Lilly: A Flowering of Diabetes Drugs


In the treatment of diabetes, no U.S. corporation has had a longer or more important role than Eli Lilly (LLY). The Indianapolis-based drugmaker was the first to market insulin, in 1923. Sixty years later, it introduced the first bioengineered insulin derived from humans. Even today, 4 of its top 10 drugs are diabetes products, with Humulin and Humalog -- its two lab-synthesized human insulins -- each on track to top $1 billion in annual sales.

Yet, since its launch of Prozac in 1988, Lilly has a acquired a reputation for making drugs to treat depression and other mental illnesses. Indeed, Zyprexa, a pill for schizophrenia and bipolar disorder, accounted for a third of Lilly's $13.86 billion in sales in 2004.

GROWING RANKS OF DIABETICS. But as more than 13,500 researchers and doctors get ready for the start of the American Diabetes Assn.'s annual scientific sessions on June 10 in San Diego, Lilly may again raise its profile in the diabetes arena. In April, it and partner Amylin Pharmaceuticals (AMLN) received U.S. Food & Drug Administration approval to begin marketing Byetta, a twice-a-day shot to control blood-sugar levels.

Later this year, Lilly expects to seek FDA permission to introduce another first in a new class of drugs, Arxxant. The medication alleviates complications arising from diabetes, including severe pain. At the four-day ADA meetings, Lilly researchers will report on a pilot study showing that Arxxant also appears to work in treating diabetic kidney disease. In addition, the drug is being tested for diabetes-related blindness.

Along with Cambridge (Mass.) drug-delivery outfit Alkermes (ALKS), Lilly has also started early-stage research on an inhaled insulin. The product could appear on the market by the end of the decade.

Lilly's new efforts in diabetes treatment could hardly come at better time. An estimated 18 million people in the U.S. -- or 1 out of 16 -- have diabetes. And their adult ranks are growing by 1.3 million a year, due in part to the nation's obesity epidemic. As he prepared to send Lilly's team to the ADA conference, Chairman and Chief Executive Sidney Taurel spoke with BusinessWeek Senior Correspondent Michael Arndt. Edited excerpts follows:

Q: Please update me on your latest diabetes drugs.

A: Type II diabetes is caused by two drivers. One is insulin resistance. Actos, a drug we introduced in 1999 with Takeda Pharmaceutical, works on that. The other cause is beta-cell dysfunction. Byetta addresses this.

What makes Byetta exciting is that it's what I would call a smart drug. It's in a new class of products called "incretin mimetics." It helps to reduce blood glucose and helps the body produce more insulin in the presence of high blood glucose. In other words, it works only when needed.

Q: What about Arxxant?

A: The first indications we're working on are the symptoms of diabetic nerve disease. It can be a debilitating condition that manifests itself in sharp pain in the hands and feet. We're working with Arxxant on all of the complications of diabetes. We're testing it, for instance, for diabetic retinopathy, which is the leading cause of blindness in adults. It's one of the worst consequences of diabetes.

Q: How does the drug work?

A: The drug is called a PKC inhibitor, and it works like some of these newer therapies for the treatment of cancer by anti-angiogenesis. It basically starves the tissue. Retinopathy is the multiplication of small blood vessels in the retina, which can hemorrhage and cause blindness. We're basically preventing blood from going to the small vessels that cause retinopathy.

Q: Lilly has had some big-selling diabetes products in the past. Are these new ones likely to be as big?

A: I don't want to make sales forecasts, but, for Byetta, we're talking about a very important drug. Diabetes is a progressive disease. Eventually, a lot of people end up having to take insulin. We see Byetta as being used prior to getting to insulin.

Of the people getting treated for diabetes today, 6 million are taking oral products. We know that two-thirds of patients on oral therapy fail to meet the target level for good control of blood glucose. So, two-thirds of those 6 million are the target patients for Byetta. And in the future, we think we're going to be able to show also that it works with another 2 million to 3 million patients.

As for Arxxant, a lot of people who have diabetes end up with complications. This is 60% to 70% of the total cost of the disease. That product, if it fulfills its promise in terms of efficacy and safety in all these long-term complications, has blockbuster potential.

Q: Lilly has an 80-year history with diabetes. But lately Lilly's focus has seemed elsewhere.

A: We're heard of less in diabetes because there were not a lot of spectacular new product launches. But our commitment to diabetes has been there all along. We're seen in the world of diabetes as, if not the top experts, one of the top two or three. Therefore, we're very attractive to companies that want a partner. That's what brought Amylin and Takeda to us.

Q: Still, Lilly's recent products in diabetes have been drugs developed via joint ventures with other companies, rather than products that came out of Lilly's own labs. Does this speak to the discovery power of biotech firms? Or does it speak to the weakness of Lilly and Big Pharma?

A: A little bit of both. But look at our total record of new product launches. Since 2001, we've had approval for nine drugs in the U.S. or Europe. Of those, only Byetta and Cialis, for erectile dysfunction, were not from Lilly's own research. We probably have more coming from the inside than our competitors.

We also have enjoyed an increase in our productivity. We had seven products in the whole decade before this. And we had seven products also in the 1980s. For the industry as a whole, there has been a 40% decline in new drug approval in the last five years vs. the previous five years. And we continue to have a very good pipeline.


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