Eli Lilly CEO David Ricks, speaking to the slow and steady progress that brought tirzepitide to the world, says the Indianapolis pharma is now ready to open up the chocolate factory.
“I know a number of biotechs are in the room at this conference so it’s worth mentioning: we’re open for business on external innovation,” Ricks said at the J.P. Morgan Healthcare Conference Tuesday.
That doesn’t just mean gobbling up companies. Ricks said the pharma’s approach over the past few major acquisitions—see Loxo Oncology in 2019—has been to buy the companies and keep them operating more at an arm’s length, retaining the talent and allowing them to continue bringing new, exciting ideas to the table.
“Most of the Big Pharma companies in our industry, and certainly Lilly for the longest time, thought about acquisition as grabbing an asset. Essentially, go into a company, take their work, thank them very much. The people move on to the next thing. And then as Big Pharma, we envelop that and prosecute it forward,” Ricks said.
Lilly doesn’t want to do that anymore. Starting with Loxo, the company began to prioritize the people more.
“We think about now, acquisition is not just assets, but people and methodologies and ways to make even more medicines,” Ricks said. “Surely one of the ways that Big Pharma can grow R&D productively is by having more great minds around the table and more difference in how we think about creating drugs.”
Pointing to a number of other acquired companies, including Point Biopharma, Ricks said the leadership has stayed on. He calls these “satellites to the Lilly ecosystem.”
Ricks gave the standard CEO answer to the question of whether he would pull the trigger on a larger M&A deal right now: “Never say never.” Revenue-stage companies “have challenges” that might complicate the business case for such a transformative, or “messy” deal, he said.
“If someone had like a platform or like a really strong pipeline that we could add value to, I don’t think the number next to the price tag is such a big deal anymore,” Ricks said. “I used to answer that question differently.”
The reality is, most companies that are eligible for buyouts are in the earlier stage. Lilly doesn’t mind the risk of taking on an early-stage company and just has to be better than its competitors at predicting what’s going to be the next big thing in medicine.
“In our domains of expertise, we better be able to call balls and strikes better than our competitors and maybe better than even venture capital. And if we can do that, we can pick winners,” Ricks said.