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Eli Lilly SWOT & PESTLE Analysis

ID : 52384153| Apr 2018

COMPANY PROFILE -Eli Lilly

Business Sector :Pharmaceuticals

Operating Geography :United States, Global

About Eli Lilly :

Eli Lilly is a global pharmaceutical company with focus on neuroscience, endocrinology, oncology, and immunology. Headquartered in Indianapolis, Indiana it operates in 125 countries as of 2018. The company's foundation date backs to 1876 when Colonel Eli Lilly committed himself to the creation of high quality medicines. Ever since then, the company has worked towards its mission of making medicines that help people live longer, healthier and more active lives. The company is also credited with the achievement of being the first one to mass produce penicillin, the polio vaccine. It conducts clinical research in more than 55 countries and has a dedicated and quality workforce of not less than 42000 employees.

Its mission statement states 'We make medicines that help people live longer, healthier, more active lives.' with a vision of 'We will make a significant contribution to humanity by improving global health in the 21st century.'

Its USP is 'Lilly makes medicines that help people live longer, healthier, more active lives.'

Eli Lilly Revenue :

$22,871.3 million (FY ending Dec 2017) (y-o-y growth of 7.8%)

$21,222 million (FY ending Dec 2017)

Competitive Analysis of Eli Lilly

SWOT
PESTLE
The SWOT analysis for Eli Lilly is presented below:
Strengths
Weaknesses
1. Vast Geographic Spread
2. Significantly huge market share
3. Sound financial indicators
4. Strong focus on innovation, alliances and R&D
1. Failed and problematic drugs
2. Price hike regulation and patent expiry to impact financials
Opportunities
Threats
1. Upward trend in US prescriptions of SGLT-2 and GLP-1 class of Diabetes drug
2. Acquisition of new drugs from smaller companies
3. Emerging Markets
1. Negative aspects of patent matters
2. Generic Pharmaceuticals
3. Potential Competition in diabetes segment
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Detailed SWOT Analysis of Eli Lilly

 

Strength

1. Vast Geographic spread: Eli Lilly, a global company with its heart in USA, has its footprints across UK, Germany, France, Spain, Italy, Brazil, South Asia, Middle East and North Asia- Pacific. Lilly international is responsible for operations across the aforementioned hubs. It delivers innovative medicines to more than 80% people around the world. This sort of geographic presence provides Eli Lilly the much needed footprints in the most significant target markets across the globe. The company plans to launch more than 50 potential products by 2020; constituting medicines in therapeutic areas such as oncology, diabetes and autoimmune disease- that shall help them foster a steady share of market growth globally.

2. Significantly huge market share: Eli Lilly enjoyed an increase of 6.95% in its total revenues for Q4-2017. Whereas, its competitors managed to grow at a rate of 6.52% in the same quarter. It commands a stronger hold over its competitors for both human pharmaceutical and animal health products owing to their effectiveness, safety and ease of use, price and demonstrated cost effectiveness, marketing effectiveness, and extent and quality of research and development for new products and processes. Eli Lilly's Animal Health segment saw an approximate improvement of 32.46% in its market share germinating out of a strong revenue growth of 33.2% in the same segment. Market share of Cardio-vascular segment boosted to 9.35%, while similar growth in other segments such as Endocrinology and Neurosciences were also seen. For the full year 2017, worldwide revenue increased 8 percent compared with 2016. Similarly for 2018, the company has in pipeline uptake of several newer products like Taltz, Lartruvo, Jardiance, etc. Through this product expansion, the company forecasts to maintain its current share in the market.

3. Sound Financial Indicators: An analysis of the Eli Lilly stock indicates the sound financial position of the company. Its share price is below the future cash flow value and at a moderate discount (>20%). Its earnings growth rate is expected to exceed the low risk savings rate of 4.5%, while outperforming the US average, as well. It is expected to efficiently use the shareholders’ funds with a Return on Equity greater than 20%. It has its debt well covered with an operating cash flow of 40.9%, greater than 20% of total debt. EBIT provides coverage of 85.5x times for the interest payments. It has been giving out stable dividends in the past 10 years. Dividends, 3 years from now are expected to be covered by the net profit as much as by 2.4x times.

