Eli Lilly 2011 Annual Report Download - page 23

FORM 10-K
To supplement our internal efforts, we collaborate with others, including educational institutions and research-
based pharmaceutical and biotechnology companies. We use the services of physicians, hospitals, medical schools,
and other research organizations worldwide to conduct clinical trials to establish the safety and effectiveness of our
pharmaceutical products. We actively seek out investments in external research and technologies that hold the
promise to complement and strengthen our own research efforts. These investments can take many forms,
including licensing arrangements, co-development and co-marketing agreements, co-promotion arrangements,
joint ventures, and acquisitions.
Drug development is time-consuming, expensive, and risky. On average, only one out of many thousands of
molecules discovered by researchers ultimately becomes an approved medicine. The process from discovery to
regulatory approval can take 12 to 15 years or longer. Drug candidates can fail at any stage of the process, and even
late-stage drug candidates sometimes fail to receive regulatory approval or achieve commercial success. After
approval and launch of a product, we expend considerable resources on post-marketing surveillance and clinical
studies to collect and understand the benefits and potential risks of medicines as they are used as therapeutics. The
following describes the new drug research and development process in more detail:
Phases of New Drug Development
Discovery Research Phase
The earliest phase of new drug research and development, the discovery phase, can take many years. Scientists
identify, design, and synthesize promising molecules, screening tens of thousands of molecules for their effect
on biological “targets” that appear to play an important role in one or more diseases. Targets can be part of the
body, such as a protein, receptor, or gene; or foreign, such as a virus or bacteria. Some targets have been
proven to affect disease processes, but often the target is unproven and may later prove to be irrelevant to the
disease. Molecules that have the desired effect on the target and meet other design criteria become “lead”
molecules and go on to the next phase of development. The probability of any one such lead molecule
completing the rest of the drug development process and becoming a product is extremely low.
Early Development Phase
The early development phase involves refining lead molecules, understanding how to manufacture them
efficiently, and completing initial testing for safety and efficacy. Safety testing is done first in laboratory tests
and animals, to identify toxicity and other potential safety issues that would preclude use in humans. The first
human tests (often referred to as Phase I) are normally conducted in small groups of healthy volunteers to
assess safety and find the potential dosing range. After a safe dose has been established, the drug is
administered to small populations of sick patients (Phase II) to look for initial signs of efficacy in treating the
targeted disease and to continue to assess safety. In parallel, scientists work to identify safe, effective, and
economical manufacturing processes. Long-term animal studies continue to test for potential safety issues.
Of the molecules that enter the early development phase, typically less than 10 percent move on to the product
phase. The early development phase normally takes several years to complete.
Product Phase
Product phase (Phase III) molecules have already demonstrated safety and, typically, shown initial evidence of
efficacy. As a result, these molecules generally have a higher likelihood of success. The molecules are now
rigorously tested in much larger patient populations to demonstrate efficacy to a predetermined level of
statistical significance and to continue to develop the safety profile. These trials are generally global in nature
and are designed to generate the data necessary to submit the molecule to regulatory agencies for marketing
approval. The potential new drug is generally compared with existing competitive therapies, placebo, or both.
The resulting data is compiled and submitted to regulatory agencies around the world. Phase III testing varies
by disease state, but can often last from two to four years.
Submission Phase
Once a molecule is submitted, the time to final marketing approval can vary from six months to several years,
depending on variables such as the disease state, the strength and complexity of the data presented, the novelty
of the target or compound, and the time required for the agency(ies) to evaluate the submission. There is no
guarantee that a potential medicine will receive marketing approval, or that decisions on marketing approvals or
indications will be consistent across geographic areas.
We believe our investments in research, both internally and in collaboration with others, have been rewarded by the
large number of new molecules and new indications for existing molecules that we have in all stages of
development. We currently have approximately 65 drug candidates across all stages of human testing and a larger
number of projects in preclinical development. Among our new investigational molecules in the product phase of
development or awaiting regulatory approval are potential therapies for diabetes, various cancers, Alzheimer’s
disease, rheumatoid arthritis, lupus, psoriasis, schizophrenia, depression, and pancreatic exocrine insufficiency, as
well as an imaging agent for detecting beta-amyloid plaques (which are associated with Alzheimer’s disease) in the
brain. We are studying many other drug candidates in the earlier stages of development, including molecules
targeting various cancers, diabetes, obesity, Alzheimer’s disease, depression, bipolar disorder, migraine,
atherosclerosis, anemia, rheumatoid arthritis, musculoskeletal disorders, and renal diseases. We are also
developing new uses, formulations, or delivery methods for many of these molecules as well as several currently
marketed products, including Alimta, Cialis, Effient, Erbitux, Forteo, and Humalog.
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