It’s rare to see a small army of staff cleaning windows and raking newly-seeded grass banks on a building site but time is money for top pharma companies and, even before its billion dollar biologics plant in Limerick is complete, Eli Lilly’s chief executive is in town to announce a further $1 billion (€895m) investment to double the size of the facility that will manufacture its new Alzheimer’s disease drug.
By the time Dave Ricks arrives, the frenetic activity had stopped and the staff have disappeared, replaced by an assembly of national and local politicians including Minister for Enterprise, Trade and Employment Peter Burke, Limerick newly-elected mayor John Moran and senior IDA Ireland figures.
Even against the background of Ireland’s storied success in attracting foreign direct investment, particularly in the life sciences sector, a $1.8 billion investment by a single company is attention-grabbing – especially when that money is chasing two of the hottest therapy areas in medicine.
Ricks is heading from the new Alzheimer’s biologics plant at Limerick’s Raheen Business Park down to Kinsale where the company formally opened an $800 million expansion of its facility there to try to meet demand for the company’s obesity medications.
Lilly is flying high right now. It wasn’t always so.
Cyclical game
Pharmaceuticals is a cyclical game with companies continually looking for new blockbusters to replace medicines that are coming to the end of their patent protection. Back in 2008 when I interviewed Ricks’ predecessor John Lechleiter, he was taking over a business that had not had a market launch in three years and had lagged the S&P500 healthcare index by 55 per cent over the previous decade.
Over the past 10 years, Lilly has outperformed that index by a factor of close to six, most of that on Ricks’ watch since he took over in January 2017. And the company that first brought insulin to the commercial market back in the 1920s is launching medicines that have the potential to rank among the biggest blockbusters in the history of the industry.
The Alzheimer’s drug, donanemab, for which Limerick will be one of just two manufacturing sites globally, is the most recent. For Ricks, it illustrates the long-term nature of drug discovery and the importance of persevering even when the company was under pressure.
“We have invested for three decades to find something that could slow Alzheimer’s. And now we have something that’s proven to do that,” he says of the drug which was approved in July by the American regulator, the Food and Drug Administration, and is currently under review in Europe.
“Probably five years ago, every other company abandoned this field, because it was deemed difficult to make progress. We did not. We persisted and succeeded. Now others will get in, but it will take them a half decade or more to make their way to the market. That’s a benefit of persisting when others give up.”
Marketed in the US as Kisunla, Ricks sees it as reflecting the purpose of companies like Lilly.
“We should focus our efforts on problems of significance. And when we do that, we create value in society, but also for our shareholders and everybody and employees, et cetera,” he says. But he is not pretending it is a panacea. Kisunla is only the third Alzheimer’s medication to come to market and like the others, it slows down the disease, it doesn’t cure it.
Clinical trial data shows that people at an earlier stage of the disease who were treated with the drug were 35 per cent more likely to show a significant slowing in disease progression compared to those taking a placebo and a 39 per cent lower risk of progressing to the next clinical stage of the disease.
It was successful in reducing amyloid plaques – proteins seen as triggers for Alzheimer’s – by 61 per cent after six months and by 84 per cent 18 months after starting treatment.
“It gives people months or years of more normal independent living. That’s a big gain, but it doesn’t cure it. So, we need to keep going,” Ricks says.
Lilly is currently studying the potential for donanemab in preventing the onset of Alzheimer’s in the first place.
“So, if you have the precursor proteins in your brain that are thought to, or proven now to cause the disease, you can deplete those and slow the onset,” he says, outlining the theory. “We haven’t proven that yet but we need to. That’s a big advance and a major investment we’re making.”
The company is also targeting another protein, tau, which is also implicated in Alzheimer’s.
The decision to build the Alzheimer’s plant in Ireland is testament to the role of IDA Ireland and the Government in facilitating multinational investment.
Lilly first announced plans for the greenfield site in Limerick in 2022, breaking ground a year later. The construction phase is just about completed, with the first medicine due to come off the production line in 2026 after a necessarily detailed FDA validation process.
