Speaker 1: How Eli Lilly got huge by making us thin. Dave
Speaker 1: Rix steered the one hundred and fifty year old drug
Speaker 1: giant to a one trillion dollar market cap. Can he
Speaker 1: defeat Pharmer's Boom and Bust cycle? By Madison, Muller and
Speaker 1: brad Stone Read aloud by Mark Leedorf. When Dave Rix
Speaker 1: became chief executive officer of Eli Lilly in twenty seventeen,
Speaker 1: he was facing an industry under siege. Americans held drug
Speaker 1: companies in lower esteem than airlines, law firms, and even
Speaker 1: the federal government. President Donald Trump, then starting his first term,
Speaker 1: was excoriating them for their high prices. A mounting number
Speaker 1: of reports showed that soaring costs were even forcing some
Speaker 1: diabetics to ration.
Speaker 2: Insulin. Rix, the eleventh.
Speaker 1: CEO in Lily's one hundred and fifty year history, concedes
Speaker 1: that one was a public relations nightmare. Eventually it became personal.
Speaker 1: One day, he received a letter from a young boy
Speaker 1: detailing the links to which his mother was going to
Speaker 1: a Ford insulin. Similar messages piled in from others. Rix
Speaker 1: says he read almost all of them, and about ninety
Speaker 1: percent accused Lily of price gouging patients. I couldn't sit
Speaker 1: there and accept it. He recalls, it was a major problem.
Speaker 1: Almost a decade later, the mood that Lily has shifted dramatically.
Speaker 1: The company's hit diabetes shot Mountjaro and obesity shot Zepbound
Speaker 1: have transformed its fortunes and in many ways, its public image.
Speaker 1: Lily is the most valuable healthcare corporation in the world,
Speaker 1: joining only a dozen or so other companies, mostly in tech,
Speaker 1: that have reached a one trillion dollar market capitalization. Rix,
Speaker 1: formerly just another embattled pharmaceutical executive in Washington, is a
Speaker 1: frequent White House ally who helped persuade the Trump administration
Speaker 1: to expand Medicare coverage for obesity drugs. Even the mail
Speaker 1: is better these days. Patients send him rapturous testimonials of
Speaker 1: their weight loss success, complete with before.
Speaker 2: And after photos.
Speaker 1: Two year old correspondent told Rix that his daughter said
Speaker 1: he'd almost certainly die before sixty. Then he started Mountjaro
Speaker 1: and shed more than two hundred pounds in eighteen months.
Speaker 1: His only wish was to go to his daughter's wedding,
Speaker 1: Rix says, and he was like, now I can do it.
Speaker 1: Millions of patients all over the world are taking Manjaro, zepbound,
Speaker 1: and other glp ie receptor agonists made by Lilly and
Speaker 1: its long time rival, Denmark based Novo Nordisk. These revolutionary drugs,
Speaker 1: the acronym stands for a glucagon like peptide on a
Speaker 1: gut hormone the medicines are designed to mimic, have surged
Speaker 1: in popularity thanks to their ability to suppress people's appetites
Speaker 1: and melt away stubborn pounds. Available first as injections and
Speaker 1: then also as oral medications, glp ones are beginning to
Speaker 1: turn the tide on the US obesity epidemic, an unfathomable
Speaker 1: outcome a few years ago. Now, their efficacy is being
Speaker 1: studied for other potentially deadly conditions, including heart disease and
Speaker 1: drug addiction, with promising results. Investors can't get enough of
Speaker 1: Lily's drugs. Since Mountjaro was approved in May twenty twenty two,
Speaker 1: It has passed mrk's cancer blockbuster key Truda as the
Speaker 1: world's best selling medication, helping bump Lily's stock nearly three
Speaker 1: hundred percent. Zetbound is the planet's most popular obesity medicine,
Speaker 1: despite being released only.
Speaker 2: Two years ago.
Speaker 1: Rix says Lily is shipping seven Zetbound injections every second.
Speaker 1: Found Dio, a daily pill introduced in April that also
Speaker 1: helps patients lose weight, has already racked up about eighty
Speaker 1: nine thousand prescriptions, according to analysts, even though the company
Speaker 1: only recently started advertising it.
Speaker 2: People are also.
Speaker 1: Clamoring to get their hands on reta truetide, a next
Speaker 1: generation compound Lily has in testing. That drug, which mimics
Speaker 1: three different hormones versus two for Zepbound and one for
Speaker 1: Novo's Wegovi, yielded average weight loss of twenty eight percent
Speaker 1: across eighteen months in a late stage trial, a decline
Speaker 1: previously thought possible only through gastric bypass surgery, and Lily
Speaker 1: has more obesity drugs coming.
