WEBVTT - How Eli Lilly Got Huge by Making Us Thin 0:00:01.040 --> 0:00:05.720 How Eli Lilly got huge by making us thin. Dave 0:00:05.800 --> 0:00:07.960 Rix steered the one hundred and fifty year old drug 0:00:08.000 --> 0:00:11.360 giant to a one trillion dollar market cap. Can he 0:00:11.440 --> 0:00:15.320 defeat Pharmer's Boom and Bust cycle? By Madison, Muller and 0:00:15.360 --> 0:00:21.080 brad Stone Read aloud by Mark Leedorf. When Dave Rix 0:00:21.120 --> 0:00:24.560 became chief executive officer of Eli Lilly in twenty seventeen, 0:00:24.960 --> 0:00:28.960 he was facing an industry under siege. Americans held drug 0:00:29.000 --> 0:00:32.280 companies in lower esteem than airlines, law firms, and even 0:00:32.320 --> 0:00:36.840 the federal government. President Donald Trump, then starting his first term, 0:00:37.240 --> 0:00:40.760 was excoriating them for their high prices. A mounting number 0:00:40.760 --> 0:00:43.760 of reports showed that soaring costs were even forcing some 0:00:43.880 --> 0:00:44.960 diabetics to ration. 0:00:45.120 --> 0:00:48.080 Insulin. Rix, the eleventh. 0:00:47.680 --> 0:00:51.080 CEO in Lily's one hundred and fifty year history, concedes 0:00:51.200 --> 0:00:55.480 that one was a public relations nightmare. Eventually it became personal. 0:00:55.880 --> 0:00:58.160 One day, he received a letter from a young boy 0:00:58.360 --> 0:01:00.640 detailing the links to which his mother was going to 0:01:00.680 --> 0:01:05.160 a Ford insulin. Similar messages piled in from others. Rix 0:01:05.240 --> 0:01:07.800 says he read almost all of them, and about ninety 0:01:07.840 --> 0:01:11.760 percent accused Lily of price gouging patients. I couldn't sit 0:01:11.800 --> 0:01:15.119 there and accept it. He recalls, it was a major problem. 0:01:15.560 --> 0:01:19.240 Almost a decade later, the mood that Lily has shifted dramatically. 0:01:19.760 --> 0:01:24.240 The company's hit diabetes shot Mountjaro and obesity shot Zepbound 0:01:24.560 --> 0:01:28.640 have transformed its fortunes and in many ways, its public image. 0:01:28.720 --> 0:01:32.080 Lily is the most valuable healthcare corporation in the world, 0:01:32.319 --> 0:01:35.360 joining only a dozen or so other companies, mostly in tech, 0:01:35.680 --> 0:01:39.679 that have reached a one trillion dollar market capitalization. Rix, 0:01:39.920 --> 0:01:43.840 formerly just another embattled pharmaceutical executive in Washington, is a 0:01:43.880 --> 0:01:47.199 frequent White House ally who helped persuade the Trump administration 0:01:47.360 --> 0:01:51.360 to expand Medicare coverage for obesity drugs. Even the mail 0:01:51.480 --> 0:01:55.280 is better these days. Patients send him rapturous testimonials of 0:01:55.280 --> 0:01:58.120 their weight loss success, complete with before. 0:01:57.840 --> 0:01:58.840 And after photos. 0:01:59.800 --> 0:02:02.720 Two year old correspondent told Rix that his daughter said 0:02:02.760 --> 0:02:06.760 he'd almost certainly die before sixty. Then he started Mountjaro 0:02:06.920 --> 0:02:10.359 and shed more than two hundred pounds in eighteen months. 0:02:10.480 --> 0:02:12.640 His only wish was to go to his daughter's wedding, 0:02:12.800 --> 0:02:15.680 Rix says, and he was like, now I can do it. 0:02:16.760 --> 0:02:20.240 Millions of patients all over the world are taking Manjaro, zepbound, 0:02:20.480 --> 0:02:23.840 and other glp ie receptor agonists made by Lilly and 0:02:23.880 --> 0:02:29.240 its long time rival, Denmark based Novo Nordisk. These revolutionary drugs, 0:02:29.600 --> 0:02:32.880 the acronym stands for a glucagon like peptide on a 0:02:32.960 --> 0:02:36.080 gut hormone the medicines are designed to mimic, have surged 0:02:36.120 --> 0:02:39.359 in popularity thanks to their ability to suppress people's appetites 0:02:39.639 --> 0:02:44.160 and melt away stubborn pounds. Available first as injections and 0:02:44.200 --> 0:02:47.920 then also as oral medications, glp ones are beginning to 0:02:47.960 --> 0:02:51.920 turn the tide on the US obesity epidemic, an unfathomable 0:02:51.960 --> 0:02:55.400 outcome a few years ago. Now, their efficacy is being 0:02:55.400 --> 0:02:59.240 studied for other potentially deadly conditions, including heart disease and 0:02:59.280 --> 0:03:04.040 drug addiction, with promising results. Investors can't get enough of 0:03:04.080 --> 0:03:07.919 Lily's drugs. Since Mountjaro was approved in May twenty twenty two, 0:03:08.280 --> 0:03:11.440 It has passed mrk's cancer blockbuster key Truda as the 0:03:11.440 --> 0:03:15.440 world's best selling medication, helping bump Lily's stock nearly three 0:03:15.560 --> 0:03:20.200 hundred percent. Zetbound is the planet's most popular obesity medicine, 0:03:20.240 --> 0:03:21.679 despite being released only. 0:03:21.480 --> 0:03:22.320 Two years ago. 0:03:22.880 --> 0:03:26.560 Rix says Lily is shipping seven Zetbound injections every second. 