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Eli Lilly: the Evista Project

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    C580 – Operations Management Eli Lilly: The Evista Project Case Study – Krishna Tavvala Background: Eli Lilly is a leading pharmaceutical company specializing in treatment of diseases like the depression, schizophrenia, diabetes, infections, osteoporosis among others. Evista, a newly developed drug by Eli Lilly, is an estrogen replacement therapy medicine for prevention of post-menopausal osteoporosis which also appeared to lower the incidence of breast cancer in women. This FDA approved drug is expected to be a potential blockbuster and generate revenue of 1 billion US dollars per year for the company. Problem Statement:

    In a highly competitive and dynamically changing market it has become imperative for the leading pharmaceutical companies to recuperate their development costs and generate returns for stockholders as well as funding for R&D of new drugs as soon as possible. With the profitable lifetime for drugs, in United States, being significantly shortened since the 1980’s, Lilly Research Laboratories (LRL) under the leadership of Gus Wantabe was able to develop Evista in shorter duration by adopting a Matrix-Based product development approach and utilizing heavyweight teams instead of their traditional function-based product development approach.

    In the face of internal resistance to the heavyweight teams and shortage of resources, Wantabe now has to make a decision about adopting this new successful heavyweight team approach for commercialization of Evista as well. Analysis: In the past several years some critical changes have been taking place in the pharmaceutical industry which included encouragement of generic prescriptions by the formularies, the exclusive listing of a single drug for a particular therapeutic prescription, enablement of bulk discount rate negotiation by health care insurers, and the minimization of the number of rugs to be put in the formularies. These changes pressured the pharmaceutical manufacturers to reduce the price of their drugs. However, the cost of bringing a new therapeutic drug has been increasing dramatically since the 1980’s and well into 1990’s due to the increased time required to conduct the pre-clinical trials per new dug application. All these changes have resulted in reduced profits, increased costs, increased competition and higher risks for the pharmaceutical companies. Under these conditions, Eli Lilly had to improve its abilities to develop and introduce novel drugs to the market efficiently and effectively.

    The traditional functional-based teams at Eli Lilly adopted slow and cautious approach for product development with no proper tracking of resources, accountability or focus. With the introduction of “heavyweight” teams the product development at Eli Lilly was sped up by developing innovative methods to gather information, develop large clinical trials to answer many questions, anticipate regulatory concerns and meet them, and provide regulatory agencies with the best possible application and accurate and definitive information as observed with Zyprexa.

    The heavy weight teams headed by project manager’s, who also had a strong management profile, were able to improve the product development process also by improving the communication between the project members, commitment to the project and focus on cross-functional problem solving. The market oriented focus of heavyweight teams also helped the company become innovative as demonstrated by labeling of Evista as a preventative medicine instead of a treatment medicine. The flip-side of adopting the heavy-weight team approach at Eli Lilly was alienation of the employees in functional teams who were not part of the heavyweight projects.

    The other projects/products got side-lined as the resources and personnel got diverted and the heavyweight teams wielded excessive influence. Exacerbating the problem is the shortage of skilled personnel. The acute shortage is reflected by the fact that Eli Lilly has been spending only 16. 2% of its revenues on research and development when compared to the industries average of 19. 4%. Under these conditions, Wantabe has to address the concerns of the employees in functional teams and allocate the resources properly in the face of the challenge of maximizing the profits for the shareholders before commercializing the successful drug, Evista.

    Alternatives: 1. License/sell the drug, Evista, to third parties and share the profits. 2. Setup a joint venture with other successful companies just for commercialization. 3. Collaboration with similar companies in search and development of new products and thereby decreasing the competition for resources within the company. Recommendations: To obtain a competitive advantage, through the rapidity, efficiency and maximization of the profits, Eli Lilly should adopt the heavyweight team approach for the successful commercialization of Evista.

    In an industry where the rate of development of a successful product is 0. 2% and the development time of more than 10 years, commercialization of a drug must be given utmost short-term importance lest a bad decision waste years of work. The short-term challenge the company faces is the resistance from the functional teams. The managers of the functional teams must be trained to understand the importance of generating profits for the organization and hence the need for sharing/temporarily losing their key resources.

