Gilding Lilly - Pharmaceutical Executive


Gilding Lilly
As the company marches toward its patent cliff, CEO John Lechleiter has a bold new plan to save it. But it's going to take more than ImClone to restore Lilly to its former glory. Does Lechleiter have what it takes?

Pharmaceutical Executive

Taking a Stand

After stepping up as CEO, Lechleiter invited all his employees to an open house in Lilly's plush executive suites. As it turns out, it was a last look of sorts. He soon tore them down and remodeled the space to make them less austere, more inviting—but not so comfortable that the people in charge stayed there.

Lechleiter, according to people who know him, is happiest rolling up his sleeves and walking the factory floors or visiting labs. When shown plans for a big capital project, he wants to put on a hard hat and inspect the site. He challenges employees to e-mail him their questions about Lilly or the pharmaceutical industry, and then answers them in regular updates to the company's blog.

"Lechleiter is a man of the people, who sits in the cafeteria, and can talk with the janitor," says Clifford Kalb.

Lechleiter sees that as an important part of his job. "Part of it is the way I learn," he says. "But part of it is that I think leaders need to be visible, especially in challenging times. Leaders need to communicate directly with people. It's important to have a sense of the character of this guy or gal. Not just what he says in press releases or what precepts have come down from on high, but what's he like? Does he know what he's doing? Does he care about us? Can we trust him?"

Lechleiter also tackles the trust issue on an industry level. Lilly was the first company to commit to publicly disclosing its clinical trials, CME grants, and other educational contributions. Recently, Lechleiter announced it would also disclose payments to physicians in a public registry beginning in 2009, in advance of the passage of the Physician Payments Sunshine Act. The registry will initially list speakers and advisors to the company. By 2011, it will reflect the gifts or payments to physicians.

When asked what it's been like to stick his neck out on these issues, while peers have remained quiet, Lechleiter admits it's "a little scary." But, he says, "It's an important part of restoring trust in our industry. People want to know that this is all out in the open, and that physicians make choices that are best for the patients, not because Lilly is paying them. We're going to get mystery cleared away because we have nothing to hide."

The next issue to tackle is patient safety—but don't look for simple solutions. "We don't have a magic formula for addressing this," says Lechleiter. "I do think that as we get more sophisticated in postmarketing surveillance, including using some of the big databases to get real-time feedback on how our medicines are being used, I see a world in which the knowledge base around any marketed product will continue to grow. But we've got to make that intelligible and accessible for physicians and consumers. That will put people more at ease, because they'll know we're not hiding anything and they can feel assured in taking this medicine; that it is the right thing for them, and that their physician clearly understands what Lilly knows about this drug."

Some say all this public positioning on industry topics is just a distraction from what should be the company's main focus: finding and making drugs. But it's hard to ignore the growing importance of the interplay today between politics, broadly conceived, and pharma.

"At the end of the day," says Oliver Wyman's Jim Hall, "If I'm an investor, I'd have a different view of Lilly with his leadership and long-term vision than [with] someone else who is making short term change."

Of course, Lechleiter's reputation is not without its blemishes. A 2003 e-mail disclosed as part of ongoing litigation over Zyprexa makes it appear that Lechleiter encouraged promotion of Zyprexa for an unapproved use. (A company spokesperson told reporters that he was simply encouraging the company to respond to physician inquiries.) Still, his background in science and ability to bring people along seem to have outweighed any role he might have taken in the case—at least in the court of public opinion.

"He reminds me of Roy Vagelos, who also came out of R&D" says Kalb. "That was a time in Merck's history when people felt aligned with and closer to the company."

Others say his grasp of the new paradigm of customer-focused pharma is what's truly impressive. "He could be the next [Procter & Gamble CEO and chairman] A.G. Lafley," says Jean-Claude Larreche, a professor at the international business school INSEAD and author of The Momentum Effect: How to Ignite Exceptional Growth. "If you look at his speeches, you see a CEO that talks about the customer with some meat."

Kind words are all well and good, but is Lechleiter's grand plan grand enough? "Lilly would have been well served if it started to move down this path earlier, or even last year," says Fernandez. "In my opinion, he is more of an evolutionary thinker, and Lilly's strategic challenges require revolutionary action. It may be, unfortunately, a little too late."

Still, for some, the risks Lechleiter is taking are even bigger than Lilly's—and when he steps up to chairman in December, he has the potential to go, perhaps, even further. "Pharma has really struggled with the new generation of leaders," says Hall. "After Fred Hassan and Christine Poon, who will emerge and take the lead on redesigning the industry? I believe John is one of those people. He has a very clear vision; he's a scientist so he is going to experiment with a few things and some will work and some won't. But his idea is that some things really need to change, and he is going to provide leadership beyond Lilly if he does it right."


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