SHANGHAI – Eli Lilly opened a brand new Asian office and unveiled a major expansion at a second office in as many days as part of a company-wide shift to a new collaborative research and development model, company officials told PharmAsia News.
Lilly opened a new facility Oct. 15 in Shanghai, which will house its R&D headquarters in the region. On Oct. 16, the company then unveiled an expanded state-of-the-art research facility, the Lilly Singapore Center for Drug Discovery, at the Biopolis in Singapore.
Robert Armstrong, vice president of Lilly’s global external research and development, said that establishing the China office provides an important portal for its new innovation network.
“The existing model of drug discovery where the internal organizations deliver all components of the package is being seriously challenged as productivity is dropping across the industry,” Armstrong said. “Traditional outsourcing offers certain cost advantages but does little to address the fundamental problem with regard to risk profiles and resource efficiency.”
“China, with its vast supply of scientific talents, vibrant entrepreneurs, and superb infrastructure, will become a fertile ground to define the winning model of future drug R&D,” he added.
In 2001, Lilly was the first MNC to establish a research center in Singapore, through a partnership with the Singapore Economic Development Board (PharmAsia News, March 28, 2007).
The LSCDD is the world’s first center to conduct drug discovery through this approach of discovery research, integrated informatics and bioinformatics, Jonathon Sedgwick, managing director and chief scientific officer of LSCDD, said.
The expanded LSCDD has added discovery research and integrated informatics units, he said.
The first new unit, drug discovery research, focuses on the identification and development of new medicines. Oncology and diabetes research teams utilize epigenetics, which refers to changes in gene expression caused by environmental factors rather than changes in the underlying DNA sequence, and adult stem cells as key approaches for drug development, the company said.
The second unit, integrative informatics, focuses on the integration of heterogeneous datasets, algorithm development, statistical analysis, and integrated data analysis workflows; the outcomes of which eventually get wrapped up into software tools for global implementation and usage by scientists and clinicians across all therapy areas at Lilly, the company said.
“At a strategic level, LSCDD is about expanding into Asia to leverage talent and to establish collaborations with others to support our drug discovery efforts,” Sedgwick said. “Our expanded location now at the Biopolis, where other industry peers and academic institutions reside, will help us to achieve this goal.”
In addition to regional ambitions, Lilly, through LSCDD, intends to give back to the local scientific community.
“We will be placing internally developed informatics tools in the public domain and participate in the training of the next generation of scientists living in Singapore,” Sedgwick said. “In the coming years, we will build a very experienced workforce who will be very valuable to the global scientific community.”
Lilly’s recent developments in Singapore include the establishment of investigational medicine units at public hospitals, and the Singapore Clinical Research Institute, which pools knowledge and capabilities in late-phase trials, according to Tan Choon Shian, assistant managing director of the Singapore Economic Development Board, at LSCDD’s opening ceremony.
The Shanghai office, located at Zhang Jiang Hi-Tech Park, will house a scientific management and venture investment team, with a mission to identify, foster and manage collaboration opportunities with local firms and academic institutions, the company said.
The China team will be responsible for the management of outsourced and risk-sharing R&D projects, in-licensing and out-licensing activities of drug candidates and research technologies, and healthcare venture investment in the greater China region.
“Lilly has a unique approach in China,” Monica Chang, spokeswoman with Eli Lilly Asia’s Beijing office, told PharmAsia News. “Rather than establishing our own R&D center, we are pursuing a network strategy by working with different local partners, through outsourcing, risk-sharing development, or equity investment.”
FIPco vs. FIPNet
Chang said the change of approach can be captured by the company’s use of a new acronym to describe its R&D efforts.
“At Lilly, we are taking aggressive actions to transform,” Chang said. “One strategic approach is to transform from a fully integrated pharmaceutical company (FIPCo) to a fully integrated pharmaceutical network (FIPNet).”
Traditionally, with its FIPCo structure, Lilly owned and managed its entire value chain.
“But as a FIPNet, Lilly will draw on a broad range of resources from outside the company, increasing Lilly’s effective capacity and access to external capabilities, reducing Lilly’s level of risk while accelerating development,” she said.
According to Chang, Lilly has three defined levels of FIPNet.
“The first level is functional outsourcing that supports its global internal portfolio,” she said. “For example, the chemistry and early development work in our ChemExplorer and PharmExplorer ventures in China.”
“We expect to significantly increase our outsourcing, fee-for-service activities with existing and new partners,” she added.
The second level of FIPNet includes molecule-based, risk-sharing agreements, according to Chang.
“We are finding ways to increase our throughput using not only others’ capabilities but also their financial resources advancing some of our molecules outside of Lilly’s walls,” Chang said.
“The goal is to have no molecule in our portfolio sitting idle because of capacity constraints,” she added.
Chang said that last year Lilly signed a pioneering risk-sharing and reward-sharing deal with India-based Nicholas Piramal, under which Lilly transfers development rights to Piramal for preclinical small molecule drugs but holds the option to advance any of the drugs beyond Phase II trials (PharmAsia News, Jan. 12, 2007).
Lilly entered into a similar partnership in the preclinical arena with China’s Hutchison MediPharma focused on targets in oncology and inflammation, and Chang said Lilly expects to develop a number of additional molecules through similar arrangements in the future (PharmAsia News, Aug. 21, 2007).
The third level of FIPNet includes equity investments managed by Lilly Ventures and Lilly Asian Ventures with a combined $200 million in funds which, are investing in emerging biotech, health care IT and medical technology companies (PharmAsia News, Nov. 30, 2007).
“These investments enable us to evaluate and advance emerging technology that may play a role in long-term opportunities for Lilly,” she said. “China is in every level of our FIPNet strategy.”
The Singapore unit will work closely with its China counterpart on the new strategy, its chief said.
“LSCDD, especially the drug development activities, will operate exclusively through FIPNet and partner in areas that, while essential for the drug discovery process, are not essential for Lilly to own,” Sedgwick added.
Lilly’s R&D has invested extensively in China for the last six years, and the country is a critically important market for Lilly’s business, Chang said.
In China, Lilly has invested nearly $200 million in the areas of manufacturing, research and development, its local business, and corporate social responsibility, according to Chang.