John C. Lechleiter, Ph.D.
Chairman, President and Chief Executive Officer — Eli Lilly and CompanySeptember 22, 2009
Labs21 2009 Annual Conference Keynote,
Indianapolis, Indiana
The Human Face of Innovation
Good morning, everybody, and welcome to Indianapolis. Eli Lilly and Company is a long-time participant in Labs21, and we’re delighted that your annual conference is here in our hometown.
I’m especially glad that you’ll have an opportunity tomorrow to tour Lilly’s biotech labs just south of here. The biotech development campus, which we dedicated last year, represents a billion-dollar investment in Lilly’s strategy to build on our position as the world’s fifth-largest biotech company.
This morning I want to focus on innovation … the inspiring struggles and exciting achievements of scientists working in labs across this country. I’ll be speaking from the perspective of a research-based pharmaceutical company … pursuing new medicines to extend and improve life. Much of what I have to say will relate directly to medical innovation … but it applies more broadly to innovation of all kinds.
At Lilly, we’ve staked our company’s future on innovation. In fact, just last week we announced the most sweeping changes in our company’s history, all aimed at speeding the flow of new and better medicines to patients. I’m not exaggerating when I say that every single day we’re intensely focused on cracking the nut of innovation.
But I’ve learned that we also have to keep making the case for innovation … to sustain an environment where new ideas can flourish.
So let me begin this morning with the threshold question, Why should anyone care about innovation?
It’s a truism that “necessity is the mother of invention” … and the fact is, developed countries like ours … and, increasingly, developing nations as well … have the basic human necessities covered. We don’t face daily threats to survival. Some people are undoubtedly satisfied with the way things are; many may feel threatened by change and “creative destruction.” Maybe innovation isn’t a winning proposition.
But I would turn that around. It’s precisely because we’ve met our basic needs that we can and should devote resources to innovation … even if the benefits don’t always materialize overnight. That’s a great opportunity!
I believe that invention is a necessity, an urgent human imperative to push back against the limits of time and space, constrained resources and human mortality. We must pursue innovation relentlessly, to overcome not only the barriers we face today, but also the challenges we can’t yet see.
When I began my career at Lilly, no one had ever heard of HIV/AIDS. In the past two decades, medical advances in developed countries have changed HIV/AIDS from a certain death sentence to a generally manageable chronic disease. Of course, there is still no cure, and HIV/AIDS continues to wreak devastation around the world. But the progress has been dramatic, and it would not have been possible without the innovative science on which it was built.
In the work we have chosen, innovation can make the difference between a doctor visit where the diagnosis is followed by, “Here’s a prescription for a medicine that can treat your problem” … and one that simply ends, “I’m sorry, there’s nothing we can do.” In your work, innovation in laboratory technology and design can mean cleaner air and water, safe and healthy working conditions, more productive and rewarding science.
Clearly, at a point in time where we’re up against some big economic and fiscal barriers, investing resources in innovation might be seen as a luxury. Yet who among us can witness the impact of cancers, Alzheimer’s disease, and other scourges and say, “We have all the medical innovation we need”? In fact, innovation may help us overcome fiscal as well as medical and technological challenges; in a world of increasingly constrained budgets, scientific innovation can create new and better policy options for us. And, at the same time, good policy can promote innovation.
So let me turn to how policy can create the right conditions for innovation to flourish. As you know, the pursuit of innovation is a very difficult, very high risk venture. If innovation is to take root and grow, it requires a combination of elements I’ll describe as an “ecosystem.”
The first element is an atmosphere in which innovation can thrive … the air and sunshine … beginning with a society that understands and appreciates scientific inquiry and innovation. For example, there must be free markets where prices reward innovators for the value they create.
The second element: the nutrients for innovation come in the form of monetary investments. For investors to be willing to take the risks associated with innovation, they must be confident of earning a return if the work is indeed successful. That requires solid protection of intellectual property and the enforcement of IP rights … and a fair, rigorous, and transparent system of regulation.