Obesity
The Alzheimer’s breakthrough is Lilly’s most recent success but it is developments in obesity therapy that have turbocharged performance in recent years.
The company has a long history in diabetes care and, as with Danish rival Novo Nordisk’s Ozempic, its Type 2 diabetes drug Mounjaro was being taken off label as a treatment for obesity. Having gone through new clinical trials, Lilly now has approval for the underlying drug, tirzepatide, as a therapy for obesity under the brand name Zepbound.
Those trials showed Zepbound to be even more effective than Novo Nordisk’s Wegovy in managing weight loss, with adults over 18 and with a body mass index of at least 30 – or 27 with additional weight-related complications – losing up to 20 per cent or 52 pounds of weight.
Predictably, demand has surged. Lilly has spent $20 billion over the past four years building and acquiring manufacturing capacity to produce Mounjaro and Zepbound. That includes an $800 million of the company’s Kinsale plant which sees it quadruple the amount of tirzepatide it can produce, an expansion that was officially opened by Ricks on his whirlwind Irish tour.
Kinsale is special for Lilly in Ireland as the US giant’s purchase of that site back in 1978 was its first venture into the State. Now the company employs 3,500 people here at its three locations, a figure that will grow further with the latest Limerick announcement.
Asked about the role of Kinsale in the company’s obesity drug supply chain, Ricks describes it as “critical”.
“We need that running 24/7, 365 days a year,” he says as he acknowledges the company’s supply constraints.
“It’s not that we’re not meeting our production schedules. We’re exceeding them. But the demand is incredible. And I think it’s only going to grow, not just because people want to lose weight but, more importantly, because we’re proving that losing weight improves your health dramatically,” noting that there are more than 200 conditions that are implicated by obesity.
One in four people in Ireland is obese, according to Ricks and the numbers in the US are even higher, at 40 per cent. The company is working on more potent versions of the therapy for those struggling to get down to a healthy weight even with Zepbound.
It also has an oral form of the medicine in late-stage trials – something that is seen as a game changer in obesity treatment if it can get to market. And Ricks says the question of developing a treatment that allows people to maintain their target weight without medicine is another area of focus but one that requires more research.
Pharma’s #1
Eli Lilly is now comfortably the biggest pharmaceutical company worldwide by market cap, significantly ahead of the other big player in obesity meds – Novo Nordisk – in second. The company’s share price is up 53 per cent so far this year, far outpacing the general market.
And it is not just a two trick pony. While Mounjaro more than trebled sales year-on-year to $3.1 billion and Zepbound broke the billion dollar barrier for the first time since its release late last year, at $1.24 billion, the company’s breast cancer therapy Verzenio also pitched in with sales of $1.33 billion, 44 per cent ahead of the year ago period.
Between them, they accounted for $5 billion of the company’s $11.3 billion in revenue across its full product range. And that’s before the Alzheimer’s therapy Kisunla starts contributing to the numbers.
“We have a great business in various immunologic conditions, other diabetes products which we’re well known for as well. So, the business is performing across the board, really driven by innovation and making newer medicines for people with these difficult conditions,” Ricks says.
But developing the drugs is one thing. Getting access to market and pricing that allows a return on investment remain contentious.
“Of course, pharmaceutical pricing is controversial and healthcare resourcing is a difficult topic in every country,” Ricks says, “maybe only going to get more difficult.
“I think all advanced countries will have a demography problem and we need to think of new ways to solve health problems other than building more hospitals and hiring more clinicians. That will just add cost and it’s unsustainable.”
Perhaps, predictably, he argues that the answer lies in medicine that keeps people out of hospital settings in the first place.
“That seems to be the most efficient way to treat chronic illness. So, that’s an argument that needs to prevail. We’re not maybe that successful making it. People typically criticise – ‘oh, it’s an expensive input’. It’s true, although in most countries it is 15 per cent of total healthcare costs.
“But it probably is the most efficient 15 per cent in the total. So, we need to make that point.