0:03:27.280 --> 0:03:30.600 Found Dio, a daily pill introduced in April that also 0:03:30.639 --> 0:03:33.680 helps patients lose weight, has already racked up about eighty 0:03:33.760 --> 0:03:37.600 nine thousand prescriptions, according to analysts, even though the company 0:03:37.640 --> 0:03:39.560 only recently started advertising it. 0:03:40.240 --> 0:03:41.240 People are also. 0:03:41.160 --> 0:03:44.280 Clamoring to get their hands on reta truetide, a next 0:03:44.360 --> 0:03:48.640 generation compound Lily has in testing. That drug, which mimics 0:03:48.640 --> 0:03:51.920 three different hormones versus two for Zepbound and one for 0:03:52.000 --> 0:03:55.720 Novo's Wegovi, yielded average weight loss of twenty eight percent 0:03:55.840 --> 0:03:59.240 across eighteen months in a late stage trial, a decline 0:03:59.280 --> 0:04:03.720 previously thought possible only through gastric bypass surgery, and Lily 0:04:03.800 --> 0:04:05.480 has more obesity drugs coming. 0:04:06.080 --> 0:04:07.080 We basically put a. 0:04:07.120 --> 0:04:10.320 Bet on every rational idea and said we should be 0:04:10.360 --> 0:04:14.840 first or best on every conceivable concept. Rick says, Behind 0:04:14.840 --> 0:04:18.640 the Blockbusters is a company that's been remade by Rix's personality, 0:04:19.000 --> 0:04:22.359 with speed the top priority and mistakes not an option. 0:04:23.000 --> 0:04:28.119 He's resolved widespread supply shortages, supercharged research and development, poured 0:04:28.160 --> 0:04:32.400 billions of dollars into manufacturing and artificial intelligence, and pioneered 0:04:32.520 --> 0:04:37.159 direct to consumer strategies, including launching Lily Direct, an online 0:04:37.200 --> 0:04:40.760 platform where patients can connect with doctors and get obesity drugs. 0:04:41.480 --> 0:04:44.960 These moves have helped Lily capitalize on the obesity boom 0:04:45.000 --> 0:04:48.559 in ways its peers have struggled to match Novo, whose 0:04:48.560 --> 0:04:52.360 diabetes drug Ozepic created the modern weight loss Frenzy has 0:04:52.400 --> 0:04:57.720 stumbled amid US pricing pressures, lagging insurance coverage, intensifying competition, 0:04:57.839 --> 0:05:01.880 and especially by assuming its early life would hold. Lily 0:05:02.000 --> 0:05:04.520 is just playing at a completely different game level than 0:05:04.600 --> 0:05:08.680 any other pharmaceutical company, says Wiley Shao, who spent eighteen 0:05:08.760 --> 0:05:11.279 years at Lily and is now president of virtual care 0:05:11.320 --> 0:05:15.520 platform provider Omada Health. The test for Rix now is 0:05:15.600 --> 0:05:19.440 whether Lily can outlast the industry's familiar boom and bust cycle. 0:05:19.960 --> 0:05:23.320 Although drug patents last about two decades, they are typically 0:05:23.400 --> 0:05:27.200 granted years in advance of US Food and Drug Administration approval, 0:05:27.520 --> 0:05:29.640 so companies don't get that much time to reap a 0:05:29.680 --> 0:05:34.159 profit before cheaper generics begin to erode sales. Roughly half 0:05:34.200 --> 0:05:37.600 of Lily's revenue last year came from Manjaro and zepbound, 0:05:37.760 --> 0:05:41.600 a precarious dependency for any drug company. While Lily has 0:05:41.640 --> 0:05:44.479 about a decade of patent protection left on those drugs. 0:05:44.800 --> 0:05:49.040 The competition is already intensifying. Hundreds of thousands of people 0:05:49.040 --> 0:05:52.200 are taking Novo's new wigov pill, and at least one 0:05:52.279 --> 0:05:55.560 hundred and twenty companies, a third of them in China collectively, 0:05:55.560 --> 0:05:59.400 have hundreds of such drugs in development, according to Bloomberg Intelligence. 