Eli Lilly Case Analysis

608 words - 3 pages

Johana L. Diaz Charles
Operations Management
Nabil Rageh
Summer 2013
Case Analysis #1

Eli Lilly and Company: The Flexible Facility Decision (1993)

Eli Lilly and Company was one of the most important developers, manufacturers, and marketers of pharmaceuticals in the United States. The company’s case analysis is about the important decision that Steve Mueller, the strategic facilities planning manager, has to make about the type of manufacturing facilities to construct for the three products that the company is expected to launch in 1996. Lilly’s current manufacturing strategy consisted of having a specialized plant to produce a specific product or set of products. In the past, this had worked well for the company. However, with the increasing competition, the management set the goal of reducing the development leadtime by 50% to introduce a new product faster, and reduce manufacturing costs by ...view middle of the document...

However, there would be no reduction in the development leadtimes because the facility would not be flexible enough to accommodate changes to the product in case that the products did not get FDA approval, or simply produce a new product. Moreover, due to the time that is spent to design the facility for the specific product, the company would not able to introduce its products faster in the marketplace. Also, the company would incur retrofit costs for every new product. On the other hand, having a flexible plant provides flexibility in operations due to the ability of producing different kinds of products, and accommodate changes to products that are in process and reducing lead times; thus, responding faster to market demands increasing sales and market share. However, the output at this facility is lower, the costs per year are much higher, and effective utilization of the facility is 15% less than the specialized facility.
Based on my analysis, in the short term, a specialized facility would be more suited for the company, due to the reasons explained above. However, because of the uncertainty of the product approval, the probability of incurring retrofit costs is higher, and generating increased costs in the long term. On the other hand, even though the costs are much higher in the flexible plant and the output is lesser, the flexibility in operations would eliminate the costs on retrofits and increase the speed of product manufacturing responding faster to the market. Thus, this would generate more sales and increase market share. Therefore, it can be suggested to Steve Mueller and the company to use a combination between a specialized and a flexible plant. The product can be manufactured in the flexible facility, and taking in consideration that some products are forecasted to exceed the capacity of the flexible plant, these products can be transferred to a specialized facility as demand increases, and new products could start their production process in the flexible facility. As a result, the company would create more output at a faster rate, and reduce costs by being effective and efficient in capacity usage.

Other Essays Like Eli Lilly Case Analysis

Healthcare Industry Case Study

1734 words - 7 pages Healthcare Industry Case Study Introduction: Following on his experience of medicines used in the Civil War, Colonel Eli Lilly, a Union Officer and a pharmacist, started a small pharmaceutical company in Indianapolis, Indiana, USA with the aim of producing high quality prescription drugs. After Colonel Lilly's death, his son Josiah K. Lilly Sr., and eventually his two grandsons, Eli Lilly and Josiah K. Lilly Jr., each served as president of

Elly Lilli Essay

1173 words - 5 pages what will be the best route to take. Ranbaxy Laboratories wants to be bought out, but Eli Lilly is worried of the financial implications of such move. There were two pharmaceutical companies that were looking for ways to expand globally to position themselves in a competitive advantage from their competitors. One was located in the United States, which was Eli Lilly and Company and the other one was located in India, which was Ranbaxy

Elli Lilly Case

604 words - 3 pages Parinaz Kokabi OP 300 “Elli Lilly and the Company: The Flexible Facility Decision” case analysis Due to the fierce competition in pharmaceutical industry, Elli Lily has to change its product development process to retain its situation in the market. Steve Mueller, manager of strategic facilities planning, must suggest the company what type of manufacturing facilities to construct. These new facilities were needed for three new products

Cymbaltamkamara

1266 words - 6 pages Cymbalta case Analysis Mohamed A. Kamara AMBA 650: Marketing Management and Innovation January 22, 2013 Table of Contents 1.0. Identification of the strategic issues and problems. 2.0. Analysis and evaluation. 3.2. Recommendations. 1.0. Identification of the strategic issues and problems. In April 2000, Eli Lilly’s New Antidepressant Team (NAT) convenes to review the potentials of alternative medications, and to subsequently adopt

Emerging Trends in Contract Research Industry in India

1409 words - 6 pages pharmaceuticals companies like Novartis, Eli Lilly, Pfizer, and GlaxoSmithKline, Aventis etc. to venture into this business, in collaboration with Indian Drug Companies like Nicholas Piramal India Ltd., Advinus Therapeutics, Ranbaxy laboratories, Torrent Pharma, Dr. Reddy's Laboratories, and Cipla etc. India is fast emerging as a favoured destination for clinical research globally, owing to a large number of contributing factors, like: (a) Easy

