Eli Lily Case

Case Study #2

Eli Lilly

Question #1:

* The major changes have occurred because the molecular structures being created are more complex, which require more expensive production methods and that because there is more competition in the market

* a company with a "blockbuster" product only gets to enjoy all the profits in this market for about two years until another company creates the product in another form

* then finally after ten years of the patent on the product even more companies can begin making much cheaper generic versions of the product and driving the price down even more.

* All these factors are causing Eli Lilly to have to speed up the rate at which they get a product to the consumer market and also be more efficient in producing the product so that they can make more of a profit in the market which has been driven down by all those factors

Question #2:

* Flexible

o More upfront costs

o More efficient with capacity because there's never excess

o The product can be released much faster and allows for the product to be more thought out

* Specialized

o Factory cost is much cheaper and yearly running costs are cheaper

o There's constantly an excess in the factory since it's designed for one product and for the peak of that product

o The product cannot be released as fast because of having to create or retrofit a factory.

Question #3:

* The flexible facility allows Eli Lilly to have more flexibility in the production of more products in one facility, and the ability to change the factory to another product with very little downtime because the machines only have to be recalibrated as opposed to being fully changed out.

* The Company can begin be more flexible on the time table of their production process for a product because things can be changed without having to reconstruct or retrofit a facility.

* The flexibility is unmeasurable in it's savings of time and money over the long run because although it costs more to produce originally it allows the company to release a product sooner which allows the company to capture $175 Million in net sales in the products release year that would otherwise be lost. Also, a specialized factory has to be designed to make the amount of a product that will be needed when it's at its peak and therefore has a lot of excess space when it's not at peak because the factory can't make anything else.

* The