The third and most important element: the seeds of innovation are talented people and their ideas. Ultimately, innovation grows from the human mind. Innovation, in a very real sense, has a human face. Unfortunately, in the current health care discussion, we tend to talk about human beings only as an expense. We need to remind ourselves that human beings, with their talent and energy, their creativity and insights, are a priceless resource – but a resource that is woefully underdeveloped in this country, even as we congratulate ourselves for maintaining, still, the world’s largest knowledge economy.
Today I want to suggest three policies necessary to allow the human seeds of innovation to take root and grow. They are:
- First, broad improvement in science and math education in our grade schools and high schools,
- Second, immigration policies that allow and encourage top scientists to choose to work in the United States, and
- Third, a well-funded basic research infrastructure within academic and government labs where scientists can devote their lives to this fundamental research.
Let’s begin with science and math education … and this will not be news to any of you. No matter how you look at the statistics, the United States is falling short … especially at the high school level.
- In international comparisons, American 15-year-olds perform poorly in science and math literacy. When compared with students in 57 countries around the world, U.S. 15-year-olds rank 23rd in science literacy and 32nd in math literacy.
- We’re not meeting our own goals for student performance in these fields. While we’ve made some progress in lower grades, American high school students’ scores in math, as measured by both the National Assessment of Educational Progress and the SAT, are essentially unchanged since the 1970s. Just last month, the ACT admissions test reported that only about a quarter of the 2009 high school graduates taking the test have the skills to succeed in college.
- Not surprisingly, then, the number of U.S. students pursuing bachelor’s degrees in science, technology, engineering and math – the so-called “STEM” fields – is far below what will be needed to meet the needs of the future.
Broad understanding of math and science is essential, first of all, so that young people across our society have an opportunity to participate in the high-tech economy of the future. Further, as the technology sector grows, the Baby Boom generation retires, and shortages emerge in particular fields, we will need a large cohort with basic scientific skills to prepare for these jobs. Here in Indiana, we estimate that we’ll need to fill more than 46,000 new STEM-related jobs in just the next five years. As we know in our business, this kind of knowledge is also needed in many other fields outside science, such as law and regulatory policy.
Meeting these needs will require continued significant reform of K-12 science and math education across our country, and I believe that both the public and private sectors must be involved. Here in Indiana, Lilly is collaborating with BioCrossroads – a public/private initiative formed in 2002 to develop the life sciences in our state – and the I-STEM Resource Network – a partnership of 18 Indiana universities, K-12 schools, business, and government – to take action.
A key need is to better prepare and support teachers in STEM subjects ... teachers who know their stuff and can get students excited about math and science. In too many schools, teachers lack strong subject-matter knowledge in these fields. Here in Indianapolis, we’re working with the New Teacher Project … a national organization founded in 1997 to address the challenges of teacher shortages and teacher quality … to promote alternative paths for potential science and math teachers to enter the classroom. We’ve also developed a unique mentoring relationship with Teach For America to help ensure that these outstanding young teachers – many of whom are in math and science classrooms in underperforming schools – can be successful.
In addition to better prepared teachers, we need to give teachers better support … beginning with curricular materials based on sound research. Lilly is supporting research by the National Science Resources Center – an affiliate of The National Academies and the Smithsonian Institute – to develop a hands-on, inquiry based approach to teaching science in Indiana. And we’re working with I-STEM to improve science kits and make them available to teachers throughout the state.
Ultimately, what we need is not an intensive program to produce an elite cadre of brilliant scientists, but a common effort as a society to develop whole new generations of Americans with knowledge and skills in math and science … a large pool from which great scientists and breakthrough ideas will emerge.
Now let me turn to the second policy to promote innovation: immigration policy that allows and encourages top scientists to choose to work in the U.S.