Speaker 2: We basically put a.
Speaker 1: Bet on every rational idea and said we should be
Speaker 1: first or best on every conceivable concept. Rick says, Behind
Speaker 1: the Blockbusters is a company that's been remade by Rix's personality,
Speaker 1: with speed the top priority and mistakes not an option.
Speaker 1: He's resolved widespread supply shortages, supercharged research and development, poured
Speaker 1: billions of dollars into manufacturing and artificial intelligence, and pioneered
Speaker 1: direct to consumer strategies, including launching Lily Direct, an online
Speaker 1: platform where patients can connect with doctors and get obesity drugs.
Speaker 1: These moves have helped Lily capitalize on the obesity boom
Speaker 1: in ways its peers have struggled to match Novo, whose
Speaker 1: diabetes drug Ozepic created the modern weight loss Frenzy has
Speaker 1: stumbled amid US pricing pressures, lagging insurance coverage, intensifying competition,
Speaker 1: and especially by assuming its early life would hold. Lily
Speaker 1: is just playing at a completely different game level than
Speaker 1: any other pharmaceutical company, says Wiley Shao, who spent eighteen
Speaker 1: years at Lily and is now president of virtual care
Speaker 1: platform provider Omada Health. The test for Rix now is
Speaker 1: whether Lily can outlast the industry's familiar boom and bust cycle.
Speaker 1: Although drug patents last about two decades, they are typically
Speaker 1: granted years in advance of US Food and Drug Administration approval,
Speaker 1: so companies don't get that much time to reap a
Speaker 1: profit before cheaper generics begin to erode sales. Roughly half
Speaker 1: of Lily's revenue last year came from Manjaro and zepbound,
Speaker 1: a precarious dependency for any drug company. While Lily has
Speaker 1: about a decade of patent protection left on those drugs.
Speaker 1: The competition is already intensifying. Hundreds of thousands of people
Speaker 1: are taking Novo's new wigov pill, and at least one
Speaker 1: hundred and twenty companies, a third of them in China collectively,
Speaker 1: have hundreds of such drugs in development, according to Bloomberg Intelligence.
Speaker 1: The rapid rise of AI has also introduced a new
Speaker 1: threat that the next big drug will come from Silicon Valley,
Speaker 1: and Lily has some internal challenges too, with insiders saying
Speaker 1: it's newly hard driving corporate culture has led to high
Speaker 1: executive turnover and poor morale.
Speaker 2: Rix is undeterred.
Speaker 1: Now in his tenth year as CEO, he says he
Speaker 1: wants to imbue Eli Lilly with the consistency and dominance
Speaker 1: of technology giants such as Apple and Amazon. In addition
Speaker 1: to flooding Lily's pipeline with new treatments, He's got the
Speaker 1: company on an unprecedented acquisition spree and in a ubiquitous
Speaker 1: advertising campaign that seeks to inspire Nike like brand fidelity.
Speaker 1: If you look at healthcare, most people would say it is,
Speaker 1: perhaps next to government services, the worst consumer experience they
Speaker 1: have every day, Rick says, But he adds there are
Speaker 1: a bunch of people posting on Reddit. When their package
Speaker 1: arrives from Lily at their door, they unwrap it, they
Speaker 1: make a video of it.
Speaker 2: It's like an iPhone. It's an exciting moment.
Speaker 1: In eighteen seventy six, a former Union Army colonel named
Speaker 1: Eli Lilly opened a small laboratory on Pearl Street in Indianapolis.
Speaker 1: He wanted to improve on the eras patent medicines and
Speaker 1: counter snake oil salesmen by making quality products patients could trust.
Speaker 1: It took some time. Early medications such as succus alteran
Speaker 1: marketed as a blood purifier for syphilis, and other ailments,
Speaker 1: were themselves little more than quackery, but Lily eventually found
Speaker 1: success selling pills coated in gelatine, a major improvement on
Speaker 1: the putrid medicinal liquids and powders patients commonly choked down.
