Waving the white flag – Lilly Surrenders
In perhaps the clearest sign yet that Lilly (NYSE:LLY) is no longer a serious player in diabetes the company announced that they would be conducting their diabetes pipeline update during the upcoming American Diabetes Association (ADA) annual conference. This is not surprising or unusual, what is truly surprising and very unusual is when they are conducting this event, Monday June 11, 2012 at 7:00 pm EST. Lilly not only picked the last full day of the conference, they picked a time well after markets close and most attendees will headed home.
This is just the latest sign that Lilly once THE dominate player in diabetes has become an also-ran in the space. As Diabetic Investor reported when Novo Nordisk (NYSE:NVO) and Sanofi (NYSE:SNY) reported earnings both companies felt very comfortable taking pot shots at Lilly, something that would have never happened just a few years back. The harsh reality is Novo and Sanofi both know that Lilly isn’t really much a competitor anymore and likely won’t be in the future given their very lackluster pipeline which includes a series of me-too, copycat drugs that even if they make it to market will be the second, more likely third entry into that market.
Diabetic Investor can’t put an exact date on when Lilly’s decline began but one thing is certain for a company that has such a rich history in diabetes and claims that the diabetes franchise remains a priority, they have gone from the penthouse to the outhouse. Perhaps we should have known this was going to happen way back when Novo was first making their entry into the US market and captured the Wal Mart account for insulin. Diabetic Investor called the company for a reaction which was basically it’s wasn’t a big deal as patients shouldn’t be changing which insulin they use without first consulting their physician. The company seemed clueless to the fact that the Novo insulin was not only similar to their offering but cheaper and that physicians would have no problem switching their patients to the cheaper version, which is exactly what happened. The fact is Novo came into Lilly’s backyard, kicked their butts and never looked back. In the ultimate sign of just how things have turned upside down for Lilly, the company recently captured the Wal Mart business a move they hailed as a major coup.
Given the amount of time we’ve spent writing about how poorly they handled the Amylin (NASDAQ:AMLN) relationship about all we can add today is that this unfortunately is a perfect example of Lilly’s arrogance. Yes there was a time when companies actually wanted to partner with Lilly and the Lilly name did stand for something other than being a lousy partner, however those days are long gone and the company now has one of the worst reputations in the industry. The fact is Lilly still thinks they’re the bell of the ball when in reality they are viewed more like Typhoid Mary.
It would be easy and convenient to blame the company’s CEO for this decline but that would be too easy as this the entire diabetes team in their own way is responsible for this disaster. When the last chapter of this story is written it will conclude that it was their arrogance and hubris that turned a once dominate, legacy franchise into a third rate, two bit company who has little to offer the diabetes market expect a memory. Diabetic Investor can only hope that the company now humbled has learned its lesson, has learned that it’s not good business to go around screwing their own partners; that they return their roots and get back to providing patients with innovative solutions.