Let me explain why this is so important. In pharmaceutical research, only one molecule in 10,000 makes it all the way through development … from concept to patient. One discovery, one insight over the course of years can mean the difference between success and failure for an entire research program. OK, I know what you’re thinking … why not just pursue that one molecule? If only we knew …
Well, just as we look for the very best ideas, and the most promising molecules, we also look for the very best scientists. Today, many of the best scientists who want to work at Lilly are not U.S. citizens or even permanent residents. To stay and work in this country, skilled foreign nationals … often graduates of U.S. universities … typically need H1B visas, but the number of those visas is subject to impossibly low limits in federal law.
At Lilly, over the past four years, we’ve had success with only about 75% of our H1B visa applications, because once the low limit of H1Bs has been exceeded, we’re subject to a lottery. This year, with the economic downturn, U.S. employers won’t hit the limit … though I don’t see how that would qualify as good news … but with recovery we’ll surely come up against the limit again.
And that’s not all. It takes an average of five years for the Lilly employees we sponsor for residency status to obtain a green card. This kind of delay causes a great deal of uncertainly for prospective immigrants … including promotions and careers on hold, and significant difficulty traveling outside the U.S. while green-card applications are pending.
Today, Lilly has a full-time employee dedicated to working through these challenges. She makes absolutely sure that any employee who qualifies for a green card gets through all the hoops – and there are many!
The problem is that the uncertainty and frustration of the immigration process is driving away prospective candidates before we ever see them. In fact, our nation is experiencing a trend of highly talented foreign nationals who enter our universities and corporations simply returning home … which is not surprising under these conditions. People with the capacity to succeed are not likely to want to hang around for questionable prospects and indignities in the U.S. if they have opportunities at home … which is more and more the case in countries such as China and India.
The critical mass of knowledge and quality of life still make the U.S. a location of choice for top talent engaged in life-sciences R&D … but we are fooling ourselves if we believe this is a permanent advantage.
Whether or not Congress takes up comprehensive immigration reform, we must fix the policies that are driving away talented people who want to live here and contribute to our economy. This does not require drastic changes … just a sensible increase in visas for these highly skilled immigrants and a shorter, simpler process to get a green card. To those who argue that these immigrants are taking jobs from Americans, I respond that they’re contributing to strong businesses that can create jobs … and drive innovation … right here in this country. It surely beats the alternative: returning to their native country or going elsewhere to help a foreign firm better compete against us. That’s a job killer.
A third policy imperative is a well-funded basic research infrastructure within academic and government labs … through increased funding for the National Institutes of Health, the National Science Foundation, and other agencies that pursue and support basic research. Academic and government research has historically created a vital synergy with the private sector, often supplying the raw material … such as insights on disease processes and leads on promising molecules … which industry works to translate, develop and commercialize.
Interestingly, the philanthropic sector is playing an increasingly important role in basic research … for example, support by the Bill and Melinda Gates Foundation for basic research into diseases of the under-developed world. This is important, but it can’t fill the gap created by the shrinking role of government-funded basic research.
Real federal funding for research actually declined over the past five years – and the decline hit basic research in government and academic labs. During this same five-year period, by comparison, R&D spending by biopharmaceutical companies grew 22% in real terms. The American Recovery and Reinvestment Act – the “stimulus bill” – provides substantial funding for the National Institutes of Health, the National Science Foundation, and other agencies involved in health research. While that infusion of funding is welcome, what’s more important is a sustained long-term commitment to significant, steady growth in federal funding for basic research.
At Lilly, we know first-hand that, when budgets are tight, there’s always a temptation to cut R&D. We also know that our future depends on innovation, and we resist that temptation. We need the same commitment at the federal level. Unstable funding means that grants dry up, projects are cut short, and progress is disrupted. In addition, too many prospective research scientists see the uncertainty of a career in basic science, and look for other opportunities.
Our nation’s innovation engine works best when we’re firing on all cylinders. The indispensible role of government is to support basic research, along with translating and transferring knowledge to the private sector. U.S. companies, in turn, apply that knowledge to develop and commercialize innovative products that create value in the market.
What’s required is not some new “Manhattan Project" but rather a long-term commitment to steady growth in basic research … to attract outstanding scientists to basic research and keep them engaged in productive work throughout their careers.