Liposarcoma Treatment Market : Global Industry Analysis and Forecast 2016 - 2022

982 words - 4 pages the disease. For more info: http://www.persistencemarketresearch.com/contact-us.asp Some of the key players in global liposarcoma treatment market include Eli Lilly and Company, Baxter International, Bristol Laboratories Ltd., Pfizer Inc., Teva Pharmaceutical Industries Ltd., Mylan N.V., Actavis plc.,Fresenius Kabi Ltd., Accord Healthcare Inc., Taro Pharmaceuticals Inc., Sandoz, Bedford Laboratories and others. Recently FDA approved the new

Colorectal Cancer Therapeutics Market: Global Industry Analysis and Forecast, 2014 - 2020

1011 words - 5 pages latest trends that have been observed in global colorectal cancer therapeutics market. Some of the major companies involved in the global market for colorectal cancer therapeutics are F. Hoffmann-La Roche Ltd, Eli Lilly and Company, Taiho Pharmaceutical and Merck KGaA. Some other companies having significant presence in the global colorectal cancer therapeutics market are Pfizer, Inc., Bayer HealthCare Pharmaceuticals and Boehringer Ingelheim

Mystic Monk

3181 words - 13 pages will determine a company’s success in the movie rental industry in the next 3-5 years? 5. What is Netflix’s strategy? Which of the five generic competitive strategies discussed in Chapter 5 most closely fit the competitive approach that Netflix is taking? What type of competitive advantage is Netflix trying to achieve? 6. What does a SWOT analysis of Netflix reveal about the overall attractiveness of its situation? CASE 05 - REDBOX’S

Diabetes Drugs Market: BRIC Industry Analysis and Forecast to 2020

1209 words - 5 pages market is rising use of personalized drugs. Some of the companies operating in the BRIC diabetes drugs market are Abbott Laboratories, Biocon, Ltd, Eli Lilly and Company, Lupin, Ltd., and Sun Pharma Industries, Ltd. Other companies in the market include Bayer Healthcare AG, Roche Holding AG, Novo Nordisk A/S, and Aurobindo Pharma, Ltd. Request Full TOC: http://www.persistencemarketresearch.com/toc/3888 Key points covered in the report 1) Report

Clinical Trials

2343 words - 10 pages are prevalent in most countries. This helps drug companies complete the Clinical Trials on time and saves millions of dollars. The major players (Contract Research Organizations) and Pharmaceutical companies in the clinical research business include Quintiles, ICON, PPD, Parexel, Kendle, Eli Lilly, Pfizer, Biocon etc. The 20 largest U.S.-based drug makers conduct a third of their phase III Clinical Trials abroad. Fig 2.1: Number of Clinical

Crisis Management Report

3545 words - 15 pages personnel and the specific situation facing the company. This means internal controls should include not only fake invoices but systems, procedures and forms to ensure that only approved and appropriate payments are made. The effects on business-level and corporate level strategy-making GSK trying to use other company example and Foreign Corrupt Practices Act (FCPA) enforcement Eli Lilly and Company (Lilly) the bribery scheme which got Lilly into

Related Papers

Eli Lilly Case Essay

1823 words - 8 pages ------------------------------------------------- Eli Lilly and Company To: | Chairman,Manufacturing Strategy Committee | From: | Steve Mueller,Manager, Strategic Facilities Planning | Date: | 24th November, 1993 | Subject: | Decision Report on Manufacturing Facility for Alfatine, Betazine and Clorazine | The entailing report includes the analysis of various options that may be implemented and the associated advantages, risks and trade

Eli Lilly Company Case Study

1198 words - 5 pages Eli Lilly and Company Case Study GSB 723 Operations management Spring 2015 Group 5 Scott Lozier, Timothy Little, Anas Hidar, Xiaocao Yu Situation Eli Lilly and Company is a big pharmaceutical company which ranks amongst the top 6 in the U.S. The pharmaceutical industry changed a lot since 1993. There are huge competitions and pressure on pricing, innovation, and manufacturing. Eli Lilly and Company decided to reduce the time and cost

Eli Lilly Ranbaxy Jv Essay

1434 words - 6 pages flow in order to grow abroad. Both firms are considering options for the future. Problem statement Eli Lilly-Ranbaxy, a joint venture in India must re-evaluate the direction of their business relationship. Though the partnership has been successful for both firms, multiple variables including a changing industry climate and diverging futures give cause to question whether continuing as partners is the best choice for ELR. Analysis

Caso Eli Lilly Essay

761 words - 4 pages CASO ELI LILLY 1. Describir la historia, el desarrollo y el crecimiento de la compañía a lo largo del tiempo. Historia * Esta compañía, que antes había sufrido debido a una estrategia descuidada, no centrada, y había logrado una sólida recuperación a mediados de la década de los '90s debido a su antidepresivo Prozac altamente exitoso, enfrentaba un periodo de depresión corporativa durante 1998 a 1999. *A partir de la década de los'80s