ELI LILY and Company

(Manufacturing Strategy)

Submitted by:
27NMP22 Mukesh Kumar Sahu
27NMP43 Amit Gujjewar
27NMP51 Komal Tagra

Company Introduction
Founded in 1876
Second largest Pharmaceutical concern in the US

and 8th largest in the world

Serves in Pharmaceutical products, medical
services and diagnostic and animal products
Manufacture and distribute its products in 25
countries
Sell products in 120 countries
Main Competitor1. American Firms- Bristol Myers-Squibb, American
Home Products, Johnson and Johnson, and Pfizer.
2. Non American Firms-Ciba-Geigy, Hoechst,
Glaxo, Bayer, and SmithKline-Beecham

Industry Trends(in the

1980s)
Globalization
Difference in the national healthcare market

diminished
Increasing complexity in Government
approval and testing procedure
Slower rates of innovation
Government involvement
More Government intervention
Higher standards of environmental and

product safety
Shorter product life cycle
Intense competition

Existing Product Development Cycle

CREATION OF PHARMACEUTICAL
PRODUCTS
Discovery of chemical compound.
Analysis of chemicals required
Experimental tests conducted on animals
3 phase of clinical trials on humans:
Phase1 : Trials tested whether the drug was safe

for humans at recommended dosages levels

Phase 2: Demonstration of whether the drug
actually worked for the application claimed for it.
Phase 3: Simultaneous testing of safety and
efficacy of the drug in larger patient populations
than the first two phases
Filing of NDA with the United States FDA

PROCESS DEVELOPMENT &

RESEARCH FOR INGREDIENT
Determination of the sequence of chemical

reactions required to synthesize the

particular compound
Clinical trials in laboratories
Clinical trial in Pilot plant
Refining of process and yield for large scale
commercial manufacturing environment
Transfer to one of the companys bulk
chemical manufacturing sites

Current Strategy
Manufacturings contribution a relatively

lower weight in corporate strategy

Current manufactruing strategy is
+ reactive and
+ lacks coordination among
various plants units
It leads to lost opportunities
So senior manufacturing managers were
attracted to process development and
improvement as a focal point

STRATEGY DEVELOPMENT
(PROCESS TECHNOLOGY)
Plan 1: Increase the investment to improve

the manufacturing processes for successful

products that are already on the market.
Plan 2: Commit to process improvement
for a product (or products) that is not yet
on the market, but which appears
overwhelmingly likely to succeed.
Plan 3: Commit substantial resources to a
selected basket of products, very early in
their development lifecycles.

Product Phases
100
Product Phase
1&2
s
Phase
3

Fail in
Phase 3

25Produ
cts

5
Product
s

75Produ
cts
Fail in Phase
1& 2

20
Product
s
In
market

Analysis

Micros oft Office

Excel Works heet

Micros oft Office

Excel Works heet

Analysis Plan 1
Regular process cost=

$.58Mn
After launch process cost= $1.16Mn
(As process improvement is done after product is
successful in the market)
Only 20% of the product that enter are
launched in the market.

Analysis Plan 2
Cost of Process Improvement in Phase 3=

$1.16Mn
After launch Process Cost=
$.58Mn
20% of the products that enter Phase 3 are
launched in the market.

Analysis Plan 3
Process Improvement Cost in Phase 1=

$1.60Mn
Process Improvement Cost in Phase 2=
$1.60Mn
Process Improvement Cost in Phase 3=
$1.16Mn
After launch process cost=
$.58Mn

Per unit costs decreases by implementing any of the

three plans

Thank You!