Speaker 1: Over the following one hundred and fifty years, Lily grew
Speaker 1: from that tiny two story brick building into a powerhouse
Speaker 1: with roughly fifty thousand employees around the world today. Its
Speaker 1: Indianapolis headquarters, a mile north of the original operation, is
Speaker 1: so large it has its own zip code. In that time,
Speaker 1: it's been at the forefront of addressing America's most pressing
Speaker 1: ailments and anxieties diabetes, polio, depression, erectile dysfunction, COVID nineteen,
Speaker 1: and now obesity. In the early two thousands, Lily learned
Speaker 1: what it was like to have the profits from an
Speaker 1: enormously popular drug, vanish virtually overnight Prozac, approved as a
Speaker 1: breakthrough treatment for depression in nineteen eighty seven, by then
Speaker 1: accounted for about a quarter of the company's sales, prescribed
Speaker 1: to tens of millions of patients. Executives tried to plan
Speaker 1: for the loss of crucial patents for the drug in
Speaker 1: two thousand and one, focusing heavily on mental health, cancer,
Speaker 1: and diabetes. But although Lily's research led to the development
Speaker 1: of glp ie drugs for diabetes, the company failed to
Speaker 1: find a replacement hit at the time, and in the
Speaker 1: process it ignored some early research showing how GLP one's
Speaker 1: might help with obesity. By two thousand and eight, Lily
Speaker 1: had lost a third of its revenue since the turn
Speaker 1: of the century and had seen an even bigger drop
Speaker 1: in profits. It was forced to undertake a massive cost
Speaker 1: cutting effort that eliminated fifty five hundred jobs, roughly fourteen
Speaker 1: percent of its workfe From two thousand and five to
Speaker 1: two thousand and nine, the company got only two new
Speaker 1: drugs approved, a blood thinner called Effiant and a diabetes
Speaker 1: treatment called Bayeta. Novo Nordisk, in contrast, was moving on
Speaker 1: GLP one's for weight loss by twenty thirteen, when the
Speaker 1: American Medical Association declared obesity a chronic disease and not
Speaker 1: the result of weak will power or bad lifestyle choices,
Speaker 1: it was ready. The next year, Novo got approval for Saxinda,
Speaker 1: the first GLP one drug cleared for weight.
Speaker 2: Loss in the US.
Speaker 1: Those were formative years for Rix, who joined Lily as
Speaker 1: a business development associate in nineteen ninety six after growing
Speaker 1: up in the San Francisco Bay area and studying industrial
Speaker 1: management at Purdue University. He ascended the ranks managing Lily's
Speaker 1: businesses in Canada and China before returning to oversee the
Speaker 1: company's most important market. Along the way, he developed a
Speaker 1: reputation as an uncompromising manager with an aversion to the
Speaker 1: Lily nice culture of harmonious colors. Aberation shortly after Rix
Speaker 1: joined the executive committee. He remembers he asked then CEO
Speaker 1: John Lechlider for some constructive feedback. You have an over
Speaker 1: developed sense of urgency, lack Lighter told him, you mean
Speaker 1: I'm impatient. Rix replied, He's like, yeah, sometimes it gets
Speaker 1: you in trouble. I'm like, okay, some trouble's good. In
Speaker 1: July twenty sixteen, Lily announced Rix would become CEO. At
Speaker 1: the time, it took an average of thirteen to fourteen
Speaker 1: years for a promising medication to make it through the
Speaker 1: company's test labs to an FDA approval decision. Dan Skovronsky,
Speaker 1: Lily's chief scientific and product officer, says he remembers the
Speaker 1: speech Rix gave when he started as CEO, especially the
Speaker 1: priority on speed. It's not just about getting to the
Speaker 1: patients faster. Of course, we care a lot about that
Speaker 1: or beating your competitors, Skovronsky says, summing up the message,
Speaker 1: it's also such a tough business that you need to learn,
Speaker 1: and you can learn faster if you move faster. That year,
Speaker 1: Novo published impressive results from a weekly GLP one shot
Speaker 1: that went on to become ozimpic under Rix, Lily needed
Speaker 1: to come up with something better. He turned to Skovronsky,
Speaker 1: a physician, neuroscientist, and entrepreneur who joined the company after
Speaker 1: it acquired his startup, Avid Radio Pharmaceuticals in twenty ten.
Speaker 1: Lily scientists had been experimenting with combinations of GLP one's
Speaker 1: and other gut hormones, which had the potential to be
Speaker 1: more powerful than GLP one's alone. That research led to
Speaker 1: early stage testing of several different compounds, one of which
Speaker 1: stood out to Skovronsky ter zeppetide. In just a month,
Speaker 1: healthy volunteers who took the drug lost from three percent
Speaker 1: to five percent of their body weight. We said, this
Speaker 1: is working, he recalls, this is really going to be
Speaker 1: a special medicine. At Rix's direction, Skovronsky was also working
Speaker 1: on an initiative to cut Lily's development timeline in half.
