Eli Lilly: Why Managers Get Involved in Outsourcing

Eli Lilly is a multinational pharmaceutical company that operates mainly in the United States and Europe. Its headquarters is in Indianapolis, Indiana, and it employs roughly 44,500 people. Recent annual revenues were nearly $16 billion. In drug research and development, the cost and time required to bring a new product to market have been increasing for decades. Drug companies are struggling to reverse these trends while simultaneously creating new drugs that are more effective for specific patient groups. Eli Lilly believes that effective solutions cannot be found simply by tinkering at the margins of our current business model but rather by finding wholly new ways to realize and deliver the full value of our products. Eli Lilly is taking the approach of mapping the critical path for all phases of drug development and implementing more efficient alternatives. In many cases, the result will be a more global approach. Researchers at U.S. pharmaceutical firms use clinical trials to evaluate new drugs on patients in strictly controlled settings and are required to submit the findings of these trials to obtain approval from the U.S. Food and Drug Administration. They use a clinical data management system to capture, record, and analyze the large volume of data associated with a clinical trial. At the end of the clinical trial, the data in the system is sent to regulatory authorities for independent analysis and approval of the trials findings. In November 2006, John smith the chief security officer (CSO) at Eli Lilly awarded a multiyear contract for business process outsourcing to Tata Consulting Services (TCS), Asias largest IT services firm. TCS has annual revenues of more than $4 billion and nearly 100,000 employees. Under the contract, Tata will establish a new medical information sciences center in northern India to work with Lillys Medical Information Sciences disciplines and provide a wide range of services in clinical data management, statistical analysis, and medical writing. The new center will open with a staff of more than 100 professionals, including doctors, biochemists, software engineers, and microbiologists. The staff is expected to grow over time. The goal of our relationship with TCS has several dimensions beyond reducing cost and risk, including gaining access to a global talent pool, increasing scalability and flexibility of our resources, and maintaining a global workflow that is operational 24 hours a day, according to Dr. Steven Ruberg, Group Director of Global Medical Information Sciences at Lilly. TCS was selected because of its rich and varied experience as well as for its strong management capabilities, and ability to provide customers with talented persons and innovative approaches to address their needs, said Jay Turpen, Director of Sourcing Capabilities at Lilly. TCS has worked with a number of leading pharmaceutical and healthcare companies, including the Danish pharmaceutical firm Novo Nordisk for the data management of its clinical trials in India. TCSs deal with Lilly is yet another indication that Indias largest outsourcing firms are ready to expand the scope of their operations beyond their well-established basic IT and business services.

1. TATAs __________________ is/are the main reason(s) that make(s) Elli Lilly consider outsourcing as part of their work with TATA *
   1. High efficiency
   2. High expertise
   3. High access to new technology
   4. All of the above
2. Among the factors for evaluating outsourcing partners, Elli Lilly must check if Tata has the: *
   1. Best Price
   2. Good Reputation
   3. Trustworthiness
   4. All of the above
3. TCS was selected by Elli Lilly because they found that the company has a/an: *
   1. Rich experience in the domain
   2. Varied experience in the domain
   3. Strong managerial capabilities in the domain
   4. All of the above
4. TCSs deal with Lilly is yet another indication that even though the company is an Indian company it can bypass its *
   1. Planning barrier
   2. Language barrier
   3. Employees barrier
   4. Technology barrier