Strategy of Lilly and challenges faced by Lilly:

The primary area of expertise and operation of Eli Lilly is the pharmaceutical sector, Eli Lilly is one of the oldest and well-reputed companies operating in the drug development sector. Since its incorporation, it is the primary business level strategy of Eli Lilly to develop and sale high quality drugs and medicines which help customers to get rid of various types of diseases.

Furthermore, the corporate level strategy of Eli Lilly is also very clear and straightforward, the company relies heavily on inorganic growth strategies. Eli Lilly acquires various companies operating in the pharmaceutical sector. In addition to this, Eli Lilly also focuses on diversification strategies, several acquisitions have been made outside the pharmaceutical sector.

The company also makes various equity investments in smaller and immature companies which could give some technological assistance to Eli Lilly in developing new drugs. When considering a new investment, it is the top priority and strategy to invest in companies which operate in the technological sector or the pharmaceutical sector.

Eli Lilly, 1998 (A) Strategic Challenges Harvard Case Solution & Analysis

Strategic Challenges faced by company:

It can be said that the company is facing many strategic challenges. The main reason for these challenges is the inherent risky nature of its strategies. The main challenge is the development of new drugs.In the recent times the competition in the pharmaceutical industry hasincreased drastically. In order to remain ahead the competitors and to sustain competitive advantage for long time, it is essential and very critical for the company to regularly develop new effective drugs.

However, it can be argued that it is almost impossible for any company to develop new drugs regularly because of there are various legal and operational complexities involved in this process thus representing a significant strategic challenge. Additionally, the availability of appropriate investment options is also a significant strategic challenge faced by Eli Lilly. It is highly likely that all the investment options are not feasible and it is also common that the venture capitalists don’t find any attractive investment options. Especially, the fact that E.Lilly invests only in the technological sector increases the intensity of this challenge.

Why did Lilly establish Corporate Venture Capitalist operations?

There might be many reasons which enforce Lilly to operate in the corporate venture capitalist operations. The main reason is the lucrative financial returns the venture capitalists generate from their investment, although the risk of CVCs is very high but the returns are also usually very huge. Moreover, the deteriorating industrial conditions of pharmaceutical industry also led the management to spread the source of income to more than one sector.

The competition is continuously increasing within the sector while the costs are also moving against the manufacturers and developers of drugs. In order to protect themselves from these unfavorable changes in the industry, the top management decides to operate in other sectors as well. For this purpose, they have acquired many companies but this decision was not so effective for Lilly. After the spinning-off of these companies the top..............

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