That’s my pitch for sensible policies to foster scientific innovation in our country. The focus of this Labs21 conference – designing sustainable, high-performance laboratories for the 21st Century – is directly related to the human dimension of innovation. Labs are, in many cases, where the seeds of human inquiry and insight are planted.
The work you do is vitally important.
- The innovation of the architects and engineers in this room can create labs that capture students’ imagination and spark their interest in scientific inquiry.
- The sustainable, energy-efficient research facilities you design will help companies like Lilly attract scientists … who clearly tell us that they are looking for companies with a commitment to social and environmental responsibility … and provide them with a safe, efficient work environment.
- And continuous improvement in lab design will allow our society to get more bang for the buck from our investment in research … and provide more opportunities to research scientists.
At Lilly, we’ve invested about three-quarters of a billion dollars on Lilly lab facility projects globally over the last seven years … an investment that reflects not only our innovation-driven strategy but also our responsibilities to our employees, communities, and the environment.
Some of these projects expanded our capacity, others have ushered in new technologies and strategic focus, and still others were upgrades to existing facilities to enhance safety, improve energy efficiency, and reduce environmental impact.
And we’ve made considerable progress. Across all Lilly facilities, over the five-year period from 2003 to 2007, we:
- Cut hazardous materials purchases in half;
- Improved our energy intensity (in energy used per dollar of sales) by more than a third and reduced absolute energy use by 2.4%;
- Cut our greenhouse gas emissions per dollar of sales by 33%; and
- Cut emissions of volatile organics by 40%.
Last year, Lilly established new goals we intend to achieve by 2013. These include:
- a 15% improvement in energy efficiency and reduction in the corresponding greenhouse gas emissions
- a 40% reduction in waste to landfills, and
- a 25% reduction in water intake, all on a 2007 baseline.
Our facility in Fegersheim, France, found a way to keep energy consumption flat despite the construction and startup of two new facilities: a lab and a warehouse. The team at Fegersheim achieved this feat by energy conservation efforts in their existing facilities and energy-efficient design of the new facilities using renewable energy sources ... solar and geothermal energy.
My Lilly colleagues will share a small sample of past and future Lilly projects in platform presentations during the conference and the facility tour on Wednesday evening.
A few years ago, a business reporter offered a startling description of the business that Lilly is in:
“Drug research,” he said, “is quite possibly the least efficient endeavor in the world of business. It’s the equivalent of hiring thousands of art students and funding decades of work in hopes that once in a while one will paint a ‘Mona Lisa.’ ”
Now that could be a depressing thought … except that Lilly scientists do produce those Mona Lisas! Each is a self-portrait … our scientists are indeed the human face of innovation.
The human face of innovation is also the patient who benefits from a medical breakthrough. One of the most inspiring aspects of my job is the chance to meet face-to-face with patients whose lives have been touched by Lilly medicines. I’ve seen the face of a young man who had been saved from imminent death by a Lilly medicine … and the faces of his grateful parents. I’ve seen the face of a woman who overcame depression and got her life back with the help of a Lilly breakthrough. And many more …
We’re determined to achieve more victories for patients. This nation presently is the world leader in biopharmaceutical innovation … but continued leadership is not guaranteed.
But we need a society that appreciates and rewards innovation, a strong legal and regulatory infrastructure, and most of all, talented and dedicated people to pursue innovative science. We must ensure that health care reforms do not undermine the very innovation that can help address our most pressing unmet medical needs. And those of us who care about innovation must do what we can to promote better K-12 education, especially in math and science; immigration laws that allow skilled scientists to work in the U.S.; and steady growth in funding for basic research.
Today, we stand on the brink of an enormous opportunity to harness new scientific knowledge that could make a further, substantial contribution to human health. And researchers in other fields are pursuing many more innovations to improve life for people around the world. We’re fortunate to live in a time and place where we can choose to devote substantial resources to such endeavors. We owe it to future generations in this country, and to people around the world, to ensure that we create and sustain a viable ecosystem for innovation as a matter of highest priority.
