Eli Lilly plans to double its insulin and device manufacturing capacity by 2017 without building any new production plants.
Growth of the diabetes portfolio at Lilly will require greater quantities of insulin and devices but the firm is opting against building plants or increasing outsourcing. Instead, Lilly plans to boost output at existing sites by standardising each plant so they can all handle any insulin product.
“We're working toward a flexible model that will enable us to manufacture more in the same facility. This flexibility will translate into increased production and capacity,” Kelley Murphy, director of communications, Lilly Diabetes, told in-PharmaTechnologist.com.
The decision has financial motivations. Lilly executives claim the plan is equivalent in value to a blockbuster drug because it avoids the capital costs of new plants and cuts outgoings over time.
Savings are expected to translate to margin improvements of several percentage points in the overall insulin business. For a company like Lilly, which faces rising generic competition and uncertainty around replacement revenues, this represents a significant boost to the business.
When contacted by in-PharmaTechnologist.com Lilly was unwilling to divulge many technical details of the plan. The press officer shared some information though and Lilly executives also spoke about the plan on last week’s conference call to discuss second quarter financial results.
During the call Derica Rice, chief financial officer at Lilly, said the company is “implementing a process technology agenda to standardise along common platforms for insulins and devices.”
The agenda will give diabetes manufacturing plants at Lilly the capabilities to produce the full range of insulins in its portfolio and pipeline. After completing the project Lilly expects to cut the unit cost of its insulin products and devices while benefiting from the increased flexibility too.
Bringing it all back home
The decision by Lilly to make better use of its existing infrastructure is in keeping with the deal it struck with AMRI last year. After years of doing chemistry work in China Lilly brought it back to its facility in Indianapolis and contracted AMRI to provide more than 40 scientists for the project.
AMRI says Lilly improved project management and communication by bringing the work back to its home territory. The move also made better use of existing infrastructure, as should the insulin manufacturing standardisation project.
Some of Lilly’s Big Pharma peers are pursuing similar strategies. In February Simon Dingemans, chief financial officer at GlaxoSmithKline, said the firm had brought some work back in-house.
“It saves us going to an outsourced third party, we're loading our own plant more effectively, and we’re driving down the cost of goods in the consumer business by tens of percent,” Dingemans said.