0:06:00.080 --> 0:06:02.640 The rapid rise of AI has also introduced a new 0:06:02.640 --> 0:06:06.160 threat that the next big drug will come from Silicon Valley, 0:06:06.560 --> 0:06:10.239 and Lily has some internal challenges too, with insiders saying 0:06:10.279 --> 0:06:13.320 it's newly hard driving corporate culture has led to high 0:06:13.360 --> 0:06:15.320 executive turnover and poor morale. 0:06:16.400 --> 0:06:17.600 Rix is undeterred. 0:06:18.080 --> 0:06:20.720 Now in his tenth year as CEO, he says he 0:06:20.760 --> 0:06:23.880 wants to imbue Eli Lilly with the consistency and dominance 0:06:23.920 --> 0:06:27.480 of technology giants such as Apple and Amazon. In addition 0:06:27.520 --> 0:06:30.359 to flooding Lily's pipeline with new treatments, He's got the 0:06:30.360 --> 0:06:34.200 company on an unprecedented acquisition spree and in a ubiquitous 0:06:34.240 --> 0:06:38.040 advertising campaign that seeks to inspire Nike like brand fidelity. 0:06:38.839 --> 0:06:41.480 If you look at healthcare, most people would say it is, 0:06:41.880 --> 0:06:45.760 perhaps next to government services, the worst consumer experience they 0:06:45.800 --> 0:06:49.360 have every day, Rick says, But he adds there are 0:06:49.400 --> 0:06:51.960 a bunch of people posting on Reddit. When their package 0:06:52.040 --> 0:06:54.800 arrives from Lily at their door, they unwrap it, they 0:06:54.839 --> 0:06:56.040 make a video of it. 0:06:56.040 --> 0:06:58.520 It's like an iPhone. It's an exciting moment. 0:06:59.680 --> 0:07:03.039 In eighteen seventy six, a former Union Army colonel named 0:07:03.080 --> 0:07:07.479 Eli Lilly opened a small laboratory on Pearl Street in Indianapolis. 0:07:07.960 --> 0:07:10.960 He wanted to improve on the eras patent medicines and 0:07:11.080 --> 0:07:15.240 counter snake oil salesmen by making quality products patients could trust. 0:07:15.840 --> 0:07:19.760 It took some time. Early medications such as succus alteran 0:07:20.080 --> 0:07:23.360 marketed as a blood purifier for syphilis, and other ailments, 0:07:23.600 --> 0:07:27.480 were themselves little more than quackery, but Lily eventually found 0:07:27.520 --> 0:07:31.560 success selling pills coated in gelatine, a major improvement on 0:07:31.600 --> 0:07:35.559 the putrid medicinal liquids and powders patients commonly choked down. 0:07:36.320 --> 0:07:39.200 Over the following one hundred and fifty years, Lily grew 0:07:39.280 --> 0:07:42.360 from that tiny two story brick building into a powerhouse 0:07:42.400 --> 0:07:46.560 with roughly fifty thousand employees around the world today. Its 0:07:46.600 --> 0:07:50.720 Indianapolis headquarters, a mile north of the original operation, is 0:07:50.760 --> 0:07:54.000 so large it has its own zip code. In that time, 0:07:54.080 --> 0:07:56.960 it's been at the forefront of addressing America's most pressing 0:07:57.000 --> 0:08:03.280 ailments and anxieties diabetes, polio, depression, erectile dysfunction, COVID nineteen, 0:08:03.760 --> 0:08:07.880 and now obesity. In the early two thousands, Lily learned 0:08:07.880 --> 0:08:09.600 what it was like to have the profits from an 0:08:09.680 --> 0:08:14.800 enormously popular drug, vanish virtually overnight Prozac, approved as a 0:08:14.840 --> 0:08:17.960 breakthrough treatment for depression in nineteen eighty seven, by then 0:08:18.040 --> 0:08:21.280 accounted for about a quarter of the company's sales, prescribed 0:08:21.280 --> 0:08:24.680 to tens of millions of patients. Executives tried to plan 0:08:24.760 --> 0:08:26.760 for the loss of crucial patents for the drug in 0:08:26.800 --> 0:08:30.520 two thousand and one, focusing heavily on mental health, cancer, 0:08:30.600 --> 0:08:34.400 and diabetes. But although Lily's research led to the development 0:08:34.440 --> 0:08:37.680 of glp ie drugs for diabetes, the company failed to 0:08:37.679 --> 0:08:40.200 find a replacement hit at the time, and in the 0:08:40.240 --> 0:08:43.760 process it ignored some early research showing how GLP one's 0:08:43.880 --> 0:08:47.600 might help with obesity. By two thousand and eight, Lily 0:08:47.640 --> 0:08:49.760 had lost a third of its revenue since the turn 0:08:49.800 --> 0:08:52.160 of the century and had seen an even bigger drop 0:08:52.200 --> 0:08:55.400 in profits. It was forced to undertake a massive cost 0:08:55.400 --> 0:08:59.160 cutting effort that eliminated fifty five hundred jobs, roughly