ddn Online

The Blog of Drug Discovery News

Earning your way

According to Dow Jones Newswires, Eli Lilly & Co. is now basing employee bonuses partly on advances in its drug research pipeline, a change that the company disclosed in a filing Friday with the Securities and Exchange Commission recently. In other pay-related news, the company also said the value of total compensation for CEO John Lechleiter went down to $16.5 million for 2010, a 21 percent drop from his 2009 pay. (Reportedly, this was at Lechleiter’s request, made for the second year in a row, due to Lilly’s business challenges.)

Lilly sees the experimental drug pipeline as its key to growth, as well it should considering it’s a Big Pharma company. And this is clearly a move in line with that notion, to encourage advancement toward market approval of its potential therapeutics. Reportedly, most Lilly employees are eligible for cash bonuses, and a smaller pool (including managers) are also eligible to receive equity-based bonuses.

Previously, Lilly’s employee cash bonuses were based primarily on how Lilly’s financial performance measured up against competitors. Now, in addition to the research-based element, cash bonuses will be based on whether Lilly meets internal goals for financial performance, and the peer-group comparison will be dropped.

It will be interested to see in the coming years (assuming results are visible before I exit the business of covering pharma and biotech news) how well this plays out and how effective it will be.

But it is an intriguing way of not only encouraging people to get workable products out there, but no doubt to also encourage them to stay with the company in a more long-run fashion.

The news also put me in mind of the GSK R&D Day in Boston that I attended in late 2010. Much of the talk from GSK execs of various types to us media folks was about new ways to do discovery and development, with unique corporate-academic partnership structures, risk-sharing deals with up-and-coming biotechs and other such innovations.

Clearly, the big boys and girls of pharma are not only recognizing that things have changed, but are trying to morph themselves in accordance with those changes. It’s good to see that companies that have traditionally been too keen on remaining…well, traditional…are trying to move outside the normal boxes.

Question is, will their efforts work? I hope it’s not too little, too late and instead will be a “Just in time” set of solutions.

February 7, 2011 Posted by | Corporate | Leave a comment