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Lilly's Taurel sees no need for big merger
March 02, 2004
LOS ANGELES, March 2 (Reuters) - Eli
Lilly and Co's chief executive Sidney Taurel
on Tuesday said there was no need for Lilly
to jump on the merger bandwagon in Europe where
a hostile bid for Aventis <AVEP.PA> has
sparked rumors of a white knight.
"We really don't believe that pursuing
size for the sake of size is a key to success
in our industry," Taurel told reporters,
in response to questions regarding whether or
not Lilly (nyse: LLY - news - people) would
consider a bid for Aventis.
In January, Sanofi-Synthelabo <SASY.PA>
announced an unsolicited $60 billion offer for
Aventis, its larger rival, which has been trying
to fend off the bid.
"The history of large mergers and acquisitions
in our industry shows that typically they are
driven by weakness or basically companies with
large patent expiration or not enough products
in their pipeline," Taurel said ahead of
a speech to local businesses during a Town Hall
of Los Angeles luncheon.
The company has what analysts consider one
of the best pipelines of new drugs in the industry,
including impotence drug Cialis,
attention deficit medicine Strattera and depression
medication Cymbalta, yet to be approved by the
U.S. Food and Drug Administration.
Taurel said that real success in pharmaceutical
companies comes from innovation. "We have
not seen any correlation between innovation
and size," he said.
"What this (merger) gives them is the
ability to eliminate duplications, to rationalize.
There could be a boost in earnings, but it is
a short-term boost from cost-cutting,"
he said.
"With many larger mergers, we've see mass
confusion, lots of people leaving the company,
political in-fighting and a loss of momentum
in the lab and in the marketplace," he
said.
"We don't think a merger brings value.
Small acquisitions, yes, and partnerships,"
he said.
Taurel said Lilly's strategy was focused more
on internal growth.
"We spend more on R&D than other companies
as a percentage of sales and compliment that
by partnerships with biotech firms,' he said.
Copyright 2004, Reuters News Service
source:-http://www.forbes.com
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