Is There Any Hope for Eli Lilly & Co. (LLY)? – Merck & Co., Inc. (MRK), Pfizer Inc. (PFE)

Playing to strengths
The number of drugs in the pipeline is important but not nearly important as the caliber of the drugs. Unfortunately, it can be difficult to determine how much potential mid-stage drugs really have.

Results from phase 1 don’t tell us a lot. And there’s always the possibility that a drug that experiences great success in phase 2 won’t have nearly the level of success in late-stage studies. We can, though, at least look at the therapeutic areas addressed by the drugs.

Source: Company website

Lilly seems to be playing largely to its strengths. The company’s top mid-stage focus is in oncology, an area where the company has see considerable success in the past with Gemzar, Alimta, and Erbitux. Lilly is also a major player in the diabetes market with Humalog, Humulin, and Tradjenta. The presence of four phase 2 drugs targeting diabetes fits in well with the company’s direction in that market.

Neuroscience is an area where Lilly needs new drugs to stay competitive, with Zyprexa already going off patent and Cymbalta losing exclusivity this year. The company counts three phase 2 drugs in this therapeutic category (plus another two in late-stage trials.) Similarly, Lilly loses patent protection for osteoporosis drug Evista next year. One of the two musculoskeletal drugs in phase 2 target this indication, while the other addresses disuse atrophy.

Positively speaking
Not everything looks totally bleak for Eli Lilly & Co. (NYSE:LLY). The company’s phase 2 pipeline looks strong (at least in volume) compared to several other drug makers. Lilly is also focusing on several areas that fit it well. There — I feel better for being able to say something positive about the company.

But (you knew one of those was coming), Eli Lilly & Co. (NYSE:LLY) still has the most perilous pipeline considering how badly it needs new drugs quickly. And it is still the frailest big pharma overall. Maybe somewhere down the line we can have plenty of good things to say about Lilly, but the next few years just don’t look too promising. Of that outlook, I’m quite positive.

The article Is There Any Hope for Lilly? originally appeared on Fool.com and is written by Keith Speights.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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