In France

1. In France Best in France Case study September 2006 – December 2006 By Thiébaut KELLER, Céline LEBLANC, Antoine LEPRETRE

2. Outlay • Lilly’s overview • Specific issues of the pharmaceutical sector • Why and when did Lilly come to France • Main constraints in France

3. Eli Lilly Co. Overview Eli Lilly & Co. Major drugs introduced

4. Source (11/06 figures) : http://www.lilly.com/about/highlights.html Eli Lilly & Co • Founded in May 1876 by Colonel Eli Lilly in Indianapolis, USA • 14.6 billion $ net sales in 2005 • 41 854 employees worldwide (19% in R&D) • Clinical research in more than 50 countries • Research and development facilities located in 9 countries • Manufacturing plants located in 13 countries • Products marketed in 143 countries : Lilly’s performance influences these economies

5. Source : http://www.lilly.com/about/highlights.html Major drugs introduced (1/2) • Prozac®, which revolutionized the treatment of depression • Zyprexa®, breakthrough product for schizophrenia and acute mania associated with bipolar disorder • Cialis®, a new treatment for erectile dysfunction • Gemzar®, for pancreatic and non-small-cell lung cancer, one of the world's best-selling oncology agents

6. Source : http://www.lilly.com/about/highlights.html Major drugs introduced (2/2) • Humatrope®, therapy for growth hormone deficiency • Humulin®, human insulin, the first human-health-care product created by biotechnology • Ceclor®, which became the world's top-selling oral antibiotic • Iletin®, the first commercially available insulin product, in 1923

7. Lilly France Overview Institut Lilly in France

8. Overview • Headquarters in Suresnes (92 Hauts-de-Seine) • Fegersheim’s plant (Alsace) : main production factory of the group’s subsidiaries, supplier of 126 countries all over the world. • 2,02 billion € net sales (1,53 billion € from exports) • 2980 employees : 4th most important subsidiary of Eli Lilly • 10th best employer in Europe (Hewitt) • 4th “great place to work” in France in 2005

9. “Institut Lilly” in France • Established in 1990 • 2 goals : • Supporting clinical research • Delivering educational and training programs to health care professionals and patients • Has provided grants to 250 researchers • Has delivered 90 training courses (90,000 professionals) • Specific courses for hospital pharmacists • Ex: Aims at destigmatizing schizophrenia

10. Lilly’s values 3 main values Lilly’s values in France

11. 3 main values • Respect for people : • Employees, customers, shareholders, partners, suppliers and communities • Integrity • Highest standards • Search for excellence • Continuous search for ways to improve the performance • Global values but adapted to each country to take into account cultural and corporate specificities.

12. Lilly’s values in France How do Lilly’s global values adapt to France? • Example: Search for excellence: • Means being #1 in the USA • In France, it means excellence in methods and work quality. Being #2 doesn’t really conflicting with the search for excellence.

13. Specific issues of the pharmaceutical sector Clinical trials : specific and strict regulation Research and development Responsibility

14. Clinical trials : specific and strict regulation • In France : “Autorisation de mise sur le marché”

15. Research and Development • R&D expenses : • $2.7 billion • R&D development laboratories in 9 countries • Clinical research in 60 countries • 20% of turnover invested in research • Necessity to discover breakthrough products, thanks to medical expertise, in order to finance research for new drugs. • Recruit and retain the highest quality employees is critical to success in this sector

16. Responsibility • To act responsibly and consistently : • Observing and complying with the laws • Set standards in operations • Greater transparency on trials (www.lillytrials.com) • Quality : people’s lives at stake : stakeholders trust is needed for the business to operate • Work with WHO • High standards in ethical behavior (social responsibility report) • Health, safety and Environment program (3 points)

17. Why and when did Lilly come to France A strategic location Quality workforce A great market French health care system

18. A strategic location • Plant in Alsace region: close to Germany, the first pharmaceutical market in the world • At the center of Europe: • Infrastructures • Well served by transportation : roads, airport, train • Close to European institutions • Headquarters in Suresnes (92), near Paris: • Close to institutions and agencies (AFSSAPS, etc.) • Close to La Défense business district

19. A quality workforce • Skilled and well-educated employees • Numerous students in pharmacy • Public research facilities: INSERM • High productivity • Productivity higher in France than the productivity of other plants of the group • Low absenteeism in Fegersheim • France is a net-exporter of high-profile executives within the group

20. A great market • France is a very attractive market : • more than 19 billion € in 2001 • US $2903 per capita vs. US $2307 in the OECD • 340 doctors per 100 000 inhabitants • The French spend a lot of money on medicine : they rank second within the OECD.

22. French health care system • Social security / High governmental investments • 76.3% of health expenses paid by the government • French doctors and hospitals are early adopters of new drugs • In 2001, 38% of the turnover made with prescription drugs launched less than 10 years before vs. 26% in Germany • Prices are not the lowest in Europe (close to the mean)

23. Main constraintsin France Social forces and regulations Mentalities The Judiciary Administrative

24. Social forces and regulations • 35h work week • Everything needs to be negotiated : high risk of strike. HOWEVER • Fegersheim’s plant is not syndicated. So far 0 day of strike.

25. Mentalities • New employees are carefully selected to fit the corporate culture • “Win-win” concept doesn’t always seem to be fully understood by the French • For example: new drugs will help the social and economic development of France and create value for Lilly • BUT it is sometimes only seen as a new cost for the Social Security

26. Judicial • The French society has become very risk-adverse (risk of punitive damages) : • “Principe de Précaution” is widely spread. Safety expectations are very high. • But in pharmaceuticals risk-zero does not exist • Nevertheless, no class actions in France yet • Difficulties for foreigners to understand the protection of unionists by Work Law.

27. Administrative • Many governmental agencies with whom Lilly must continuously negotiate: AFSSAPS, etc. • A lack of freedom to communicate about the products (whereas the lab knows its drugs the best) • Sudden and unexpected political decisions (new taxes, etc.) in spite of annual contracts with firms. • Very long approval process for new drugs : • Usually 2 more years to get approval of new drugs (“Autorisation de mise sur le marché”) than in other countries

28. Perception of French issues by American chief executives • Difficulties understanding both social and political phenomena • But pragmatic approach : • Relative Autonomy of French staff • Everything is controlled and measured, including the mood of the workforce • Freedom as long as indicators remain as good as expected

29. Prospects • Lilly keeps on investing in Fegersheim • Factory improvement and enlargement : Between 1998 and 2003, number of employees from 900 to 1800 : multiplied by 2.

30. Philippe DEFOSSES, Director of corporate affairs 13, rue Pagès - 92158 Suresnes Cedex desfosses_philippe@lilly.com

31. « Lilly believes that strong economies [NDLR: like France!]with a priority on human health [NDLR: like France!] and educated population [NDLR: like the French!] will yield the ultimate health care solutions »