Speaker 1: We tried to reinvent every step of the drug development
Speaker 1: process with an eye on Speedsky says. Terzepetide was the
Speaker 1: first molecule that got the full speed treatment. He turned
Speaker 1: the R and D department into a pseudo biotech startup,
Speaker 1: calling the group gip Bio in reference to one of
Speaker 1: the hormones, the drug mimics, and freeing it from bureaucratic
Speaker 1: requirements such as commercial viability assessments. We were hungry to
Speaker 1: prove ourselves, Skovronsky said at an R and d D
Speaker 1: eight years later. Terzepetide won FDA approval in twenty twenty two,
Speaker 1: roughly five years after Rix and Skovronsky decided to expedite it.
Speaker 1: Lily had been so optimistic about the drug, which would
Speaker 1: be branded as mount Jaro, that it had started looking
Speaker 1: at manufacturing sites nearly four years before the approval came
Speaker 1: through a step it had never taken before. Rix was
Speaker 1: determined to catch up to Novo. We're not going to
Speaker 1: lose because someone leapfrogged us, he remembers thinking. By the
Speaker 1: time zep bound was approved in late twenty twenty three,
Speaker 1: GLP one hype was at a fever pitch. Patients were
Speaker 1: documenting their weight loss journeys on tik talk and swapping
Speaker 1: tips for managing side effects on Reddit, but Novo was
Speaker 1: struggling to manufacture enough semiglutide, the active ingredient in nozepic,
Speaker 1: and Wigovy. Seeking an edge, Lily priced zetbound about twenty
Speaker 1: percent cheaper than wegovy. It also introduced Lily Direct, whose
Speaker 1: launch had been closely managed by Rix himself. There, patients
Speaker 1: could connect online with doctors to get a weight loss
Speaker 1: drug prescription and pay directly if their insurance didn't cover it, as.
Speaker 2: Was often the case.
Speaker 1: The site was janky at first, but today fifty five
Speaker 1: percent of new zetbound patients are buying through Lily Direct.
Speaker 1: Demand quickly spiraled out of control for Lily, however, as
Speaker 1: it had for Novo. Within months, patients across the US
Speaker 1: were clamoring to find zetbound in stock at local pharmacies. Frantic,
Speaker 1: some railed against both companies on social media. Many turned
Speaker 1: to telehealth providers such as Roe and Hymns and hers Health,
Speaker 1: which were selling cheaper, copycat versions of the drugs, something
Speaker 1: that's allowed when medicines are in short supply. Rix pushed
Speaker 1: his staff to get the situation under control, pouring billions
Speaker 1: into Lily's manufacturing sites in Indiana, North Carolina, Wisconsin, Ireland,
Speaker 1: and Germany. Our workers come every hour of every day
Speaker 1: to every plant in the world to make more twenty
Speaker 1: four to seven three sixty five overtime weekends holidays. Rix
Speaker 1: told Bloomberg BusinessWeek in twenty twenty four. We're operating above
Speaker 1: the theoretical capacity of those sites. Lily's bottlenecks, unlike Novo's,
Speaker 1: stemmed not from an ingredient shortage, but from the complexity
Speaker 1: of its plastic injector pins. The company found a work
Speaker 1: around by instead offering the drug in a small, single
Speaker 1: use vial. This required customers to fill a syringe and
Speaker 1: inject the drug themselves, but such was Zepbound's promise that
Speaker 1: most overcame any squeamishness. Novo, lacking an immediate solution, was
Speaker 1: forced to limit the sale of introductory with govy doses.
Speaker 1: You cannot make it hard for your customers to get
Speaker 1: your product, especially if there's an alternative that may even
Speaker 1: be a little better better, says BMO Capital Markets analyst
Speaker 1: Evan Seigerman. When you do, you permanently change behaviors. Vials
Speaker 1: were also cheaper to produce than pens, so in August
Speaker 1: twenty twenty four, Rix cut the price of zetbound vials
Speaker 1: in half on Lily Direct, the only place that offered
Speaker 1: them at the time. Patients could now buy the drug
Speaker 1: there for as little as three hundred and ninety nine
Speaker 1: dollars a month. Single use zetbound vials quickly became the
Speaker 1: site's best selling product, allowing Lily to capitalize on the
Speaker 1: burgeoning cash pay market in a way that Novo, which
Speaker 1: wasn't selling we Go vi in vials and didn't have
Speaker 1: a direct consumer site, couldn't. It took the Danish company
Speaker 1: an additional seven months to roll out a similarly low
Speaker 1: priced offering and more than a year to start its
Speaker 1: own consumer website, but by then it.
