From Knowledge at Wharton
As Sidney Taurel prepares to retire as chairman and CEO of Eli Lilly, he predicts that significant changes at all levels of the health care industry will affect doctors, payers and patients alike. "I believe that the years ahead will amount to revolution much more than evolution," Taurel says.
"It will not happen overnight, but we are already moving toward the barricades and headed toward a new business model," Taurel says. Headquartered in Indianapolis, Ind., Eli Lilly has approximately 40,600 employees and more than $18.6 billion in sales. The company's top-selling drugs include Prozac, Cialis, Evista and Darvocet.
But the new business model for companies like Eli Lilly will likely move away from production of such "blockbuster" drugs and instead will focus on highly individualized solutions for patients, according to Taurel. It will emphasize therapies that work more often than not, as well as therapies that have a very clear benefit, thereby creating a more integrated system with greater economic and medical value. While some have dubbed the changes in health care "personalized medicine," Taurel prefers the term "tailored therapeutics."
Revolutions occur due to necessity and opportunity, or "push and pull," he says. "The push is a set of conditions that make change necessary, and the pull is the revolutionaries who seize the opportunity to create a different order, one that is an improvement over the old one."
Taurel's talk of a revolution is timely, given that the pharmaceutical industry has seen the rate of drug approvals slow during the first half of this decade, even as it continues to face the challenges of rising costs, expiring patents and competition from generics.
The ultimate promise of tailored therapeutics is about "the individual patient, and we are prepared to stake our business on realizing that promise," Taurel says of Eli Lilly.
Health care costs are growing at an unsustainable rate, with an aging population as the driving force, according to Taurel. "Already, there are more people in Europe who are over 40 than under 40," while the median age in Europe is predicted to reach 50 by the year 2040.
Meanwhile, lower birth rates in the developed world have caused an inversion of the age pyramid, with too few younger, working people to help pay for the medical services being used by a growing older population. As the median age rises, so does the price of health care.
"Indeed, turning the pyramid upside down wrecks the traditional model of health care payment," Taurel says, adding that Medicare faces an unfunded liability of $30 trillion over the next few decades.
Another cause for concern: The value of health care products is coming into question, Taurel adds, citing recent survey results showing that only 22 percent of consumers believe branded prescription drugs present a good value compared with more than 60 percent of consumers who think generic drugs are a good value.
The practice of medicine remains too much of a trial-and-error process that has not maximized the efficacy of prescription therapies, which work about half the time for the most common diseases, he says.
"When our industry is better able to target our products to the patients who will really benefit, then our value proposition will surely grow," says Taurel. "When medicines are used more optimally to reduce the trial-and-error nature of health care, then fewer resources will be wasted and the cost of health care will be sustainable."
Taurel challenges the widespread notion that the key to the tailored therapeutics revolution is unlocking the secrets of the human genome. "Genomic medicine certainly serves to extend and, hopefully, to accelerate our goals, but the promise of this revolution is actually much broader and much more deeply rooted," he says.
He uses "biomarkers" -- or biological indicators -- as an example of one of the many modern advantages that will help drive the tailored therapeutics revolution. "Biomarkers are more pervasive and sophisticated than ever before, and they are coming into play in much earlier stages of drug development," Taurel says, noting that Eli Lilly now has biomarker strategies in place for nearly all molecules at the earliest clinical development stage.
Important benefits of biomarkers include the ability to weed out unpromising molecules early in the game, compress development times, run smaller and more focused trials and explore secondary indications earlier. "We hope that some of the beneficial effects of widespread biomarker indication will be shorter cycle times and lower costs in drug development," Taurel says.
Recognizing the difference between tailored therapeutics and personalized medicine is important, he adds. He describes tailored therapeutics as a larger concept that encompasses the many different types of personalized approaches to medicine.
"A good tailor's abilities go well beyond alteration," he says. "The custom-made suit is his ultimate creation."
Taurel cites examples of Eli Lilly's work in tailored therapeutics, such as its use of new technology in protein engineering to design a molecule that could reach a large percentage of non-Hodgkin's lymphoma patients who don't respond to current therapy. Eli Lilly is also working to help doctors better identify patients who can benefit from specific treatments. All these efforts, while achieving the primary goal of practicing good medicine, also create a more stable financial environment in the health care industry. "Good medicine lines up with good business in every case," Taurel says.
Despite his optimism about the future of tailored therapeutics, Taurel acknowledges that some in the industry worry about the current business model being overturned -- specifically, that the lack of blockbuster drugs will reduce big pharma's ability to pay for the next generation of research and development.
