Lilly's Evolving Corporate Venture Model
This article was originally published in Start Up
Executive SummaryOf all the big pharmaceutical companies, Eli Lilly & Co. has arguably been the most aggressive and creative in finding outsiders to help develop their drugs. With its latest venture, Lilly hopes to learn lessons from a past failed initiative. The Indianapolis drug firm is set to put up to $150 million to work, backing three traditional venture funds as part of a strategy that outsources development of its own molecules.
You may also be interested in...ď»ż
As part of a new R&D investment approach, Eli Lilly has partnered with TVM Capital and HealthCare Ventures, which have raised $250 million and funded the start of eight single-molecule companies. Corporate Business Development VP Darren Carroll discussed how the companyâ€™s venture initiative has evolved during Elsevierâ€™s Pharmaceutical Strategic Alliance conference Sept. 25.
One of two venture firms signed up to run an Eli Lilly â€śmirror portfolioâ€ť of single-asset companies, venerable TVM Capital has made significant changes to get its new model off the ground.
If 2010 was the year when pharma introduced new models, 2011 was the year it discovered that executing on its plans required a new mindset. There was a realization that pharma input and capital were required at the earliest stages of company creation. Innovation remained the order of the day, though pharmaâ€™s attempts to innovate looked strikingly similar to one another. We continued to see risk-sharing deal structures, emphasis on emerging markets, ongoing externalization and the biotech-ification of pharma, and stronger emphasis on â€śunmet medical need. Pharma also did more to work with VCs, payors, generics companies, and each other. The year saw a recovery in US drug approvals and launches, but the high prices associated with some of those new therapies and austerity in Europe also shed light on the health technology assessment-dominated future that likely faces most markets, including the US.