Speaker 2: Was too late.
Speaker 1: With Rix at the helm, Lily had turned the tables,
Speaker 1: surpassing its chief rival in the most economically and culturally
Speaker 1: transformative drug category in recent memory. We'll be right back
Speaker 1: with how Eli Lilly got huge by making us then.
Speaker 1: Welcome back to how Eli Lilly got huge by making
Speaker 1: us then. The opportunity before Lily was vast. Obesity effects
Speaker 1: more than one hundred million people in the US and
Speaker 1: one billion around the world. Many more are considered clinically overweight.
Speaker 1: Countless business empires have been built around the age old
Speaker 1: challenge of helping people shed unwonted pounds and GLP. Ones
Speaker 1: weren't a fad diet or a willpower testing exercise. Regimen,
Speaker 1: but rather a scientifically proven drug with few serious side effects.
Speaker 1: Lily's focus shifted from making enough medicine to putting it
Speaker 1: in the hands of as many patients as possible, including
Speaker 1: those covered by Medicare, and to cultivating a deeper connection
Speaker 1: with their customers. The brand overhaul started with Lena Polimeni, who,
Speaker 1: during a twenty two year career at Lily, had gone
Speaker 1: from peddling medicines to Los Angeles area doctors to serving
Speaker 1: as the company's top marketing excitative. For the campaign she
Speaker 1: was planning, Paulmenni wanted to hire Portland, Oregon based advertising
Speaker 1: firm Widen and Kennedy, best known for its relationship with Nike.
Speaker 1: But such was the poor reputation of drug advertising, characterized
Speaker 1: by euphemistic references to illnesses, blithely smiling patients, and long
Speaker 1: regulatory disclosures encompassing every conceivable side effect that the agency
Speaker 1: rejected Lily I had to reverse pitch them three times.
Speaker 1: Paulmenni says they didn't want to work in pharma. Eventually,
Speaker 1: she persuaded Widen and Kennedy to give Lily a chance,
Speaker 1: and together they produced a short film. During the pandemic
Speaker 1: when the COVID vaccines were making Pfizer and Moderna household names.
Speaker 1: The spot established a friendly new identity for Lily as
Speaker 1: a medicine company. Some of Paulmeni's colleagues, including Rix, still
Speaker 1: needed convincing of the merits of a larger campaign, though
Speaker 1: there were a lot of discussions in terms of whether
Speaker 1: this was the right thing to do. Polmeni recalls Rix
Speaker 1: wanted to make sure the imagery is incorporated doctors and scientists,
Speaker 1: but he eventually gave the green light. When a sponsor
Speaker 1: of the US Olympic team backed out ahead of the
Speaker 1: pandemic delayed Tokyo Summer Games in twenty twenty one, Paulameni
Speaker 1: got her chance to go big. Lily stepped in to
Speaker 1: promote not one of its drug franchises, but the company itself.
Speaker 1: The move was successful enough that its brand advertising became ubiquitous,
Speaker 1: appearing almost anywhere potential patients might be paying attention, the Oscars,
Speaker 1: the super Bowl, the subway. We want people to know
Speaker 1: that we're here for you, Rick says, envisioning a world
Speaker 1: where customers gravitate toward trusted Lily drugs over competing options.
Speaker 1: That's where we're headed. Brand awareness doesn't matter much, though,
Speaker 1: if people can't afford the medicine, and most insurance companies
Speaker 1: are still reluctant to cover GLP ones for weight loss.
Speaker 1: Lily itself switched plans for the first time in ages
Speaker 1: last year after its pharmacy benefit manager, CVS Caremark moved
Speaker 1: zep bound off the plan's list of preferred mesas medications.
Speaker 2: Caermark put it back on this may.
Speaker 1: A not insignificant share of Lily's employees are on a
Speaker 1: GLP one, Rick says, a fact underscored by the medical
Speaker 1: waste containers full of used zep bound and Mount Jaro
Speaker 1: pens in its campus bathrooms. Although obesity is a chronic disease,
Speaker 1: half of the people don't have access or coverage forgetting treatment,
Speaker 1: says Iliya Yufa, who oversees Lily's US business and has,
Speaker 1: like Rix, been with the company for thirty years. The
Speaker 1: access gap traditionally extended to Medicare, which until recently was
Speaker 1: legally barred from covering drugs used solely for weight loss.
