Eli Lilly and company invented an insulin pen that helped patients to inject insulin easily while others focused on insulin improvement. While others tried to obtain the market by improved insulin (sustain technology), Eli Lilly approached the market with a new method, insulin pen (disruptive technology).
Other insulin companies believed that improving better insulin was the best way to obtain more market share. However, Eli Lilly thought outside of the box. The company understood the patients’ need for convenience and invented an insulin pen. The company’s innovation was remarkable. The company’s innovation in insulin was second only to its depression drug, Prozac.
What mistakes did Eli Lilly make in its development efforts?
Eli Lilly made a mistake with their Humulin product. This product was supposed to replace animal insulins, which could have the problem of being impure. Unfortunately, Eli Lilly already had 85% of the market. So the new product did not get a good opportunity to survive because it was competing against existing products from the same company.
Why were those mistakes made?
The mistake that Eli Lilly made was to have invested as much as $700 million in producing Humulin even though the market was not so much dissatisfied with highly purified pork insulin. The market was not ready so it responded poorly to Humulin. Also the price was too high.
What are the lessons learned and what projects should Larry Ellingson emphasize?
Even though the introduction of Humulin in 1980 was a failure, the market for Humulin later on became very attractive. By the early 1990’s Humulin accounted for 80% of Eli Lilly’s insulin volume. The lesson to learn here is that education was important in getting the market ready for this new product. Mr. Ellingson should emphasize the Match and insulin pen projects especially since there is an arm of Eli Lilly that is out there to educate consumers. Match is a product that mimics the normal way that insulin is secreted in people without diabetes. The insulin pen helps people to inject insulin more regularly at the appropriate times.
Is Eli Lilly talking to the right persons about product features and advancements?
If the company keeps investing in effective consumer marketing and does not see itself as just a traditional pharmaceutical business, it can get enough information about product features and advancements. However, if it relies on the kind of information that caused on of its executives to say that because the company already had such a large market in vials, that it should not cannibalize such sales with pen cartridges, then it is not talking to the right people. The executive even went as far as to say that the gross margin on vials is better than that of cartridges, which is not true.
What should Larry Ellingson do to ensure the success of Eli Lilly’s efforts to grow and expand its market?
He should invest in new product development because this is the nature of pharmaceutical business (they usually make desirable discoveries by accident) and this is the best way to create growth and expansion.