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Eli Lilly CEO says company keeping animal health business

By Bill Berkrot

NEW YORK (Reuters) - Eli Lilly and Co's chief executive said his company had no intention of following Pfizer's lead by spinning off or selling the company's lucrative Elanco animal health unit.

"We're comfortable with that business and we're going to keep it," Lilly CEO John Lechleiter said definitively on Monday during a question and answer session at the BIO CEO & Investor conference in New York.

Pfizer earlier this month spun off its animal health business through an initial public offering that raised $2.2 billion, though Pfizer will control roughly 80 percent of the new company, leading to speculation that other drugmakers would follow suit.

But Lechleiter said his company was very happy with a business that was posting industry leading growth rates.

He said livestock and pet care products now accounted for about 10 percent of total company sales, up from 5 percent to 6 percent a few years ago, and that the percentage could become even bigger.

While overall sales at Lilly declined about 7 percent in 2012, primarily due to generic competition for its once top-selling Zyprexa schizophrenia drug, the animal health unit saw sales jump 21 percent to $2 billion, with a 30 percent rise in the United States.

Lechleiter also said the company had no plans to make a push into so-called orphan drugs - medicines for serious conditions that affect few people but command astronomical prices. Many drugmakers have found this to be an attractive option as they try to find ways to make up for former big sellers facing generic competition.

"We're still focused on big diseases that kill the most people," he said, mentioning cancer, heart disease, diabetes and Alzheimer's disease.

Lilly has a pair of high profile Alzheimer's drugs in development. It is conducting a third late stage study of its solanezumab at the request of U.S. health regulators after the first two failed to meet the main goals of the trials but showed promise in patients with a mild form of the disease. The drug works by blocking a protein called beta amyloid that causes toxic plaques to build up in the brain.

It also has a drug in Phase II testing from a promising class called beta secretase, or BACE, inhibitors.

"I'm hopeful within the next 10 years, or sooner than that, we will have something that slows progression," Lechleiter said.

While the root cause of the brain wasting, memory robbing disease is not known, many researchers believe brain plaques are a main culprit.

"I think the amyloid plaque hypothesis is the best shot we've got," the CEO said.

Meanwhile Lilly has several other shots on goal in its development pipeline. The company currently has 13 drugs in Phase III testing - the most at any one time in its history - and expects key data on eight of them this year. It also has 23 drugs in midstage testing.

"We've tried to make R&D (research and development) more sustainable and not return to the cupboard is bare" that Lechleiter said was the company's plight in 2004.

(Reporting by Bill Berkrot; Editing by Nick Zieminski)

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