Eli Lilly’s history
Eli Lilly was founded by an ex-Union colonel of the same name in 1876. Since then, Eli Lilly has grown into a global powerhouse that’s been a member of the S&P 500 index since 1971.
In the late 1800s, when Eli Lilly was started, it was common for medicine to be sold from the back of wagons by questionable salespeople. Those products rarely disclosed their ingredients, and due to haphazard compounding, there was significant variability of ingredients from batch to batch.
To change that, Eli Lilly focused initially on producing standardized prescription medicines that fully disclosed their ingredients. As part of the quest toward standardization, the company pioneered the use of gelatin capsules that could more precisely control dosage. It also developed flavorings so that medicine was easier to take.
The company’s focus on improving existing medications began shifting in earnest to research and development in the 1920s. After George Henry Alexander Clowes was hired as director of biochemical research in 1919, Eli Lilly secured the rights to research on insulin by University of Toronto scientists J.J.R. Macleod, Frederick G. Banting, and Charles H. Best in 1922. Eli Lilly launched its first commercially available insulin, Iletin, in 1923, the same year that Banting and Macleod won a Nobel Prize for their research.
Due in part to Iletin, Eli Lilly and Co.’s sales grew to $9 million in 1926. That helped fund its development of Liver Extract 343, a treatment for a blood disorder called pernicious anemia that launched in 1928, and Liver Extract 55, a blood-disorder drug developed in collaboration with the University of Rochester that launched in 1930.
Sales growth for these drugs largely offset headwinds from the Great Depression. As a result, Eli Lilly and Co. was able to invest in new research facilities, and expand outside of the United States, while other companies were retrenching.
The company’s expansion gave it an advantage when World War II broke out. During the war, Eli Lilly played a major role by supplying soldiers with penicillin, an antibiotic, and merthiolate, an antifungal and antiseptic. It also provided the military with blood plasma, an alternative to blood that’s easier to store and transport on the battlefield. Revenue tailwinds as the war ended resulted in sales reaching $117 million in 1948, up from about $13 million in 1932.
In 1952, Eli Lilly and Co. became a publicly traded company. During the 1950s, Eli Lilly’s successes included the development of the antibiotics vancomycin and erythromycin. More importantly, it was chosen as one of five manufacturers of the polio vaccine, and by 1955 it was manufacturing more than half the polio vaccine produced in the United States.
In the 1970s and 1980s, the company launched Keflex, one of the most widely used antibiotics in history; Dobutrex, a drug used to treat heart failure; and Ceclor, which at one point was the best selling oral antibiotic on the planet. Eli Lilly also developed the leukemia drug Eldisine; the arthritis medicine Oraflex; and the analgesic Darvon.
Acquisitions began to play a more important role in the company’s growth, too.
In 1971, Eli Lilly bought the cosmetics company Elizabeth Arden. Then it bought the medical instruments company IVAC Corporation and the heart-disease medical device company Cardiac Pacemakers Incorporated in 1977. In the 1980s, the company’s acquisitions included Physio-Control Corporation, Advanced Cardiovascular Systems, Hybritech, and Devices for Vascular Intervention.
In the 1990s, it acquired Pacific Biotech, Origin Medsystems, Heart Rhythm Technologies, and the prescription-drug benefits manager PCS Health Systems. These deals were important because its medical devices and diagnostics division was contributing about one-fifth of its sales by the early 1990s.
The company’s R&D team was also hard at work at the time, and in 1987, it won approval from the Food and Drug Administration (FDA) of Prozac, a top-selling antidepressant that contributed tens of billions of dollars to Eli Lilly’s top line before it lost patent protection in 2001.