fourteen 0:08:59.200 --> 0:09:02.120 percent of its workfe From two thousand and five to 0:09:02.120 --> 0:09:04.920 two thousand and nine, the company got only two new 0:09:05.000 --> 0:09:08.640 drugs approved, a blood thinner called Effiant and a diabetes 0:09:08.679 --> 0:09:13.120 treatment called Bayeta. Novo Nordisk, in contrast, was moving on 0:09:13.200 --> 0:09:16.800 GLP one's for weight loss by twenty thirteen, when the 0:09:16.800 --> 0:09:20.920 American Medical Association declared obesity a chronic disease and not 0:09:21.040 --> 0:09:24.040 the result of weak will power or bad lifestyle choices, 0:09:24.400 --> 0:09:28.240 it was ready. The next year, Novo got approval for Saxinda, 0:09:28.640 --> 0:09:31.120 the first GLP one drug cleared for weight. 0:09:30.960 --> 0:09:31.960 Loss in the US. 0:09:32.800 --> 0:09:36.040 Those were formative years for Rix, who joined Lily as 0:09:36.080 --> 0:09:39.439 a business development associate in nineteen ninety six after growing 0:09:39.480 --> 0:09:42.439 up in the San Francisco Bay area and studying industrial 0:09:42.480 --> 0:09:46.960 management at Purdue University. He ascended the ranks managing Lily's 0:09:46.960 --> 0:09:50.040 businesses in Canada and China before returning to oversee the 0:09:50.040 --> 0:09:53.800 company's most important market. Along the way, he developed a 0:09:53.840 --> 0:09:57.560 reputation as an uncompromising manager with an aversion to the 0:09:57.679 --> 0:10:02.080 Lily nice culture of harmonious colors. Aberation shortly after Rix 0:10:02.200 --> 0:10:05.640 joined the executive committee. He remembers he asked then CEO 0:10:05.800 --> 0:10:09.880 John Lechlider for some constructive feedback. You have an over 0:10:09.920 --> 0:10:13.679 developed sense of urgency, lack Lighter told him, you mean 0:10:13.720 --> 0:10:17.960 I'm impatient. Rix replied, He's like, yeah, sometimes it gets 0:10:18.000 --> 0:10:22.360 you in trouble. I'm like, okay, some trouble's good. In 0:10:22.440 --> 0:10:26.719 July twenty sixteen, Lily announced Rix would become CEO. At 0:10:26.720 --> 0:10:29.120 the time, it took an average of thirteen to fourteen 0:10:29.200 --> 0:10:31.720 years for a promising medication to make it through the 0:10:31.720 --> 0:10:36.040 company's test labs to an FDA approval decision. Dan Skovronsky, 0:10:36.280 --> 0:10:39.680 Lily's chief scientific and product officer, says he remembers the 0:10:39.679 --> 0:10:43.320 speech Rix gave when he started as CEO, especially the 0:10:43.360 --> 0:10:46.720 priority on speed. It's not just about getting to the 0:10:46.760 --> 0:10:49.280 patients faster. Of course, we care a lot about that 0:10:49.800 --> 0:10:53.719 or beating your competitors, Skovronsky says, summing up the message, 0:10:54.040 --> 0:10:56.640 it's also such a tough business that you need to learn, 0:10:56.679 --> 0:11:00.000 and you can learn faster if you move faster. That year, 0:11:00.280 --> 0:11:03.920 Novo published impressive results from a weekly GLP one shot 0:11:04.000 --> 0:11:07.720 that went on to become ozimpic under Rix, Lily needed 0:11:07.760 --> 0:11:10.680 to come up with something better. He turned to Skovronsky, 0:11:10.840 --> 0:11:14.520 a physician, neuroscientist, and entrepreneur who joined the company after 0:11:14.559 --> 0:11:18.120 it acquired his startup, Avid Radio Pharmaceuticals in twenty ten. 0:11:18.960 --> 0:11:22.960 Lily scientists had been experimenting with combinations of GLP one's 0:11:23.000 --> 0:11:25.840 and other gut hormones, which had the potential to be 0:11:25.880 --> 0:11:29.640 more powerful than GLP one's alone. That research led to 0:11:29.720 --> 0:11:33.080 early stage testing of several different compounds, one of which 0:11:33.120 --> 0:11:37.319 stood out to Skovronsky ter zeppetide. In just a month, 0:11:37.480 --> 0:11:40.520 healthy volunteers who took the drug lost from three percent 0:11:40.559 --> 0:11:43.520 to five percent of their body weight. We said, this 0:11:43.720 --> 0:11:46.439 is working, he recalls, this is really going to be 0:11:46.480 --> 0:11:50.840 a special medicine. At Rix's direction, Skovronsky was also working 0:11:50.880 --> 0:11:54.199 on an initiative to cut Lily's development timeline in half. 0:11:54.800 --> 0:11:57.640 We tried to reinvent every step of the drug development 0:11:57.720 --> 0:12:02.400 process with an eye on Speedsky says. Terzepetide was the 0:12:02.480 --> 0:12:05.960 first molecule that got the full speed treatment. He turned 0:12:06.000 --> 0:12:08.800 the R and D department into a pseudo biotech startup, 0:12:09.120 --> 0:12:12.120 calling the group gip Bio in reference to one of 0:12:12.120 --> 0:12:15.239 the hormones, the drug mimics, and freeing it from bureaucratic 0:12:15.280 --> 0:12:19.480 requirements such as commercial viability assessments. We were hungry to 0:12:19.520 --> 0:12:22.160 prove ourselves, Skovronsky said at an R and d D 0:12:22.160 --> 0:12:27.319 eight years later. Terzepetide won FDA approval in twenty twenty two, 0:12:27.480 --> 0:12:31.080 roughly five years after Rix and Skovronsky decided to expedite it. 0:12:31.600 --> 0:12:34.320 Lily had been so optimistic about the drug, which would 0:12:34.360 --> 0:12:37.199 be branded as mount Jaro, that it had started looking 0:12:37.200 --> 0:12:40.719 at manufacturing sites nearly four years before the approval came 0:12:40.760 --> 0:12:44.120 through a step it had never taken before. Rix was 0:12:44.160 --> 0:12:47.240 determined to catch up to Novo. We're not going to 0:12:47.280 --> 0:12:51.360 lose because someone leapfrogged us, he remembers thinking. By the 0:12:51.400 --> 0:12:54.280 time zep bound was approved in late twenty twenty three, 0:12:54.640 --> 0:12:58.079 GLP one hype was at a fever pitch. Patients were 0:12:58.120 --> 0:13:01.360 documenting their weight loss journeys on tik talk and swapping 0:13:01.400 --> 0:13:04.720 tips for managing side effects on Reddit, but Novo was 0:13:04.720 --> 0:13:08.760 struggling to manufacture enough semiglutide, the active ingredient in nozepic, 0:13:08.800 --> 0:13:12.920 and Wigovy. Seeking an edge, Lily priced zetbound about twenty 0:13:12.960 --> 0:13:17.320 percent cheaper than wegovy. It also introduced Lily Direct, whose 0:13:17.400 --> 0:13:21.439 launch had been closely managed by Rix himself. There, patients 0:13:21.440 --> 0:13:23.840 could connect online with doctors to get a weight loss 0:13:23.880 --> 0:13:27.640 drug prescription and pay directly if their insurance didn't cover it, as. 0:13:27.679 --> 0:13:28.480 Was often the case. 0:13:29.280 --> 0:13:32.080 The site was janky at first, but today fifty five 0:13:32.120 --> 0:13:35.360 percent of new zetbound patients are buying through Lily Direct. 0:13:36.240 --> 0:13:39.559 Demand quickly spiraled out of control for Lily, however, as 0:13:39.600 --> 0:13:43.040 it had for Novo. Within months, patients across the US 0:13:43.080 --> 0:13:47.280 were clamoring to find zetbound in stock at local pharmacies. Frantic, 0:13:47.520 --> 0:13:51.679 some railed against both companies on social media. Many turned 0:13:51.720 --> 0:13:55.199 to telehealth providers such as Roe and Hymns and hers Health, 0:13:55.600 --> 0:13:58.760 which were selling cheaper, copycat versions of the drugs, something 0:13:58.760 --> 0:14:02.280 that's allowed when medicines are in short supply. Rix pushed 0:14:02.280 --> 0:14:05.520 his staff to get the situation under control, pouring billions 0:14:05.559 --> 0:14:10.280 into Lily's manufacturing sites in Indiana, North Carolina, Wisconsin, Ireland, 0:14:10.280 --> 0:14:13.880 and Germany. Our workers come every hour of every day 0:14:13.920 --> 0:14:16.400 to every plant in the world to make more twenty 0:14:16.440 --> 0:14:20.440 four to seven three sixty five overtime weekends holidays. Rix 0:14:20.440 --> 0:14:24.160 told Bloomberg BusinessWeek in twenty twenty four. We're operating above 0:14:24.200 --> 0:14:29.000 the theoretical capacity of those sites. Lily's bottlenecks, unlike Novo's, 0:14:29.120 --> 0:14:32.320 stemmed not from an ingredient shortage, but from the complexity 0:14:32.320 --> 0:14:35.480 of its plastic injector pins. The company found a work 0:14:35.480 --> 0:14:38.400 around by instead offering the drug in a small, single 0:14:38.520 --> 0:14:41.920 use vial. This required customers to fill a syringe and 0:14:42.040 --> 0:14:45.720 inject the drug themselves, but such was Zepbound's promise that 0:14:45.800 --> 0:14:50.840 most overcame any squeamishness. Novo, lacking an immediate solution, was 0:14:50.840 --> 0:14:53.680 forced to limit the sale of introductory with govy doses. 