Business > CASE STUDY > ELI LILLY AND CO. THE FLEXIBLE FACILITY DECISION (1993) by Gary P. Pisano Sharon Rossi (Case Notes A (All)

ELI LILLY AND CO. THE FLEXIBLE FACILITY DECISION (1993) by Gary P. Pisano Sharon Rossi (Case Notes Answer with Free Case File)

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The case focuses on Eli Lilly's facilities strategy for manufacturing three new chemical entities1 that the company expects to launch within the next few years. Historically, the company built speci... alized plants for each new drug approved for the market. Each plant could manufacture only the product or specific set of products for which it was designed. In 1993, amidst changes in the competitive and economic environment confronting pharmaceutical companies, and ensuing corporate goals to accelerate product development, Lilly was contemplating an alternative strategy to build a flexible facility that could produce virtually any of its new products. The chief advantage of the flexible facility strategy would be speed-to-market for new products. Since it would no longer be necessary to design and build a new facility for each new product, facilities would be removed from the critical path for product launch. However, flexible facilities are far more costly to build and operate than traditional specialized plants, and thus any benefits of flexibility must be weighed against the higher costs—a significant issue in the pharmaceutical environment of the 1990s. In examining the decision, students must probe the tradeoffs between flexibility and costs, analyze the interaction of facilities strategies and development processes, and explore different paths for improving both flexibility and costs over time. [Show More]

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