4. Strong focus on innovation, alliances and R&D: Innovation, acquisitions and R&D happen to be strategic to the growth of Eli Lilly. Its Open Innovation Drug Discovery Program (OIDD) is a perfect strategy solution of how strict regulations, IP concerns and profit pressures can be dealt to adopt best practices for life science companies pursuing collaborative innovation. Open Innovation Centre, Lilly's latest and not-so-easy program is deemed to reap benefits for the company. This gives Lilly the necessary and instrumental access to new and new and different molecules, coupled with a network of partners predominantly made up of research universities and small biotechs. As rigorous as their IP protection has been, Lilly has successfully and very carefully developed a process such that their research does not get contaminated. This way Lilly as well as the external investigators, will both be protected. Moreover, five out of the last nine launches of Lilly stemmed from partnerships, which were nothing less than big pharmaceutical companies.

Weakness

1. Failed and problematic drugs: Eli Lilly has faced and is facing a number of lawsuits for certain dangerous drugs that it has manufactured. To state, Axiron is one such testosterone replacement therapy drug which is facing accusations of augmenting risk of heart attack and stroke and even death. Actos has been found to expose patients to risk of developing bladder cancer and congestive heart failure, Byetta is has potential side effects of pancreatic cancer and pancreatitis. Eli Lilly has also been in soup over its drug called diethylstilbestrol, against which cases of developing breast cancer have been filed. These and a few other problematic drugs have posed huge costs for the company.

2. Price hike regulation and patent expiry to impact financials: Eli Lilly's growth slowed down for the past few years, on account of failed clinical trials and lack of product development. Therefore, the company had to resort to price hikes on existing products before patent expirations made that impossible. It is one of the seven pharmaceutical companies that relied on price hikes for its revenue growth in 2016-17. Investors in the company are a little concerned about expiration of patent protection on Humalog which happened to be one of the biggest contributors to Lilly's revenue. Also, European drug regulators consideration of a similar drug manufactured by Sanofi over Humalog could be hurtful for the latter's sales, the price of which cannot be even hiked now.

Opportunity

This section is available only in the 'Complete Report' on purchase.

Threat

This section is available only in the 'Complete Report' on purchase.

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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in Eli Lilly Analysis Report

1. http://files.shareholder.com/downloads/LLY/5998474644x0xS59478%2D17%2D204/59478/filing.pdf

2. https://www.lilly.com/who-we-are/key-issues/intellectual-property

3. https://www.lilly.com/products/making-safe-high-quality-medicine

4. https://academic.oup.com/jiplp/article-abstract/12/10/815/4111248

5. https://simplywall.st/stocks/us/pharmaceuticals-biotech/nyse-lly/eli-lilly#038;#health?unique_symbol=NYSE:LLY&l=1&t=cnfg_cresbeznapr&s=3&id=255288&utm_source=post&utm_medium=finance_user&lt=Conc_ticker&utm_campaign=Conc_ticker

6. https://www.lilly.co.uk/en/responsibility/environmental-sustainability.aspx

7. https://www.mckinsey.com/industries/pharmaceuticals-and-medical-products/our-insights/whats-next-for-pharma-in-emerging-markets

8. https://www.statnews.com/2017/08/16/eli-lilly-canada-patents-zyprexa-strattera/

9. http://files.shareholder.com/downloads/LLY/5998474644x0xS59478%2D17%2D129/59478/filing.pdf

Copyrights and Disclaimer

Eli Lilly SWOT and PESTLE analysis has been conducted by Avneet Kaur Sahni and reviewed by senior analysts from Barakaat Consulting.

Copyright of Eli Lilly SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

Eli Lilly SWOT & PESTLE Analysis
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