0:14:54.240 --> 0:14:56.400 You cannot make it hard for your customers to get 0:14:56.440 --> 0:14:59.400 your product, especially if there's an alternative that may even 0:14:59.400 --> 0:15:02.760 be a little better better, says BMO Capital Markets analyst 0:15:02.800 --> 0:15:08.080 Evan Seigerman. When you do, you permanently change behaviors. Vials 0:15:08.120 --> 0:15:11.560 were also cheaper to produce than pens, so in August 0:15:11.560 --> 0:15:14.760 twenty twenty four, Rix cut the price of zetbound vials 0:15:14.800 --> 0:15:17.640 in half on Lily Direct, the only place that offered 0:15:17.680 --> 0:15:20.280 them at the time. Patients could now buy the drug 0:15:20.320 --> 0:15:22.240 there for as little as three hundred and ninety nine 0:15:22.280 --> 0:15:25.880 dollars a month. Single use zetbound vials quickly became the 0:15:25.920 --> 0:15:29.480 site's best selling product, allowing Lily to capitalize on the 0:15:29.480 --> 0:15:32.360 burgeoning cash pay market in a way that Novo, which 0:15:32.480 --> 0:15:34.840 wasn't selling we Go vi in vials and didn't have 0:15:34.880 --> 0:15:38.480 a direct consumer site, couldn't. It took the Danish company 0:15:38.480 --> 0:15:41.200 an additional seven months to roll out a similarly low 0:15:41.200 --> 0:15:43.800 priced offering and more than a year to start its 0:15:43.840 --> 0:15:46.520 own consumer website, but by then it. 0:15:46.520 --> 0:15:47.160 Was too late. 0:15:47.520 --> 0:15:50.280 With Rix at the helm, Lily had turned the tables, 0:15:50.480 --> 0:15:53.920 surpassing its chief rival in the most economically and culturally 0:15:53.920 --> 0:15:58.480 transformative drug category in recent memory. We'll be right back 0:15:58.520 --> 0:16:02.040 with how Eli Lilly got huge by making us then. 0:16:05.120 --> 0:16:08.680 Welcome back to how Eli Lilly got huge by making 0:16:08.760 --> 0:16:14.160 us then. The opportunity before Lily was vast. Obesity effects 0:16:14.200 --> 0:16:16.800 more than one hundred million people in the US and 0:16:16.880 --> 0:16:21.120 one billion around the world. Many more are considered clinically overweight. 0:16:21.800 --> 0:16:24.680 Countless business empires have been built around the age old 0:16:24.800 --> 0:16:29.240 challenge of helping people shed unwonted pounds and GLP. Ones 0:16:29.360 --> 0:16:32.880 weren't a fad diet or a willpower testing exercise. Regimen, 0:16:33.040 --> 0:16:37.040 but rather a scientifically proven drug with few serious side effects. 0:16:37.520 --> 0:16:40.800 Lily's focus shifted from making enough medicine to putting it 0:16:40.840 --> 0:16:43.800 in the hands of as many patients as possible, including 0:16:43.840 --> 0:16:47.160 those covered by Medicare, and to cultivating a deeper connection 0:16:47.360 --> 0:16:52.120 with their customers. The brand overhaul started with Lena Polimeni, who, 0:16:52.240 --> 0:16:54.680 during a twenty two year career at Lily, had gone 0:16:54.720 --> 0:16:58.360 from peddling medicines to Los Angeles area doctors to serving 0:16:58.400 --> 0:17:01.960 as the company's top marketing excitative. For the campaign she 0:17:02.080 --> 0:17:05.840 was planning, Paulmenni wanted to hire Portland, Oregon based advertising 0:17:05.880 --> 0:17:09.480 firm Widen and Kennedy, best known for its relationship with Nike. 0:17:10.119 --> 0:17:14.040 But such was the poor reputation of drug advertising, characterized 0:17:14.080 --> 0:17:18.600 by euphemistic references to illnesses, blithely smiling patients, and long 0:17:18.680 --> 0:17:23.280 regulatory disclosures encompassing every conceivable side effect that the agency 0:17:23.400 --> 0:17:27.200 rejected Lily I had to reverse pitch them three times. 0:17:27.240 --> 0:17:31.560 Paulmenni says they didn't want to work in pharma. Eventually, 0:17:31.640 --> 0:17:34.480 she persuaded Widen and Kennedy to give Lily a chance, 0:17:34.760 --> 0:17:37.480 and together they produced a short film. During the pandemic 0:17:37.800 --> 0:17:41.359 when the COVID vaccines were making Pfizer and Moderna household names. 