EUC with HCI: Why It Matters
Focus On | Knowledge management
Business Goal | Discover and move costly new products to market faster
Technology Issue | Key data stored in too many places, being handled by too many people, slowing access, turnaround and discovery
Management Challenge | Silo-thinking, alignment gaps between IT and business executives, and cultural hurdles in convincing top brass that speed doesn't sacrifice quality
A few years ago, if a chemist at Eli Lilly and Co. enjoyed an "ah-ha" moment about a new substance that might lead to a great new miracle drugand huge new profitsthe first thing he or she would have to do is check a database to see if anyone else in the global pharmaceutical company had enjoyed a similar insight. Then he or she would have to check a second database. And then he or she would have to check yet a thirdand even then not know for sure. Problem was, the three different Lilly substance databases didn't store information under the same labels or registration numbers, so it wasn't always clear what Lilly knew or didn't: A researcher in Singapore might have registered the substance, but under a different name, slowing the process of discoveries to a walk instead of a run. And that was just one speed bump slowing researchers in the urgent race to get new drugs to market.
But speed bumps are no longer acceptable at Indianapolis-based Lilly. And no wonder. With the new revolution in the life sciences that is following the mapping of the human genomean explosion of innovation that could raise the number of new substances worthy of investigation from the current 500 to 10,000 per year to 10,000 per dayLilly can't afford to waste another second getting mired in information-processing headaches. "Speed to market is everything now," says CIO Roy Dunbar, an MBA with a pharmacy degree who has spent most of his career on the business side at Lilly, in product development. Indeed, Dunbar's whole mission since being named CIO in 1999 has been to find new ways to use information technology to shrink the 10 to 15 years it takes to discover new drugs and bring them to market.
Lilly has plenty of reasons to be impatient. Cost pressures are enormouseven on those drugs already in the pipeline. In today's high-paced world of drug development, each day a new drug is not on store shelves can mean $1 million or more in lost revenues. And recent events have raised those stakes even higher. Last April, the U.S. Food and Drug Administration ordered Lilly to delay production of Cialis, a new anti-impotence drug that's expected to rival Pfizer Inc.'s Viagra. The reason: FDA inspectors raised questions over quality problems in Lilly's Indianapolis manufacturing plants.
At press time, for the same reason, the FDA was also delaying the production of as many as four other new drugs in Lilly's otherwise vaunted pipelineincluding the potentially lucrative osteoporosis drug Fortéo and the antidepressant Cymbalta.
Lilly is particularly dependent right now on the FDA for new-product approvals to turbocharge its financial results, and the delays have been especially challenging since a 2001 court decision ended Lilly's exclusive rights to Prozac. The antidepressant generated $2.8 billion in revenues for Lilly in 1999 and another $2.6 billion in 2000, and Kenneth Nover, vice president and pharmaceuticals analyst for St. Louis-based A.G. Edwards Inc., estimates Lilly will eventually lose 90 percent of those sales to generic manufacturersand at least $1 billion in the first year alone.
Adding to those woes are disappointing sales of Xigris, a new drug for sepsis Lilly introduced in late 2001. The lackluster introduction precipitated a 20 percent drop in profits for Lilly in the second quarter of 2002, and third quarter revenues were not expected to be much better. Indeed, said Lilly CEO Sidney Taurel in July, "the next 12 to 18 months will be a decisive period for the company." Particularly disturbing, he says, is the very real possibility that Lilly's new-drug pipelineamong the best in the industrycould be little more than a gleam in the company's eye until well into 2003.
Lilly isn't the only big player in the pharmaceutical industry getting nervous. As R&D costs soar and federal regulations set the bar for drug approval ever higher, the pharmaceutical industry is becoming a horse race with no favorites. Blockbuster drugs like Pfizer's Lipitor, a cholesterol-lowering medicine, can bring in $3 million or $4 million per day. But when investors see a major source of revenue about to expire by judicial fiat, the effects can be devastating. Last August, after a federal judge doubted the efficacy of a new patent on allergy drug Claritin, Schering-Plough's stock valuation took a five percent hit in hours.
In addition, the challenges of the new bioscience revolution, while a potential boon to new drug discovery, is generating terabytes of new data that is testing new knowledge sharing systems as never beforeand telegraphing their shortcomings. "One of our big challenges as an industry is to make sure we build data storage to handle it all, and not data landfills," says Daniel Klingler, the senior vice president of information and knowledge management systems for Bristol-Myers Squibb's worldwide medicines group. "In the early 1980s, we sifted through hundreds of new compounds a year. Five years ago, we sifted through 10,000 compounds per year. Today, we're having to find ways to sift through 10,000 new compounds a day. IT's challenge now is finding a needle in a haystack, and in hoursnot years."
In many industriessoap, shoes or soft drinks, for examplea company might do well to hedge its bets by seeking safety in numbers with an ever-broader product portfolio. Not so in the highly regulated drug industry. To the uninitiated, the costs and risks of pharmaceutical R&D read like astronomy tables. According to a study by the Tufts University Center for the Study of Drug Development, the average successful drug requires 10 to 15 years of research at an average cost of $802 milliona cost that includes the price tag on the ones that never make it to market. Couple those onerous upfront investments with the fact that patents last only 20 years, and it becomes plain that when a drug might have an earnings window of a mere five or six years, companies are eager to abandon a bad bet early in the race. Another big IT goal in the drug business these days, therefore, is not only to speed winners, but winnow out those costly also-rans as early in the game as possible.
And there's another headache for which aspirin is not enough. Analyst Nover estimates that fewer than one tenth of one percent of substances that are deemed targets for investigation actually pan out as marketable drugs. The challenge to the industry, he says, is to use IT not only to get more information faster, but to get better information. "Money needs to be spent very wisely now," Nover says. "To do that, pharma companies need correct data that is easy to use and at their fingertips. If they have that, they can more quickly make the 'no-go' decision. And the sooner R&D money is saved, the sooner it can be spent elsewhere." The point isn't lost on Dunbar. "The productivity of R&D has not been sufficiently good," he says. "We need to improve it to continue to enjoy our attractive positions in investment portfolios."
Other companies faced with the pressure to move faster in the face of these challenges might be tempted to merge or acquire to pick up speed, but Lilly CEO Taureldespite the FDA's recent crackdownreaffirmed in August that's not an option. Taurel prefers partnerships, many of them to help farm out the risk and the cost of gaining speed. On Sept. 20, Lilly said it would pay up to $325 million to Amylin Pharmaceuticals, a biotech company based in San Diego, for the rights to a potentially promising treatment for diabetes.
While a few analysts, including Nover, darkly muse that Lilly just might be exposing itself to a takeover, the antimerger policy, at least for now, is just fine with Dunbar. An M&A strategy, he says, could be another speed bump, and might prove even more confining to his chances of using IT to help bolster the company's bottom line. "At least my legacy systems can talk to each other," he says. "Integrating new systems together would only cause more delays" in the pipeline.
Maybe so, but limiting one's options that way only puts additional pressure on Dunbar and his shop.
Can he deliver? Dunbar doesn't seem fazed by the challenge. Since being sent over to the IT side three years ago, to get information technology aligned more with the business goals of the company, Dunbar has had his work cut out for him. Not only has his mission always been straightforward, but his methods have also been fairly clear.
The Wait for Profits (click image to enlarge)
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