    Though the heavyweight teams were given free-hand in choosing and utilizing the resources in the development phase; during the commercialization process the functional manager’s input should be taken into consideration by project managers for resource allocation by proper prioritization. The collaboration of heavyweight teams with functional teams should become a key piece policy to regulate the dynamics between the working teams within the organization. In long-term, Eli Lilly should concentrate on increasing the staffing in critical areas by increasing the spending in R&D from the profits generated.

    It should also leverage its market leader label in collaborating with similar pharmaceutical companies or independent research laboratories/institutions in development of new drugs. This approach will not only reduce the resource constraints but also improve the coordination between different teams within and outside the organization. Though heavyweight teams are not necessary in each and every project, they need to be created and employed by identifying the key projects with high probability of success.

    Lessons learned by heavyweight teams should be shared with functional teams to achieve cost savings in all projects by every possible manner. Key goals and objectives should be set for each project, group and group member in that order and should be evaluated frequently. Coordination between different groups should be increased by encouraging them to organize frequent meetings and sharing their project issues. How did Lily traditionally staff structure their development project teams? A los administradores de proyectos se les asignaban 4 o 5 proyectos para supervisar, con equipos funcionales tambien asignados a cuatro o cinco proyectos.

    Esto parecia suponer un eficiente manejo de recursos en teoria, pero en la practica hacia que un miembro del equipo no pudiera concentrarse (focalizarse) en un proyecto particular de largo plazo de manera efectiva. Ademas alguien seria llamado para combatir el fuego en un proyecto mientras a la vez era responsable por otro trabajo importante en otro proyecto. Todo ello contribuia a que la contabilidad, documentar y llevar el registro de los desempenos individuales y lo relacionado al progreso y avance del trabajo sean extremadamente dificiles de monitorear.

    How did Lily change their structure for the Evista & Zyproxe projects? Para los equipos de proyectos de Zyprexa y Evista, la novedad en su estructura era que tomaron gran importancia el papel de los equipos “heavyweigts”. Un equipo heavyweight consiste en expertos especializados que son liderado por un administrador de proyecto que tiene acceso directo y responsabilidad por el trabajo de todo el equipo envuelto en el proyecto. Los equipos “heavyweight” hacen contribuciones significativas a las evaluaciones de desempeno individual.

    Caracterizar equipos heavyweights en Lilly ponia enfasis en desarrollar una solucion de sistema de un grupo de necesidades de clientes en contraste con tener grupos funcionales Sin embargo Watanabe (el Vicepresidente) tenia preocupaciones de como estos equipos podrian afectar y trabajar con el resto de la organizacion, particularmente con equipos integrados por gerentes seniors. En la empresa sucedia que los miembros del equipo continuaban siendo guiados por las prioridades de sus objetivos funcionales en vez de actuar como un equipo cohesionado.

    Ademas existian problemas de comunicacion debido a que miembros del equipo no entendian el trabajo del otro, es decir no habia integracion, Sin embargo para Zyprexa la estructura de equipos heavyweigts significo un salto dramatico en velocidad y calidad, ya que aceleraron los tiempos, y entregables. Para Evista, el enfoque de los equipos heavyweights permitio a Lilly recortar al menos 15 meses los procesos de desarrollo y muestras. Los equipos heavyweghts lograron optimizacion de los sistemas IT (mejorando la velocidad y exactitud de la adquisicion de data de las muestras).

    How do you think Eli Lilly should manage the transition from Evista? s development to its commercialization. Creemos que lo deberia manejar con suma cautela, definiendo claramente los equipos, sus roles, responsabilidades, desempenos individuales, cronogramas, y sobretodo definir un canal adecuado de comunicacion y entendimiento entre los heavyweights y los gerentes senior. Creemos tambien que Lilly debe incrementar su gasto en investigacion y desarrollo acorde a las tendencias de la industria farmaceutica a la que pertenece.

    Se deben establecer reuniones periodicas entre los principales directivos y los equipos heavyweights. (Reuniones de avance y actas) Creemos que no se deben de descuidar proyectos, y tratar de asignar adecuadamente los mejores recursos a todas las fases del producto. Es decir no se deben dejar proyectos sin la presencia de equipos heavyweights. Al efectuar la transicion Lilly no debe olvidar que deben encontrar personal experto y capaz y mas experimentando para los proyectos principales, pero tampoco descuidar a los otros proyectos.

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    Eli Lilly: the Evista Project. (2018, May 05). Retrieved from

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