0:17:41.960 --> 0:17:44.840 The spot established a friendly new identity for Lily as 0:17:44.880 --> 0:17:49.600 a medicine company. Some of Paulmeni's colleagues, including Rix, still 0:17:49.640 --> 0:17:52.400 needed convincing of the merits of a larger campaign, though 0:17:52.920 --> 0:17:55.080 there were a lot of discussions in terms of whether 0:17:55.119 --> 0:17:58.560 this was the right thing to do. Polmeni recalls Rix 0:17:58.600 --> 0:18:01.880 wanted to make sure the imagery is incorporated doctors and scientists, 0:18:02.240 --> 0:18:05.600 but he eventually gave the green light. When a sponsor 0:18:05.640 --> 0:18:08.159 of the US Olympic team backed out ahead of the 0:18:08.160 --> 0:18:12.399 pandemic delayed Tokyo Summer Games in twenty twenty one, Paulameni 0:18:12.520 --> 0:18:15.639 got her chance to go big. Lily stepped in to 0:18:15.640 --> 0:18:19.040 promote not one of its drug franchises, but the company itself. 0:18:19.520 --> 0:18:23.560 The move was successful enough that its brand advertising became ubiquitous, 0:18:23.720 --> 0:18:28.320 appearing almost anywhere potential patients might be paying attention, the Oscars, 0:18:28.359 --> 0:18:31.520 the super Bowl, the subway. We want people to know 0:18:31.560 --> 0:18:34.640 that we're here for you, Rick says, envisioning a world 0:18:34.680 --> 0:18:38.760 where customers gravitate toward trusted Lily drugs over competing options. 0:18:39.280 --> 0:18:43.480 That's where we're headed. Brand awareness doesn't matter much, though, 0:18:43.680 --> 0:18:46.920 if people can't afford the medicine, and most insurance companies 0:18:46.920 --> 0:18:49.959 are still reluctant to cover GLP ones for weight loss. 0:18:50.520 --> 0:18:53.399 Lily itself switched plans for the first time in ages 0:18:53.520 --> 0:18:57.879 last year after its pharmacy benefit manager, CVS Caremark moved 0:18:57.960 --> 0:19:01.359 zep bound off the plan's list of preferred mesas medications. 0:19:01.280 --> 0:19:03.040 Caermark put it back on this may. 0:19:03.760 --> 0:19:06.840 A not insignificant share of Lily's employees are on a 0:19:06.880 --> 0:19:10.520 GLP one, Rick says, a fact underscored by the medical 0:19:10.560 --> 0:19:13.520 waste containers full of used zep bound and Mount Jaro 0:19:13.640 --> 0:19:18.000 pens in its campus bathrooms. Although obesity is a chronic disease, 0:19:18.359 --> 0:19:21.440 half of the people don't have access or coverage forgetting treatment, 0:19:21.720 --> 0:19:25.360 says Iliya Yufa, who oversees Lily's US business and has, 0:19:25.640 --> 0:19:28.679 like Rix, been with the company for thirty years. The 0:19:28.760 --> 0:19:32.800 access gap traditionally extended to Medicare, which until recently was 0:19:32.880 --> 0:19:36.280 legally barred from covering drugs used solely for weight loss. 0:19:36.840 --> 0:19:40.520 As for Medicaid, it's allowed, but expensive. The cost is 0:19:40.560 --> 0:19:44.160 prohibitive enough that only thirteen US states currently cover weight 0:19:44.200 --> 0:19:47.760 loss drugs, and some of the largest, including California, have 0:19:47.840 --> 0:19:51.359 stopped doing so for that reason. During his most recent 0:19:51.440 --> 0:19:55.359 presidential campaign, Trump promised to go after drug companies that 0:19:55.440 --> 0:19:58.320 charge more for the same medications in America than in 0:19:58.359 --> 0:20:02.560 other wealthy nations. After Trump won, Rix, who has personally 0:20:02.600 --> 0:20:06.679 donated primarily two Republicans, started appearing on Fox News for 0:20:06.720 --> 0:20:10.040 the first time in years and made frequent trips to Washington. 0:20:10.720 --> 0:20:13.919 With the President also pushing American companies to invest in 0:20:13.960 --> 0:20:17.919 domestic manufacturing, Lily announced it would spend twenty seven billion 0:20:18.000 --> 0:20:21.640 dollars to build four new plants in the US. By spring, 0:20:21.920 --> 0:20:25.560 Trump was almost obsessively touting Rix by name, referring to 0:20:25.640 --> 0:20:29.760 him variously in speeches as a great gentleman, an incredible executive, 0:20:29.800 --> 0:20:32.920 and one of the hottest people in the world. Trump 0:20:33.000 --> 0:20:35.359 said Lily wouldn't be subject to the tariffs he was 0:20:35.359 --> 0:20:39.520 threatening because it was investing in the US. Rix's relationships 0:20:39.520 --> 0:20:42.320 in Washington served him well last summer, when the Trump 0:20:42.359 --> 0:20:45.399 administration hauled drug makers into the White House for closed 0:20:45.440 --> 0:20:49.640 door meetings about lowering drug prices. The negotiations carried on 0:20:49.720 --> 0:20:52.800 into the fall, culminating