Speaker 1: As for Medicaid, it's allowed, but expensive. The cost is
Speaker 1: prohibitive enough that only thirteen US states currently cover weight
Speaker 1: loss drugs, and some of the largest, including California, have
Speaker 1: stopped doing so for that reason. During his most recent
Speaker 1: presidential campaign, Trump promised to go after drug companies that
Speaker 1: charge more for the same medications in America than in
Speaker 1: other wealthy nations. After Trump won, Rix, who has personally
Speaker 1: donated primarily two Republicans, started appearing on Fox News for
Speaker 1: the first time in years and made frequent trips to Washington.
Speaker 1: With the President also pushing American companies to invest in
Speaker 1: domestic manufacturing, Lily announced it would spend twenty seven billion
Speaker 1: dollars to build four new plants in the US. By spring,
Speaker 1: Trump was almost obsessively touting Rix by name, referring to
Speaker 1: him variously in speeches as a great gentleman, an incredible executive,
Speaker 1: and one of the hottest people in the world. Trump
Speaker 1: said Lily wouldn't be subject to the tariffs he was
Speaker 1: threatening because it was investing in the US. Rix's relationships
Speaker 1: in Washington served him well last summer, when the Trump
Speaker 1: administration hauled drug makers into the White House for closed
Speaker 1: door meetings about lowering drug prices. The negotiations carried on
Speaker 1: into the fall, culminating in an infamous November event in
Speaker 1: the Oval Office, at which Trump, Rix and Novo Nordisk
Speaker 1: CEO Mike Doustar announced that Lily and Novo would cut
Speaker 1: the prices of their weight loss medications in exchange for
Speaker 1: Medicare reimbursement and a three year reprieve from tariffs. When
Speaker 1: Rix got his moment to speak, a patient Lily had
Speaker 1: brought to the event fainted in the background. Centers for
Speaker 1: Medicare and Medicaid administrator memet Oz jumped in to help
Speaker 1: the man, with Doustar and another executive holding up his
Speaker 1: legs as Trump and Rix looked on. Footage of the
Speaker 1: incident went viral, and Saturday Night Live spoofed it days later.
Speaker 1: Cast member mikey Day played Rix, capturing his deliberate speaking style,
Speaker 1: manicured Midwestern Polish, and utter astonishment at being caught in
Speaker 1: the chaotic center of the political storm around drug prices
Speaker 1: and GLP ones. For Rix, Who's fifty nine, the challenge
Speaker 1: now is less about making history than about escaping it.
Speaker 1: Every drug company lucky enough to have a wildly successful
Speaker 1: medicine must reckon with the reality that sooner or later,
Speaker 1: patents expire and competition arrives over a decade ago, to
Speaker 1: take one example, expiring patents on astrozenic because Saraquell and
Speaker 1: Crestor left the company in a dismal state, It struggled
Speaker 1: for several years before CEO Pascal Sorio shifted his focus
Speaker 1: to oncology and turned its fortunes around. There's a long
Speaker 1: list of companies that did well, got big, and then failed.
Speaker 1: Rick says, we don't want to be on that list.
Speaker 2: As Lily tries.
Speaker 1: To avoid a slump, the intensity has ratcheted up internally,
Speaker 1: chipping away at the genial culture that long defined its workplace.
Speaker 1: Rix has stringently maintained the company's headcount despite Lily's massive
Speaker 1: growth in recent years, and four current and former employees
Speaker 1: who requested anonymity to freely discussed internal matters say some
Speaker 1: staff feel overworked and burned out. There's widespread fear that
Speaker 1: making mistakes will lead to serious repercussions, and there's been
Speaker 1: some loss of civility. Rix is known to be an
Speaker 1: epic micromanager. One of the employees says, prone to getting
Speaker 1: involved in projects CEOs normally wouldn't bother with, Meetings with
Speaker 1: him can be intense. Several people will say, albeit because
Speaker 1: he knows everyone's job better than they do. Rix bristles
Speaker 1: at the suggestion that he's a micromanager, though he concedes
Speaker 1: no problem is too small for his attention. If it's
Speaker 1: important to the business, It's not about sticking your nose
Speaker 1: in stuff and throwing your weight around, he says, it's
Speaker 1: about proving to people that we can solve problems. At
Speaker 1: a leadership off site, sometime in the past few years,
Speaker 1: according to one of the former employees, he warned executives
Speaker 1: Lily isn't an easy place to be and ask them
Speaker 1: to honestly assess whether they were aligned with where the
Speaker 1: company was heading. I think I'm easy to be with
Speaker 1: and hard to work for. Rick says, that's in my
Speaker 1: best days. I mean, we all have bad days. He adds,
Speaker 1: I kind of hope Lily is like that, where we're
Speaker 1: demanding as hell on the what, but really quite sympathetic
Speaker 1: on the how.