“The other point we need to make, it’s kind of an abstract concept, but the medicines we sell today, fund the medicines for the breakthroughs for tomorrow.”
Lilly, he says, allocates 25 per cent of its revenue to research – $1 in every $4 it earns.
He thinks governments need to think longer term in terms of health budgets, as companies do, if healthcare is going to deliver the efficiencies that will be required.
“In healthcare financing, we tend to focus on the next year’s budget,” he says, referencing Ireland’s upcoming budget. “And we don’t talk about the 2040 budget. In business, I think we do a little better job of that. And what do we do? We make investments in efficiency to curb cost growth. We don’t just manage one year at a time. And I think this is the kind of logic we need to embrace.”
He points to the successful understanding of how vaccines can prevent dangerous and more costly interventions down the line “but we have not applied that same logic to chronic disease and 80 per cent of the cost in developed nations [healthcare budgets] is chronic disease.
“So, we need to move to a prevention mindset and it will involve a trade-off … but we would make that argument, that prevention is worth investing in.”
Infrastructural deficit
He is less animated by the ongoing concern over Ireland’s infrastructural deficit, noting that pharma processes like Lillys are less energy intensive that other areas such as data centres and chip production plants.
“What we’ll be doing here in Limerick is a water-based process. That’s one thing that Ireland is blessed with quite a bit of. Falls from the sky nearly every day. So, of course, we need it to be here and clean and so forth, but that’s been not so much of an issue.”
On power generation, he says Lilly has adopted an “aggressive stance” on renewables. It has one of the largest solar farms in the State at its Kinsale facility and plans a similar investment in Limerick.
One thing that does exercise them is the regulatory environment for pharmaceuticals and intellectual property in Europe.
“No country in Europe has a stronger interest in having a strong regulatory environment to protect the people and the environment [than Ireland],” he says. “We want that too. But also, one that is science-based and competitive on an international scale.
“I think sometimes the winds blow in different directions in Brussels and here. Ireland, which has the most intensive pharmaceutical footprint of any country in Europe, needs to be the leader in this.”
Plans to reduce IP protection at EU level are a particular concern.
“Last April, there was a big debate about reducing the reward period for innovative medicines. So, the [Alzheimer’s] medicine launching out of this plant in Europe, not yet approved in Europe, but we’ll enjoy 12 years of protection which is enough time for us to reinvest in R&D and come up with an even better medicine.
“They were threatening to short that by 20 or 30 per cent. That makes many, many medicines, probably half, not even worth pursuing. So, it has a disproportionate effect on the R&D investment, which then means fewer new medicines and fewer new plants.
“Fortunately, that was delayed, but we need a strong Irish voice in that.”
He also expresses concerns about some of Europe’s green agenda. “We want a clean environment as much as anybody,” he says, but adds that companies like Lilly need a science-based policy on use of industrial products so it can manufacture its medicines globally.
“First, we want to have a standard where we prove that a process is harmful, not just blanket approach. And then secondly, that we collaborate to work that out of the process, so that we don’t have to stop production for years and then restart, which is some of the risk,” he says.
“I think Brussels is driven, not necessarily by those principles all the time. And I think Ireland needs to advocate for those principles.”
All being well, can we expect further expansion of Lilly’s burgeoning Irish Alzheimer’s drug manufacturing business?
“There’s room on that site for one more if we need to. And we hope we need to because that means we’ve discovered something useful.”
C.V.
Name: Dave Ricks.
Age: 57.
Position: Chief executive and chairman, Eli Lilly.
Family: Married to Christina Ricks, a paediatrician, they have three children.
Outside interests: Backpacking and exercise in general.
Something you would expect: In a year when sales jumped 20 per cent and the group’s market cap surged 59 per cent, Ricks saw his pay rise 24 per cent to $26.6 million (€23.8 million), the highest since he took over back in 2017.
Something than might surprise: While now known as the leader of one of pharma’s powerhouse companies, he started his working life in a different sector altogether with Hewett Packard and then IBM. He also spent time in China as head of Lilly’s business there.
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