Of Eli Lilly&Company - Case Study Example

An aging population and the introduction of new products create new opportunities for the firm in the future. New markets in Asia and Africa also present new opportunities for these drug companies (David, 2011). Pharmaceutical sales globally are set to increase in the region between 5 to 7 percent in 2011 to the way over $880 billion, majorly driven by the expected growth in the developing markets (David, 2011). China’s sales alone are expected to grow 25- 27 percent, showing an increase in the middle class, growing standards of living, and grown government healthcare funding.

Bio tech companies have over the years shown a robust revenue growth, albeit from a way much smaller base. Purchasing the bio tech firms will increase their projected sales by between 3 – 5 percent (David, 2011). Another reason as to why it is important for Eli Lilly to purchase bio tech firms is; the discovery and development of drug usually takes a number of years to finish, and could cost way above $500 million, with a no guarantee that there is eventual approval in the market. When a drug becomes registered and gets a patent, it becomes protected against the same or generic drugs for 5- 15 years (David, 2011).

Due to this, loss of the patent protection can greatly affect the firm’s sales and earnings. Acquiring biotechnology drugs companies is an attractive route. Lily should purchase this biotechnology drug companies since it will be essential in the pharmaceutical industry in the long run. Biotech companies have continued to experience good revenue growth, and by purchasing them; lily would become assured of continued profits in the industry (David, 2011). The best way that lily can enter the global market is by introducing a new product in the market.

The top three drugs of Eli Lily; Zypera, Cymbalta, and Humalog have patent expiration by 2013 (David, 2011). The