Speaker 2: As Lily works to sharpen.
Speaker 1: Its edge, new products, aggressive rebates and mounting political pressure
Speaker 1: have driven down GLP one prices far faster than many
Speaker 1: investors expected, raising questions about future profitability. Generic versions of
Speaker 1: Novo's GLP one drugs are already available in countries including
Speaker 1: India and Canada. An industry giant such as abvi, Amgen,
Speaker 1: and Pfizer are trying to develop obesity drugs that are
Speaker 1: more tolerable, easier to take, or longer lasting than the
Speaker 1: current options. Still, no one is leapfrogging Lily, at least
Speaker 1: not yet. If anything, the company seems set to build
Speaker 1: on its lead with plans to launch several new obesity medicines,
Speaker 1: including drugs that may have fewer side effects.
Speaker 2: Its next big thing.
Speaker 1: Will likely be retatrutide, the three hormone drug that cut
Speaker 1: weight by twenty eight percent in trials, which is due
Speaker 1: out next year assuming it's approved. Although Lily originally positioned
Speaker 1: it as something for people on the higher end of
Speaker 1: the body mass index spectrum, Rix now sees mass market
Speaker 1: potential at lower doses. There's already some evidence of that potential,
Speaker 1: if not the kind Rix likes to see. People all
Speaker 1: over the world have begun buying peptides, short chains of
Speaker 1: amino acids that form the basis of GLP ones and
Speaker 1: other medicines on the black market online shady overseas sellers
Speaker 1: who've obtained the formula for Retta truetide from Lily's patent
Speaker 1: applications and scientific papers are illegally hawking the drug under
Speaker 1: names including REHTTA, GLP three, triple G, and even Rata
Speaker 1: two E. This is before Lily has completed clinical testing
Speaker 1: or safety reviews on the drug, and despite warnings from
Speaker 1: the FDA that such sales are illegal. People say peptides
Speaker 1: like a magic word. Rick says, but it's like saying chemical.
Speaker 1: You wouldn't put a crop protection chemical in your body.
Speaker 1: You wouldn't put just any peptide in your body, but
Speaker 1: people somehow think it's magic beans. I think these products
Speaker 1: should go through testing, they should be manufactured in a
Speaker 1: control setting, and none of these things are occurring.
Speaker 2: That's scary.
Speaker 1: The industry is also worrying about potential usurpers from outside
Speaker 1: the field. Anthropic, Google, OpenAI, and other companies are developing
Speaker 1: artificial intelligence systems that could one day be capable of
Speaker 1: designing novel molecules, raising the specter that the next generation
Speaker 1: of breakthrough medicines won't be developed by a pharmaceutical company
Speaker 1: at all. Rix has doubts. Naturally, there's no magic where
Speaker 1: you can turn on a computer and invent a drug. Today,
Speaker 1: he says, maybe we'll get there someday. He points out
Speaker 1: the rich irony that Lily is taking over a South
Speaker 1: San Francisco building previously occupied by Verily Alphabet's embattled life
Speaker 1: Sciences unit, and adds it turns out that language models
Speaker 1: are not good models for predictions of biology if AI
Speaker 1: is going to reshape the industry, though Rix wants Lilly
Speaker 1: to be a major participant. He's become a student of
Speaker 1: the technology after toying with chat GPT over Christmas in
Speaker 1: twenty twenty two and later taking a coding class alongside
Speaker 1: his Chief Information and Digital officer dog Raw. I can
Speaker 1: probably count on my fingers how many CEOs could actually
Speaker 1: code or write a code for a large language model,
Speaker 1: including tech CEOs RAO, says Rix, who calls himself a
Speaker 1: tech nerd, admits to running two llms at once during
Speaker 1: most meetings, in part to keep up with his brightest scientists.
Speaker 1: These days, he favors Claude and Grock over chat GPT
Speaker 1: signs all over Lily's Indianapolis headquarters encourage employees to use
Speaker 1: the technology too. How will you change the game by
Speaker 1: harnessing the power of AI? A cafeteria poster reads already.