in an infamous November event in 0:20:52.840 --> 0:20:56.280 the Oval Office, at which Trump, Rix and Novo Nordisk 0:20:56.400 --> 0:20:59.800 CEO Mike Doustar announced that Lily and Novo would cut 0:20:59.800 --> 0:21:02.800 the prices of their weight loss medications in exchange for 0:21:02.840 --> 0:21:07.040 Medicare reimbursement and a three year reprieve from tariffs. When 0:21:07.119 --> 0:21:09.959 Rix got his moment to speak, a patient Lily had 0:21:09.960 --> 0:21:13.159 brought to the event fainted in the background. Centers for 0:21:13.240 --> 0:21:16.520 Medicare and Medicaid administrator memet Oz jumped in to help 0:21:16.560 --> 0:21:19.439 the man, with Doustar and another executive holding up his 0:21:19.520 --> 0:21:22.720 legs as Trump and Rix looked on. Footage of the 0:21:22.760 --> 0:21:26.280 incident went viral, and Saturday Night Live spoofed it days later. 0:21:26.800 --> 0:21:31.119 Cast member mikey Day played Rix, capturing his deliberate speaking style, 0:21:31.359 --> 0:21:35.040 manicured Midwestern Polish, and utter astonishment at being caught in 0:21:35.080 --> 0:21:38.240 the chaotic center of the political storm around drug prices 0:21:38.240 --> 0:21:42.840 and GLP ones. For Rix, Who's fifty nine, the challenge 0:21:42.880 --> 0:21:45.880 now is less about making history than about escaping it. 0:21:46.440 --> 0:21:49.320 Every drug company lucky enough to have a wildly successful 0:21:49.359 --> 0:21:52.280 medicine must reckon with the reality that sooner or later, 0:21:52.560 --> 0:21:56.879 patents expire and competition arrives over a decade ago, to 0:21:56.920 --> 0:22:00.960 take one example, expiring patents on astrozenic because Saraquell and 0:22:01.000 --> 0:22:04.600 Crestor left the company in a dismal state, It struggled 0:22:04.640 --> 0:22:08.760 for several years before CEO Pascal Sorio shifted his focus 0:22:08.760 --> 0:22:12.520 to oncology and turned its fortunes around. There's a long 0:22:12.560 --> 0:22:15.840 list of companies that did well, got big, and then failed. 0:22:15.960 --> 0:22:18.480 Rick says, we don't want to be on that list. 0:22:19.240 --> 0:22:20.560 As Lily tries. 0:22:20.280 --> 0:22:23.720 To avoid a slump, the intensity has ratcheted up internally, 0:22:23.960 --> 0:22:27.320 chipping away at the genial culture that long defined its workplace. 0:22:28.000 --> 0:22:31.919 Rix has stringently maintained the company's headcount despite Lily's massive 0:22:31.920 --> 0:22:35.400 growth in recent years, and four current and former employees 0:22:35.440 --> 0:22:39.359 who requested anonymity to freely discussed internal matters say some 0:22:39.520 --> 0:22:43.399 staff feel overworked and burned out. There's widespread fear that 0:22:43.480 --> 0:22:47.000 making mistakes will lead to serious repercussions, and there's been 0:22:47.040 --> 0:22:50.160 some loss of civility. Rix is known to be an 0:22:50.160 --> 0:22:54.200 epic micromanager. One of the employees says, prone to getting 0:22:54.240 --> 0:22:58.240 involved in projects CEOs normally wouldn't bother with, Meetings with 0:22:58.320 --> 0:23:01.480 him can be intense. Several people will say, albeit because 0:23:01.520 --> 0:23:05.280 he knows everyone's job better than they do. Rix bristles 0:23:05.320 --> 0:23:08.280 at the suggestion that he's a micromanager, though he concedes 0:23:08.560 --> 0:23:11.080 no problem is too small for his attention. If it's 0:23:11.119 --> 0:23:14.200 important to the business, It's not about sticking your nose 0:23:14.240 --> 0:23:16.920 in stuff and throwing your weight around, he says, it's 0:23:16.920 --> 0:23:20.119 about proving to people that we can solve problems. At 0:23:20.119 --> 0:23:22.800 a leadership off site, sometime in the past few years, 0:23:23.000 --> 0:23:26.359 according to one of the former employees, he warned executives 0:23:26.440 --> 0:23:29.000 Lily isn't an easy place to be and ask them 0:23:29.040 --> 0:23:31.600 to honestly assess whether they were aligned with where the 0:23:31.640 --> 0:23:34.639 company was heading. I think I'm easy to be with 0:23:34.800 --> 0:23:37.520 and hard to work for. Rick says, that's in my 0:23:37.600 --> 0:23:41.439 best days. I mean, we all have bad days. He adds, 0:23:41.840 --> 0:23:44.080 I kind of hope Lily is like that, where we're 0:23:44.119 --> 0:23:47.159