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Eli Lilly to Focus on Cancer, Diabetes in China, CEO Says

Eli Lilly & Co. (LLY) will introduce more than a dozen products in China, including drugs for diabetes and cancer, in the next five years to help maintain sales growth, Chief Executive Officer John Lechleiter said.

“Our goal is to be the fastest growing pharmaceutical company in China,” Lechleiter told reporters at a briefing in Beijing today. “We are increasing our investments in every aspect of our business,” he said.

Lilly’s Chinese sales grew by 25 percent last year, faster than the industry average, after the Indianapolis-based drugmaker doubled its sales force in the Asian country over a three-year period, according to Lechleiter. The 58-year-old executive plans to raise Lilly’s share of revenue from China to more than 2 percent by focusing on “unmet needs.”

As diabetes rates soar in China, Lilly is competing with drugmakers including Merck & Co. and Sanofi to try and unseat Bayer AG (BAYN) and Novo Nordisk A/S (NOVOB) as the biggest providers of diabetes medicines. At stake is a market that may triple to $2.1 billion in annual sales by 2019 from $700 million in 2009, according to Yifi Liu, an analyst for Datamonitor in Shanghai.

Diabetes treatments were probably the main driver of Lilly’s 31 percent growth in third-quarter sales in China, Lechleiter said in November.

Drug Quality, Reliability

Still, the world’s fastest-growing major economy poses its share of challenges to pharmaceutical companies.

Drugmakers, seeking new sources of growth as patents on their best-sellers expire, are facing pressure on margins in China as the government has vowed to extend drug-price cuts to trim the cost of caring for an aging population. Lechleiter said he hopes China won’t focus only on cutting drug prices.

“While we understand the need of the government to save money and moderate the cost of providing health care, we also believe that other factors need to be taken into account,” he said. Drug quality and the reliability of supply should be considered, Lechleiter said.

Lilly’s Cialis drug for treating erectile dysfunction, which was introduced in China in 2009, will soon surpass Pfizer Inc. (PFE)’s Viagra as the top seller for the condition in the nation’s markets where it is sold, Eric Baclet, president of Lilly China, said. “In our quest for leadership in some of these China cities, we feel very confident,” he said.

Cialis was Lilly’s fifth best-selling pharmaceutical product in 2011, contributing $1.88 billion or 7.7 percent of sales, according to data compiled by Bloomberg.

To contact Bloomberg News staff for this story: Daryl Loo in Beijing at dloo7@bloomberg.net

To contact the editor responsible for this story: Jason Gale at j.gale@bloomberg.net

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