Speaker 1: Rick says, lily scientists have used it in ways that
Speaker 1: are as impressive as Alpha fold, referring to Google's landmark
Speaker 1: tool for predicting protein structures. Lily's AI drug discovery tools,
Speaker 1: which have been trained on decades of in house research data,
Speaker 1: are stored in tune Lab, a service that smaller biotech
Speaker 1: companies can also access. All they have to do is
Speaker 1: prove their real biotechs and not some Chinese AI lab
Speaker 1: that's just like interrogating our models, Rick says. In twenty
Speaker 1: twenty six, Lily unveiled a supercomputer built in partnership with
Speaker 1: Nvidia that's designed to help researchers sift through vast amounts
Speaker 1: of biological data and accelerate the search for new medicines.
Speaker 1: The two companies are also building a one billion dollar
Speaker 1: lab in San Francisco that will allow Lilly to advance
Speaker 1: drug development and Nvidia to improve its FARMA capabilities. Beyond that,
Speaker 1: Rick says, we have a data advantage because most of
Speaker 1: the tech biocompanies that you talk to, even some of
Speaker 1: the scale players, they're just training on public data. But
Speaker 1: there's only four thousand ever approved drugs. Lily alone has
Speaker 1: more than three million failed drugs. He's convinced that if
Speaker 1: computers will one day design novel medications, Lily has an
Speaker 1: unassailable headstart Rix isn't waiting for a technological revolution to
Speaker 1: rescue the company from its impending patent cliff, though, or
Speaker 1: from a future in which the obesity market may be saturated.
Speaker 1: As the company looks beyond obesity, he's furiously reinvesting in
Speaker 1: its internal pipeline and deploying its balance sheet to fund
Speaker 1: acquisitions a record twenty billion dollars so far this year alone.
Speaker 1: Those transactions have brought Lily into new fields and reinvigorated
Speaker 1: old efforts in areas such as sleep disorders and infectious disease.
Speaker 1: The company recently spent seven point eight billion dollars to
Speaker 1: buy Sintessa Pharmaceuticals, one of its largest acquisitions ever, gaining
Speaker 1: experimental medicines for narcolepsy and similar sleep and alertness disorders.
Speaker 1: Lily sees sleep as an untapped opportunity with the potential
Speaker 1: to be as big as obesity. I have a sense
Speaker 1: it could be that the diseases of sleep, like narcolepsy,
Speaker 1: are just the tip of the iceberg, says Skavronsky, the
Speaker 1: chief scientific officer.
Speaker 2: As we learn more about.
Speaker 1: The science, maybe someday we can make medicines that can
Speaker 1: help a broad range of people sleep better and be
Speaker 1: better awake during the daytime. Internally, the company spent more
Speaker 1: than thirteen billion dollars on research and development last year.
Speaker 1: It's continuing to invest in obesity and other metabolic health conditions,
Speaker 1: while also pouring resources into areas including cancer, immunology, neuroscience,
Speaker 1: and gene therapy, which now accounts for a third of
Speaker 1: its early stage pipeline. Lily recently released data from a
Speaker 1: small initial study of a gene therapy that showed promise
Speaker 1: in treating high cholesterol with a single infusion. Those results
Speaker 1: garnered much fanfare, including from Elon Musk, who's used Mountjarro
Speaker 1: to lose weight. Impressive new drugs coming from Lily, he
Speaker 1: wrote on X. The company is weighing too, whether to
Speaker 1: expand into consumer facing areas such as esthetics, which could
Speaker 1: mean hair loss or skin care, and even psychedelics. According
Speaker 1: to people familiar with its plans, it's all part of
Speaker 1: Lily's effort to prepare for the inevitable day its GLP
Speaker 1: one dominance ends. We spent a lot of time as
Speaker 1: an executive committee looking at other examples of pharma companies
Speaker 1: that have had extremely large franchises where eventually either growth
Speaker 1: slows or they get genericized. Says Jacob Van Narden, head
Speaker 1: of Business Development and Oncology, we are trying to do
Speaker 1: something unbelievably hard that no one's ever done before. For Rix,
Speaker 1: that's the largest and last item on his CEO to
Speaker 1: do lite, which he started in a letter he wrote
Speaker 1: to himself on a legal pad a decade ago while
Speaker 1: taking a class for new CEOs at Harvard Business School.
Speaker 1: If I look back at that list, most of those
Speaker 1: things are solved, he says. Planning for continued growth after
Speaker 1: zepbound is to me, the defining challenge we have. He adds,
Speaker 1: there is still lots to do to check that one
Speaker 1: off the list.