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What mistakes did Eli Lilly make in its product development efforts? Why were those mistakes made?

1) Going back in history, what mistakes did Lilly make in its product development efforts?
2) Why were those mistakes made?
3) As you analyze what lessons Lilly needs to have learned from its past experience, apply those lessons to the innovation projects on Larry Ellingson's current agenda. Is he pursuing the right opportunities? What should he do to ensure the success of these efforts?

The case summarizes Eli Lilly's history of innovation in its business, describing how the dimensions along which innovations have been made in the industry have changed. Lilly's innovation strategy has been to pursue ever higher performance products, while others in the industry have pursued more convenient products. At the time of the case, Lilly is contemplating offering services, not just products, to diabetic patients.

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1) Going back in history, what mistakes did Lilly make in its product development efforts?

First, it made the use of animal extracts and used it in human patients. Second, the purity of the insulin was not high enough. Third, the time period over which insulin was absorbed was not regulated and the absorption was sudden. Fourth, the development of Humulin was very costly and not affordable by customers. Fifth, the animal products were full of impurities. Sixth, the human insulin was not engineered with any differentiation and the human insulin was so similar to that produced by the competitors that the product was reduced to a commodity. Seventh, the new human insulin required refrigeration and that met with resistance from the pharmacists. Eight, the new human insulin did not match the rate of production of insulin in normal human beings. Nine, the funds commitment into the production development increased in an unplanned manner and so either funds commitment was too large or the cost of the product became very large. Tenth, the organization had a functional design where LRL was responsible for discovery of all compounds and that had little connection with the marketing of the product.
One of the glaring mistakes made by Lilly is not warn the customers of the potential dangers of the defect:
Report highlighting coma dangers to 15,000 sufferers who were switched to synthetic human substitute deemed alarmist, writes Paul Brown

Tuesday March 9, 1999 UK Guardian

Evidence that thousands of diabetics in Britain may have suffered a deterioration in their health from synthetic insulin has been withheld by the British Diabetics Association,
whose role is to advise patients and to protect their interests.

The evidence was contained in a report, commissioned by the association and completed six years ago, which highlighted dangers faced by about 10 per cent of the 150,000 diabetics
who had been switched from the traditional animal-derived insulin to synthetic human ...

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