilly’s overview

Specific issues of the pharmaceutical sector

Why and when did Lilly come to France

Main constraints in France

Eli Lilly Co. Overview

Eli Lilly & Co.

Major drugs introduced

Eli Lilly & Co

• Founded in May 1876 by Colonel Eli Lilly in Indianapolis, USA

• 14.6 billion $ net sales in 2005

• 41 854 employees worldwide (19% in R&D)

• Clinical research in more than 50 countries

• Research and development facilities located in 9 countries

• Manufacturing plants located in 13 countries

• Products marketed in 143 countries : Lilly’s performance influences these economies

Source (11/06 figures) : http://www.lilly.com/about/highlights.html

Source (11/06 figures) : http://www.lilly.com/about/highlights.html

Major drugs introduced (1/2)

• Prozac®, which revolutionized the treatment of depression

• Zyprexa®, breakthrough product for schizophrenia and acute mania associated with bipolar disorder

• Cialis®, a new treatment for erectile dysfunction

• Gemzar®, for pancreatic and non-small-cell lung cancer, one of the world's best-selling oncology agents

Source : http://www.lilly.com/about/highlights.html

Source : http://www.lilly.com/about/highlights.html

Major drugs introduced (2/2)

• Humatrope®, therapy for growth hormone deficiency

• Humulin®, human insulin, the first human-health-care product

created by biotechnology

• Ceclor®, which became the world's top-selling oral antibiotic

• Iletin®, the first commercially available insulin product, in 1923

Source : http://www.lilly.com/about/highlights.html

Source : http://www.lilly.com/about/highlights.html

Lilly France

Overview

Institut Lilly in France

Overview

• Headquarters in Suresnes (92 Hauts-de-Seine)• Fegersheim’s plant (Alsace) : main production factory of the

group’s subsidiaries, supplier of 126 countries all over the world.

• 2,02 billion € net sales (1,53 billion € from exports)• 2980 employees : 4th most important subsidiary of Eli Lilly • 10th best employer in Europe (Hewitt)• 4th “great place to work” in France in 2005

“Institut Lilly” in France

• Established in 1990

• 2 goals : – Supporting clinical research

– Delivering educational and training programs to health care professionals and patients

• Has provided grants to 250 researchers

• Has delivered 90 training courses (90,000 professionals)– Specific courses for hospital pharmacists

• Ex: Aims at destigmatizing schizophrenia

Lilly’s values

3 main values

Lilly’s values in France

3 main values

• Respect for people :– Employees, customers, shareholders, partners, suppliers

and communities

• Integrity– Highest standards

• Search for excellence– Continuous search for ways to improve the performance

• Global values but adapted to each country to take into account cultural and corporate specificities.

Lilly’s values in France

How do Lilly’s global values

adapt to France?

• Example: Search for excellence:– Means being #1 in the USA

– In France, it means excellence in methods and work quality. Being #2 doesn’t really conflicting with the search for excellence.

Specific issues of the pharmaceutical sector

Clinical trials : specific and strict regulation

Research and development

Responsibility

Clinical trials : specific and strict regulation

• In France : “Autorisation de mise sur le marché”

Discovery/Preclini

cal Testing

Phase 1 Phase 2 Phase 3 FDA Phase 4

Years 6.5 1.5 2 3.5 1.5

Purpose

Assess safety,

biological activity,

and formulati

ons

Success Rate

5,000 compoun

ds evaluate

d

5 enter trials

Evaluate effective

ness, look for

side effects

Monitor adverse

reactions from long-

term use

Additional post-

marketing testing required by FDA

Determine safety and dosage

Send to FDA

Send to FDA

LAUNCH

Review process / approval

: 1 approve

d

Research and Development

• R&D expenses : – $2.7 billion– R&D development laboratories in 9 countries– Clinical research in 60 countries– 20% of turnover invested in research

• Necessity to discover breakthrough products, thanks to medical expertise, in order to finance research for new drugs.

• Recruit and retain the highest quality employees is critical to success in this sector

Responsibility

• To act responsibly and consistently :

– Observing and complying with the laws– Set standards in operations– Greater transparency on trials (www.lillytrials.com)– Quality : people’s lives at stake : stakeholders trust

is needed for the business to operate– Work with WHO– High standards in ethical behavior (social

responsibility report)• Health, safety and Environment program (3 points)

Why and when did Lilly come to France

A strategic location

Quality workforce

A great market

French health care system

A strategic location

• Plant in Alsace region: close to Germany, the first pharmaceutical market in the world

• At the center of Europe:– Infrastructures– Well served by transportation : roads, airport, train

• Close to European institutions

• Headquarters in Suresnes (92), near Paris: – Close to institutions and agencies (AFSSAPS,

etc.)– Close to La Défense business district

A quality workforce

• Skilled and well-educated employees– Numerous students in pharmacy– Public research facilities: INSERM

• High productivity– Productivity higher in France than the productivity of other plants of the group

• Low absenteeism in Fegersheim

• France is a net-exporter of high-profile executives within the group

A great market

• France is a very attractive market :• more than 19 billion € in 2001

• US $2903 per capita vs. US $2307 in the OECD

• 340 doctors per 100 000 inhabitants

• The French spend a lot of money on medicine : they rank second within the OECD.

French health care

system• Social security / High governmental investments

• 76.3% of health expenses paid by the government

• French doctors and hospitals are early adopters of new drugs

• In 2001, 38% of the turnover made with prescription drugs launched less than 10 years before vs. 26% in Germany

• Prices are not the lowest in Europe (close to the mean)

Main constraintsin France

Social forces and regulations

Mentalities

The Judiciary

Administrative

Social forces and

regulations • 35h work week• Everything needs to be negotiated : high

risk of strike.

HOWEVER• Fegersheim’s plant is not syndicated. So far

0 day of strike.

Mentalities

• New employees are carefully selected to fit the corporate culture

• “Win-win” concept doesn’t always seem to be fully understood by the French

– For example: new drugs will help the social and economic development of France and create value for Lilly

– BUT it is sometimes only seen as a new cost for the Social Security

Judicial

• The French society has become very risk-adverse (risk of punitive damages) :– “Principe de Précaution” is widely spread. Safety

expectations are very high.

– But in pharmaceuticals risk-zero does not exist• Nevertheless, no class actions in France yet

• Difficulties for foreigners to understand the protection of unionists by Work Law.

Administrative

• Many governmental agencies with whom Lilly must continuously negotiate: AFSSAPS, etc.

• A lack of freedom to communicate about the products (whereas the lab knows its drugs the best)

• Sudden and unexpected political decisions (new taxes, etc.) in spite of annual contracts with firms.

• Very long approval process for new drugs : • Usually 2 more years to get approval of new drugs (“Autorisation de mise sur le marché”) than in other countries

Perception of French issues by American

chief executives

• Difficulties understanding both social and political phenomena

• But pragmatic approach : – Relative Autonomy of French staff– Everything is controlled and measured, including

the mood of the workforce– Freedom as long as indicators remain as good as

expected

Prospects

• Lilly keeps on investing in Fegersheim – Factory improvement and enlargement :

Between 1998 and 2003, number of employees from 900 to 1800 : multiplied by 2.

• Philippe DEFOSSES, Director of corporate affairs

13, rue Pagès - 92158 Suresnes Cedex

desfosses_philippe@lilly.com

« Lilly believes that strong economies [NDLR: like France!]with a priority on human health [NDLR: like France!] and educated population [NDLR: like the French!] will yield the ultimate health care solutions »